Regulation Of E-Commerce Under International Law

Regulation Of E-Commerce Under International Law Regulation Of E-Commerce Under International Law By Zahid Sikandar, Attorney-at-Law Advocate and Legal Consultant Introduction The phenomenon of e-commerce is not old but it has become a vital element in the business world today. The emergence of new technologies especially like Internet, has caused a great change in the present world. With the emergence of e-commerce as the standard for business transaction, this venue is no longer optional but imperative for success in a competitive global market. Today, the Internet is far from obscure-it is the centre of attention for businesses, governments and individuals around the world. It has spawned entirely new industries, transformed existing ones, and become a global cultural phenomenon1. 1. See Istoselides org world (a collection of articles from alternative media) 'shaping the Internet age' by Bill Gates [Chairman Microsoft] <http:// www.istoselicics.gr/world/print.php?sid=70> The World continues to witness a revolution in the way business is conducted and this is called as e-revolution. History bears the testimony to the fact that no other means of trading has developed at such a fast speed than e-commerce. The Internet has made the world a global village or a 'board room' to be precise. In the world today, doing business become very easy and simple. The communication was never so quick. E-banking, e-money, e-cash, e-world, e-commerce are the new concepts of the day. One of its greatest impacts is in unifying many countries' markets. It has become as easy to sell halfway across the world as it is to sell across the street. The world is changing a lot due to the advent of this new technology. It sounds as though our generation is happy to accept change without knowing the results of such change will be.2 It is said today that the development of the Internet constitutes the major change in the society as it moves from the industrial to the information change. On the other hand the law is an organic being which has always managed to evolve to keep up with changes in society. However, the challenge posed by the growth of information technology is perhaps the biggest this time. 2. See "Who Controls the Multinational Corporations? Does the answer lie in International Law" written by Surya. P. Subedi. Professor of International Law at Middlesex University, London, p. 1. What is E-commerce? Object, scope and its rapid development: The term e-commerce is understood here to mean commercial transactions taking place on the Internet. E-commerce is the process of managing online transactions. This includes online credit card transactions, e-cash, e-billing, e-cheques, electronic invoices, purchase order, financial statements etc. etc. E-commerce is not a futuristic dream. It is happening now, with many well-established successful stories. It is happening world wide. From a local toy store to big multi-national companies, businesses around the world are adopting e-commerce solutions. In fact, companies with any viable product need to have e-commerce solution to keep up with the fast paced global market of today. Internet is an incredible business opportunity and ranks the impact alongside the car and the PC, although only a few companies will dominate after a wave of take over. A leading technology analyst believes that the online business market will be worth several trillion dollars over the next ten years, however only a quarter of existing internet companies will survive.3 3. The Guardian (London), 11 October, 2000. The emergence of electronic commerce over the past decade has radically transformed the economic landscape. For developing countries, the digital revolution offers unprecedented opportunities for economic growth and development., On the other hand, countries those lag behind in technological innovations risk being bypassed by the competition edge of those using the new technologies.4 The impact of online trading on economic activity is just beginning. Over the next ten years the internet will not only expand e-commerce only but also will transform the nature of economic structures through the new concepts of business. 4. See Kofi Anan (Secretary General of the UN) "E-Commerce and Development Report 2001" <http://www.unctad.org/en/pub/ psi eedr0l .en.htm> An important characteristic of e-commerce is that it is a form of technological change. The effects of e-commerce induced reductions in business production costs and on seller to buyer transaction costs are assessed. Comparative static models for different market structures are used to assess the effects of e-commerce on prices, quantities, aggregate efficiency gains, and the distribution of benefits and costs. Ultimately the customers are the principal beneficiaries via lower prices.5 In short the promise of e-commerce is that it will allow an efficient single market, in which small enterprises and global brands alike can offer their products and services to well-informed customers, who can research their purchase decisions to whatever depth they wish to. Well, this is happening to some extent. 