The Department of Public Enterprise published a draft Electronic Commerce Bill on 13th August containing outline proposals on electronic signatures, electronic contracts and related matters. The Bill, one of the first to be published in the EU, follows a consultation process between Government and industry to address the need for legislation to underpin Ireland’s development as a hub for electronic commerce.
The draft Bill comes a mere two weeks after the publication of the UK E-Commerce Bill. Many commentators have noted the contrast between the light regulatory touch adopted in the draft Irish Bill when compared with its UK equivalent. The Department of Public Enterprise, in the draft Bill explained its desire to ensure that the Bill be as "technology neutral" as possible to encompass future technological developments.
Legal recognition of electronic contracts
The Bill contains a provision placing electronic contracts on the same legal footing as a written contract in paper form. Parties may disapply this provision in their contracts. It also addresses the issue of when it can be said that an electronic contract has been accepted. This issue is vital in deciding when a contract or agreement is actually struck. Is "acceptance" defined as the receipt of the electronic message? This issue is extremely important; particularly where the parties to an agreement are not in the same jurisdiction and choice of law issues arise.
The draft Bill provides that a document will be taken to have been "delivered" when the electronic communication by which the document is sent leaves an information system under the control of the sender; and will be taken to have been received when the electronic communication by which the document is received enters an information system under the control of the recipient. The draft Bill also provides that in the absence of agreement to the contrary, acceptance of any offer, amendment, cancellation or revocation will be of legal effect when expressed by means of electronic communications
Although this provides some clarification in relation to the timing of offer and acceptance sent electronically, it does not solve the legal problem of whether acceptance of a contract entered into through electronic means is effected once the acceptance is sent (the postal rule) or whether it is effective once received. However, it would appear that the acceptance will take effect if, when sent by the offeree, it enters into an information system under the control of the recipient.
Thus there is no requirement for the offeror to have actual receipt of the acceptance. In the absence of a technological fault preventing the message of acceptance entering into the information system controlled by the offeror, it would appear that the contract is created by the electronic assent of the offeree. Clearly this issue merits clarification and discussion.
The draft Bill recognises current encryption technology, and is flexible enough to cover future technologies in this area. Ireland’s policy on this area is based on recognition of the need for a balance between the privacy rights of individuals, the need to provide security of communications and the development of the cryptographic industry in Ireland. It is hoped that the Bill will implement the Proposal for an EU Directive on Electronic Signatures, which has not yet been finalised at EU level. However, it may well be that the Irish Bill will become law before the proposed EU Directive is in place. Many of the definitions in the draft Bill have been taken from the proposed EU Directive.
The draft Bill provides that an electronic signature or an advanced (encrypted) electronic signature will be admissible in the same way as a hand-written signature. The parties may exclude the application of the legislation through agreement. Where specific legislation requires that a document bear a seal or that witnesses be present (for example, in the case of wills), these requirements will not apply to electronic agreements.
Provision of certification services
A certification system provides that a "trusted third party" act as intermediary between parties communicating electronically. The intermediary would operate a "key" escrow system and would certify that a given key is linked to an individual or corporation.
The government proposes that a voluntary certification system be put in place to be set out by regulation. It is envisaged that a National Accreditation Board be established to administer the voluntary accreditation system.
This voluntary system is in line with Article 3 of the proposed EU Directive. The proposed Directive requires that any system be "objective, transparent and proportionate". Article 3(2) provides that member states establish an appropriate system of supervision of certificate providers.
The Department of Public Enterprise is of the view that it may be necessary to provide for a system of mutual recognition of certification procedures throughout the EU.
Liability of CSPs
CSPs would be liable for "any damage caused to any person who reasonably relies on such certificates, unless the certificate service provider proves that he has not acted negligently". The provider may, in issuing the certificate, place a limit on his liability. There are several issues here that the Department of Public Enterprise will seek to clarify before drafting legislation. In this regard, the draft Bill poses the following questions.
- Would it be convenient to limit the liability of CSPs in order to promote their establishment?
- To what extent will contractual liability exclusions be applied?
- To what extent will liability cover be priced into certification products and will this effect market up-take?
- How can persons relying on certified signatures claim damages?
The question of liability exclusion will arise in circumstances such as where the provider loses control of the private key used to sign certificates or where the algorithm used to produce the signatures is broken and forged. The availability of competitively priced insurance cover for CSPs may be the central factor in determining the success or failure of this new business.
Service of Proceedings by electronic means
The Draft Bill provides that service of any notices under the Act may be provided in electronic form by means of electronic mail as an alternative to the usual forms of service.
The Department of Public Enterprise of Public Enterprise of Public Enterprise is seeking opinions from interested parties as to the feasibility of this provision. The section provides that notice will be effected by "addressing it to the person by name and sending it by electronic mail to him or her". The section would appear to imply that an electronic mail address is one that the addressee ordinarily accesses. The pivotal question of course will be the integrity of electronic mail systems.
Undoubtedly, this will have repercussions particularly in the area of consumer law. For example, a document required under consumer law to be seen and reviewed by a consumer will be deemed to have been received by them simply when the message enters into their information system. This would suggest that the document would be deemed by law to have been sent to them and received by them irrespective of whether they had in fact read them.
Electronic writing, signatures and contracts as evidence
The draft Bill provides for the admissibility of electronic contracts, electronic writing, electronic originals and electronic signatures in legal proceedings. This is in accordance with Article 5 of the draft EU Directive on Electronic Signatures and the UNCITRAL model law on Electronic Commerce.
The draft Bill provides that where there is a requirement under law that contractual information should be presented or retained in its original form that requirement will be met by electronic communication if there is "reliable assurance" that the information contained in the original document has not been altered in any way on route to being created in electronic form and where the information held electronically is capable of being displayed.
The Department of Public Enterprise has proposed criteria for assessing document integrity. The criteria will be whether the information has remained complete and unaltered apart from the addition of any endorsement or other changes which arise in the normal course of the communications, storage and display and the standard of reliability required will be assessed in the light of the purpose for which information was generated and in the light of all relevant circumstances. This definition, in particular the toleration of changes arising in the normal course of communications, storage and display may lead to ambiguity and lack of certainty.
Domain Name Registration
New regulations have been proposed in the Bill in relation to the registration of domain names in Ireland, although the consultation paper emphasises that the purpose of this particular provision in the draft Bill is to elicit observations on this topic, and not to introduce immediate regulation. At international level, this issue has recently been the subject of a lengthy consultation process carried out by the World Intellectual Property Organisation. The stated intention is to provide for rules in relation to, amongst other things:
- The designated registration authority or authorities,
- The period during which such registrations continue in force,
- The manner in which, the terms on which, and the period or periods for which such registrations be renewed,
- The circumstances and manner in which such registrations may be granted or refused by the registration authorities,
- The right of appeal processes,
- The fees, if any, to be paid on the grant or renewal of such accreditations and the time and manner in which such fees are to be paid,
The fines contained in the Bill are relatively high compared with those contained in most Irish legislation, from IR£1500 to IR£80,000 with the possibility of jail sentences ranging from one to five years.
The publication of the draft Bill is a welcome development. The pro-business focus of the Bill, with its emphasis on giving legal certainty to electronic contracts and signatures is particularly refreshing, as is its openness to the possibility of self -regulation in this rapidly growing industry. The consultation process will now continue and the Department of Public Enterprise has invited comments on the draft Bill from all interested parties. It is expected that the Bill will become law by Christmas.
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