Annotated Bibliography

RECENT DEVELOPMENTS

The growth and development of e-commerce: an analysis of the electronic

signature law of Sri Lanka

Dr Kanchana Kariyawasam*

The Department of Accounting, Finance and Economics, Griffith University, Brisbane, Australia

A significant event in the legal regulation of e-commerce in Sri Lanka was the enactment of the Electronic Transactions Act in 2006. The objective of this important Act is to facilitate commercial and financial activity by removing barriers to electronic transactions and by preserving the right of individuals to engage in freedom of contract unimpeded by government regulation and bureaucracy. This objective is secured in the legislation by ensuring that transactions conducted electronically are regarded as of equal validity or legitimacy as normal paper (or documentary) transactions. Undoubtedly, the Electronic Transactions Act is a significant and quite innovative piece of legislation – one that that has considerable potential to both stimulate and further enhance economic development, as well as commercial and free enterprise activity, in a developing country like Sri Lanka. Before any form of private-sector activity or financial activity can be conducted, the necessary institutional and legal underpinnings must be established. This Act appears to be the first step towards providing the foundations of a flourishing free-market economy in Sri Lanka. In light of these issues, this article provides an overview of the fundamental provisions

of the Act and outlines its significance for the country’s emerging e-commerce activity. It draws attention to certain inadequacies of the Act and briefly focuses attention on the impact of the new e-commerce laws on the economic success of Sri Lanka. This article also briefly explores other associated and parallel legislative developments in Asia that aim to promote e-commerce in the region with a view to drawing out common and emergent themes in relation to the regulation of e-commerce in developing nations.

Keywords: certificate authorities; digital signatures; electronic commerce; legislation

Introduction

The rapid expansion of electronic commerce 1 and the emergence of a more market-

oriented economy in Sri Lanka promoted the creation and adoption of the Electronic Transactions Act which was formally enacted into legislation in 2006. This Act purported to provide a framework of rules and regulations regarding online contract formation; thus it sought to implement, to regulate and to govern online transactions. The Sri Lankan government aimed to extend the scope of commercial regulation from one that focused purely on paper-based communication, to one that also governed electronic forms or mediums of (commercial) communication. The effect of this was to

*Email: [email protected]

Information & Communications Technology Law

Vol. 17, No. 1, March 2008, 51–64

ISSN 1360-0834 print/ISSN 1469-8404 online

� 2008 Taylor & Francis DOI: 10.1080/13600830801889301

http://www.informaworld.com

reduce uncertainty regarding the legal consequences and implications of electronic information. In effect, the Act now enables traders to utilise electronic signatures in contractual dealings; these transactions could involve, for example, offers and acceptances. The legal recognition and acknowledgement of these electronic signatures undoubtedly enhances public confidence in relation to the use of e-commerce and the use of this electronic medium in facilitating commercial intercourse. In the era of globalisation, it is imperative that a developing country like Sri Lanka establishes clear and specific strategies and guidelines to enhance e-commerce – ones that can facilitate its growth and development. In light of these issues, the objective of this article is to investigate the impact and the importance of the recently enacted Electronic Transactions Act on Sri Lankan e-commerce. The underlying contention is that electronic commerce holds many important and instrumental benefits which can, in fact, be exploited by Sri Lankan policy-makers – particularly by small- and medium- sized enterprises. These benefits can lead to significant improvements in the efficiency and the productivity of the Sri Lankan economy and contribute to its integration in the increasingly globalised international economy.

Background

It is beyond dispute that Sri Lanka needs to embrace the enactment of the Electronic Transaction Act because this piece of legislation accords legal recognition to electronic commerce by ensuring the security and reliability of electronic communications. The Act closely follows the Model Law on e-commerce and electronic signatures of the United Nations Commission on International Trade Law (UNCITRAL), which has provided the template for the enactment of various electronic laws in many countries.

2 In essence, the

new Act purports to recognise and regulate the formation of contracts; the creation and the exchange of data messages; and other communications in electronic form.

3 It should

also be noted here that the Act does not seek to regulate purely private-sector transactions, but its regulatory reach also extends to the public or governmental sector. In particular, the new legislation facilitates the electronic filing of documents within government and also provides for the appointment of a certification authority and for the accreditation of Certification Service Providers.