5. See "Some market effects of e-commerce" for more details written by John Freebairn, professor at the University of Melbourne, The Singapore Economic Review .Vol. 46, No. 1 pp. 49-62 Arisen of new issues and problems due to its quick development: Where the advent of new technologies has improved the means of doing businesses and given lot of benefits to the business community, it has also caused number of disputes which have given rise to innumerable new issues like Hacking, Security problems, copyright issues, privacy, validity of contracts, jurisdiction and applicability of law etc. etc. The traditional transactional formalities and laws are still heavily influenced by the 19th century civil code policy. It is therefore not surprising that considerable uncertainty exists with respect to the enforceability of electronic contracts and undertakings. Suppose that a company in Korea browses the electronic catalogue of a Russian company and places an electronic order for products that will be delivered electronically and for which payment will also be made electronically. The simple scenario raises several fundamental questions that as yet are unresolved. At precisely what point is a binding contract established between the companies? What is the legal status of the contract? What body has legal jurisdiction over the contract? Given differences in financial regulations and practices, how is payment made and configured? What taxes and customs charges apply to the products? How are these taxes and charges `policed' and `collected'? Another issue that frequently arises as countries seek to promote e-commerce is the validity of contracts made by e-mail or at website. In many countries the law requires that the contract must be in `writing' or must be `signed' What do these words mean in the context of Internet? Then, Is e-commerce safe? One leading US technologist famously opined that we as consumers have no privacy and should simply `get over it'.6 The consumer confidence isn't yet much and people are far from ready to start spending freely online. Customers are worried about credit card theft, the privacy of their personal information, and unacceptable network performance. Most shoppers still aren't convinced that it is worth wile to hook up to the Internet, search for shopping sites, wait for the images to download, try to figure out the ordering process and then worry about whether credit card numbers will be filched by a hacker. 6. See Article "Confidence in e- commerce: issues and possible resolutions" written by Stefek Zaba http://www.europa.eu.int/Comm/dgs/health_consumer/events/event32_wrks4-2_en.html The right of privacy is one of the fundamental rights of everyone. It has also been recognized in Article 12 of Universal Declaration of Human Rights. It states: "No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attack."7 7. See Article 12 of Universal Declaration of Human Rights. The right to privacy has achieved recognition in the European Convention on Human Rights. Art 8 of the convention provides: 8. See Article 8 of European Convention on Human Rights. "Everyone has the right to respect for his private and family life, his name and correspondence."8 In the last few years the Internet has developed in a glorified manner. One of the main issues arisen as a result of this change is the threat to privacy. The online activities can be monitored both by their own service providers and by the sysop of any sites on the Internet they visit. It directly hits not only private lives of human beings but also huge business companies that are doing business online. E-commerce and the Internet, in general, give new significance to an old problem in International law: when does a citizen of one country or a corporation with its place of business in one country fall under the jurisdiction of the Courts of another country? E.g. can a trademark holder in Pakistan sue a company using the same trade mark in Germany for infringe?ment because the German Company has established a website that is available to Pakistani Customers and which law of trade mark applies -the German law or the Pakistani law? The Internet is often described as unregulated. However, this is not correct since many existing laws both to the deployment and use of the infrastructure of the Internet, and to the transmission of content on the internet. In fact, communications sent by means of the Internet may pass through many jurisdictions, and accordingly may be subject to a greater number of laws than would apply to other forms of communication. The real difficulty, however, typically lies in the enforcement of applicable laws.' Governments, judiciaries and legislatures are just beginning to grapple with the question of whose laws apply in cyberspace. At present, these issues are governed by the convention on the law applicable to contractual obligations 1980 (The Rome convention) and by Council Regulation No. 44/2001/EC on jurisdiction and the Recognition and enforcement of judgments in civil and commercial matters' (The Brussels Convention)10. In short, there is a real need of a uniform law addressing these issues. This is the only way that e-commerce can expand to its full potential. 9. See Dennis Campbell (Director, Centre for International Legal Studies Salzburg, Australia) (ed), Law of International online business: A Global Perspective, published by Sweet and Mawwell, 1998, p.4. 10. See "Jurisdiction and Choice of law clauses in Internet Contracts. Part one-package Holidays" written by Ian Kilbey, [2002] International Travel Law Journal, p.203. Efforts done by International Community to overcome these issues: In the few years since the Internet has become an important venue for commerce, communications and entertainment, so-called cyberspace have tried to impose a variety of rules, regulations and guidelines to protect the interests of consumers and business. Unfortunately, however, no mechanism yet exists to enforce such initiatives. Many countries have established rules for the validity of electronic contracts, electronic signatures etc. Efforts for protection for intellectual property rights, defining rules for copyright and subsidiary rights on the Internet are also in progress. The General Assembly established the United Nations Commission on International Trade law (UNCITRAL) in 1966 (Resolution 2205 (XXI) of 17 December, 1966). UNCITRAL is formulating modern, fair, and harmonized rules on commercial transactions. These included conventions, model laws and rules which are accepted worldwide. The model law applies to any kind of information in the form of a data message used in the context of commercial activities, whether contractual or not.12 Like UNCITRAL, EU is also very conscious and active about, the regulation of e-commerce. In future, analysts view it the most dominating body addressing e-commerce the world over. The World Trade Organization is the only organization dealing with the global rules of trade between nations. With the increase in the use of technologies, the WTO has turned its attention to e-commerce. The WTO bodies under the electronic commerce work program are making lot of progress.13Moreover, WTO members have also presented their proposals concerning the work on e-commerce.14 Apart from these, many other efforts are being made by International community at national and international level to regulate e-commerce. Every country is drafting new laws, adopting new techniques to overcome these problems regarding e-commerce. Anyhow, this is just a beginning there is lot more to come. 11. See home page of 1JNCITRAL,http://www..uncitral.org/en?index.htm 12. Ibid. 13. See WTO's official website for these progress reports<htt:p:// www.wto.org/english/tratope/ecom__e/ecom e.htm> 14. Ibid. for proposals Regulation of E-commerce under International Law: Now everyone is aware of the fact that e-commerce has gained importance worldwide and no country can stay aloof from it, a question arises that is it possible to regulate e-commerce under International Law? There its very much possibility that it can be regulated under international law. The only thing required is sincere efforts, strong commitment from all countries. What is International Law? Professor J.G. Starke defines it that body of law which is composed for its greater part of the principles and rules of conduct which states feel themselves bound to observe, and therefore, do commonly observe in their relations with each other. The aim of the international law is to monitor the behavior between states since where there exists a community of states, the maintaining of law and order becomes essential, At the dawn of the new millennium and as the World moves ahead to meet the challenges of a new knowledge-based economy, there is a great need of the hour that old laws should be updated and reformed according to the requirements of the present world. Presently, the legal debate over the regulation of e-commerce is far from settled, but its layers of complexity shed light on the issues at the heart of the larger discussion about regulation of e-commerce e.g. many critics, who view the internet as a democratic paradise for the free play of ideas, vehemently oppose attempts to apply conventional models of regulation to the Internet.' 5 While some are content that the regulation of e-commerce may take place slowly through a careful application of common law principles, with particular attention paid to the aspects of cyberspace that make Internet transactions unique.16 I believe that this is not the first time that the law governing bodies have faced a challenge given by the technology. The invention of telephone, fax, telex etc brought similar issues of jurisdiction, privacy and validity of contracts etc at that time. But the matters were resolved by drafting new commercial laws, forming new bilateral and multilateral treaties. This is the need of the hour. Those, who are hoping to have a lawless cyberspace to do anything freely, are living in a fool's paradise. Entry to the market is not entirely unregulated in the physical world, nor should we expect it to be in the realm of e-commerce. Businesses are bound by many requirements and regulations, such as avoiding deceptive advertising practices, accountancy and taxation matters. Sooner or later they will be regulated properly. 15. See e.g. David R. Johnson & David Post, Law and Borders?The Rise of Law in Cyberspace, 48 Stan. L. Rev. 1367. 