The Act, however, is primarily concerned with electronic transactions and electronic documents. Its according of legal recognition to the electronic medium of communication is quite emphatic and it stipulates that no electronic document, record or other com- munication should be denied legal effect, validity or enforceability on the ground that it is in electronic form.

4 The Act does not waive the basic requirements of traditional contract

law which provides that a contract, including the need for offer and acceptance, must meet the minimum requirements of the contract law. In this regard, the new Act was developed to regulate and respond to the challenges of facilitating contractual and, more generally, commercial activity online by removing barriers to trade being carried out on electronically. Precisely to what extent the Act will promote e-commercial activity in Sri Lanka in the future remains to be seen.

Key features of the Electronic Transactions Act

The objective of the Act is to facilitate the use of electronic technology and to accord equal legal status and credence to electronic documents as that which is currently accorded to

52 K. Kariyawasam

traditional paper-based documentation. In this particular respect, the Act seeks enshrine and codify four major principles:

(1) to facilitate electronic commerce, and eliminate barriers to electronic commerce resulting from legal uncertainties;

(2) to encourage the use of reliable forms of electronic commerce; (3) to facilitate electronic filing of documents with the government and to promote

efficient delivery of government services by means of reliable electronic records; (4) to promote public confidence in the authenticity, integrity and reliability of data

messages, electronic documents, electronic records or other communications. 5

The Act defines the electronic signature 6 as ‘any letters, numbers, symbols, images,

characters or any combination thereof in electronic form, applied to, incorporated in or logically associated with an electronic document, with the intention of authenticating and/ or approving the same, in order to establish authenticity or integrity, or both’.

7 Hence, it

gives electronic signatures the same legal effect and authority as a manual signature – an important policy requirement to ensure trust in electronic transactions.

Even though there is a difference between digital and electronic signatures, Sri Lanka only accords legal recognition to the latter. It is unclear, however, whether a digital signature will be held to be legally valid. It is stated that an electronic signature can be any electronic mark signifying agreement.

8 Digital signature is simply a term for one

technology-specific type of electronic signature. 9

Yet it would seem that the most promising electronic-signature technology comes in the form of ‘digital signatures’,

10

which use public key cryptography. 11

It is argued:

It is important to distinguish between a digital signature and other types of electronic signatures. A digital signature is not the same as an electronically-stored handwritten signature. A digital signature is a secure communication unlike many other types of electronic signatures . . . The digitally signed contract is legally valid and can be read only by the intended recipient.

12

If this is the case (and I suggest it is), then it appears to be essential that utilisation of these digital signatures be recognised and incorporated into the legislative framework. If policy- makers give legal acknowledgement to electronic authentication then the ultimate effect of this will be to guarantee data integrity and the non-repudiation of transactions. Hence, commercial and financial activity and economic development will, indeed, be ultimately facilitated.

The Act also affirms that a data message, an electronic document, electronic record or other communication shall not be denied legal effect, validity or enforceability solely on the specific ground that it is in an electronic form.

13 This provision closely corresponds

with Art 5 of the UNCITRAL Model Law. The legally acceptable functional equivalent of paper-based signatures enables parties to conduct their business by means of electronic transactions without any fear or apprehension of technology and it also has the important effect of further enhancing confidence on the part of individuals and wider business communities to undertake their commercial transactions online.

Section 4 of the Act provides for the electronic form of documents to have equal legal status to those previously required to be written manually.

14 However, it also provides a

rider which stipulates that the electronic version must be accessible for subsequent or future reference. In effect, this provision provides a functional equivalent to writing if it is

Information & Communications Technology Law 53

able to be accessed in the future. The underlying rationale and purpose of the provision detailed here is to stipulate the requirements for an electronic signature to be regarded as legally equivalent to, and as authoritative as, a handwritten signature.

The Act further states that forming or establishing a contract through the mechanism of offer and acceptance may be undertaken through electronic means.

15 Although the Act

accords legal recognition to electronic contracts, the parties must still satisfy the minimum or threshold requirements (such as offer and acceptance, and the need for consideration) for a contract. Hence, the Act – although facilitating commercial activity online – does not diminish or extinguish any of the essential and fundamental requirements that normally govern and pertain to contract law. All the above provisions of the Act will surely provide customers with the confidence that their transactions are recognisable and are authenticated by law.