1402 (1996); John Perry Barlow, A Declaration of the Independence of Cyberspace (visited Apr 19, 1999) hapi/www.eff.org/pub/publications/John_Perry_Barlow/ barlow_0296.declaration>(on file with the Harvard Law School Library) 16. See e.g. Lawrence lessig, symposium: Emerging media Technology and the First Amendment: The Path of Cyberlaw, 104 Yale L.J. 1743, 1745 (1995) ("What is special about the common law here is its construction function. What recommends it is the process that it offers, with its partial answers, to repeated if slightly varied questions, in a range of contexts with a world of different talent and ideals") One may ask that despite that a lot of attention is being paid to these issues, but, still, no mechanism exists which can solve these problems. So, where is the lacuna? Are Governments just paying lip-service and doing nothing practically or is there any other reason? No, this is not the case. Governments are trying hard to get away with these problems and to make the cyber world a good place of business market but the problem lies in the fact that the approach towards these issues needs to be universal rather than national. Most countries are drafting new laws and new statute applicable within its geographical boundaries and not beyond that. The agreements or treaties, in place at the moment, are mostly bilateral or multilateral. The phenomenon 'e' is global, it has made the world a global village, then how can it be expected to be regulated locally or nationally. In order to curb these problems, countries will have to take universal steps. Universal treaties are required, one set of rules is necessary. Apart from the treaties and conventions, self-regulation is also must and that. is only possible when people are educated. It is common sense that in order to abide by the rules and regulations, one needs to know those rules. So, until people are educated about the discrepancies of e-commerce how can they be expected to regulate themselves. One possible means of co-coordinating the regulation of the Internet would be through an International treaty. However, there appears to be little movement in this direction. Actually, the problem lies in the fact that the phenomenon of e-commerce is so wide and global that if certain rule is in favour of some countries the same rule may not be favorable to other countries that is why the world, still, does not witness any International treaty drafting a set of uniform laws for all nations. Every country is trying to protect its own interests in this new global world and trying to get more and more benefits out of it. Along with the states, the role of International bodies needs to be supportive and helpful towards the development of e-commerce. Various International Organizations such as the WTO, WIPO, UNCITRAL, OECD and The Hague convention offers possibilities. Each has its own angle and in some instances political agendas as well. Without doubt there will need to be an overarching international body to ensure a degree of consistency and harmonization. The WTO may be the best place to fulfill this role. The existing WTO agreements provide at least a staring point. In short, strictly speaking, the regulation of e-commerce is very much possible under International law. All what is required is one International organization leading at the front Conforming one International treaty having uniform set of law for all nations. The WTO is the one which can serve this purpose. WIPO treaty may be modified or a new treaty may be signed by all states addressing these problems. The applicability of contents of the treaty should be universal rather than national of regional e.g. There should be one certified system of privacy; any cyber crime taken place should be dealt with one body of law. For this purpose, regional courts may be set up for the settlement of disputes under the supervision of the WTO. But they should enforce similar laws in all parts of the World. Prior to all this, the most important thing is that all countries should be committed to regulate this new lawless world. They should keep aside their own interests and work for the benefits of all. This is how the International law develops. It is not necessarily required to start from the beginning; the traditional laws enforced in the physical world may be amended and modified according to the requirements of the present situation. Governments should keep an eye over the online business as it does in the physical world. We are at the dawn of the e-age and nothing much has been done yet but I am sure that scholars and jurist have begun to think that due to its global diversity it should be treated internationally under the umbrella of International law rather than locally or nationally. In future, lot of development regarding the regulation of e-commerce under International law is expected. Conclusion: The long and short of the whole discussion can be summarized in the words of Albert Einstein who says: It has become appallingly obvious that our technology has exceeded our humanity. In the good old days, people's activities were limited. The technology was not so advanced. Business from one state to another hardly occurred so traditional rules and laws were enough to meet the requirements. Nov, the scenario is totally different. Businesses are inter-linked worldwide. The advance?ment of technology is on the increase. It is possible that in a few hundred years when the history of our time will be written from a long term perspective, it is likely that the most important event historians will see is not technology but something else. It is an unprecedented change in the human condition. In short, with the technology improving rapidly, its time for the Internet legal community to address the fallout from a web. For better or worse, e-commerce is becoming bordered. ***