Section 8 of the Act describes the modalities for the use of electronic records and electronic signatures in government institutions and their statutory instrumentalities and the procedures to be followed to give effect to such activities. Accordingly, the government is able to transact business electronically and this could include the granting of any licence, permit or approval; receiving or making payments of money; as well as (government) procurement or other public-sector transactions. Section 8(2) of the Act affords wide powers to the Minister in charge of the subject of information and communication technology to introduce appropriate regulations for the purpose of authorising or facilitating the use of electronic communications or electronic records in government offices. The Act also recognises the Government Gazette in electronic form.

16

These provisions allow the public sector to capture the potential benefits that may be gained by the online provision of governmental services. The use of this electronic medium thereby increases the availability and will lead to the widespread use of public transactional services throughout the country.

The Act further stipulates that an electronic record shall be attributed to the originator.

17 Accordingly, unless otherwise agreed between the originator and the

addressee of an electronic record, an electronic record is that of the originator if it was:

(1) sent by the originator; (2) sent with the authority of the originator; or (3) sent by an information system programmed by or on behalf of the originator to

operate and to send the electronic record automatically. 18

Where parties do not specify that the acknowledgement be given in a particular form or method, it may be given by any communication to the addressee – automated or otherwise

19 – or by any conduct of the addressee which is sufficient to indicate to the

originator that the electronic record has been received. 20

If the originator states that the electronic record is conditional on receipt of the acknowledgement, the electronic record is of no effect and will thus be treated as if it had never been sent, until such time as the acknowledgement is received.

21 This creates new legislative rules for the distribution of

commercial risk between the originator and the addressee of data messages in electronic commerce.

Section 14 deals with the time of dispatch of a data message. This relies upon the data message entering an information system outside the control of the sender.

22 Where the

originator and the addressee are in different time zones, the tests set out in s 14 have the potential to create the situation where a message may be deemed to have been received by the addressee before it was sent by the originator. Accordingly, an electronic record is

54 K. Kariyawasam

deemed to be dispatched at the place where the originator has its place of business and is deemed to be received at the place where the addressee has its place of business.

The Act does, however, provide for exclusions or exemptions from legal recognition when dealing with electronic documents. The exclusions include wills; licences for telecommunication systems; negotiable instruments; powers of attorney; trusts created by wills; any contract for sale or the conveyance of immovable property or any interest in such property; and documents of (property) title.

23 Additional exclusions may be created

by order of the Minister. 24

This section makes it mandatory for some documents to be in writing, thereby preserving in some respects the traditional legal distinction between written and electronic communication.

According to s 6 of the Act, certain documents, records, or information can be retained in the form of electronic records if the following conditions are satisfied:

(1) the information contained in the electronic form is accessible so as to be usable for subsequent reference;

(2) the data messages, electronic document, electronic record or communication is retained in the format in which it was generated, sent or received, or in a format which can be demonstrated to represent accurately the information originally generated, sent or received; and

(3) such information as enables the identification of the origin and destination of an electronic record and the date and time when it was sent or received, is retained.

The above provision permits electronic information to be retained regardless of whether the information was originally in the form of a paper document in the first place. The Act also defines several terms and most of these definitions come from the UNCITRAL Model Law. For example, the Act defines ‘data message’ as information generated, sent, received or stored by electronic, magnetic, optical or other similar means, which is a definition that is identical to that given by the Model Law. The wider adaptation of the principles of the UNCITRAL Model Law thereby enables Sri Lanka to harmonise legal standards with international levels.

Overall, the Act facilitates the use of electronic communications in transactions by removing existing legal barriers to electronic commerce. The Act, in fact, offers a simple and quite ingenious solution to the regulatory and legal challenges that are raised by emerging electronic technologies. Immense benefits are inherent in this new law and the technology that it purports to regulate. It will undoubtedly stimulate growth in electronic commerce and trade. It is important for policy-makers to understand the fundamental point that an appropriate underlying legal and institutional framework is essential if the overall economic and commercial development of Sri Lanka is to proceed. Even though Sri Lanka is far behind in terms of information technology infrastructure, the law must facilitate and encourage the growth of electronic commerce by removing uncertainty with regard to the legal recognition of e-commerce.

Inadequacies of the Act and further reforms

In general, the Act has provided some comfort to businesses as to the reliability and the enforceability of their electronic dealings. However, despite such advantages, the Act has numerous drawbacks and it fails to address a number of important issues of contract formation. In particular, the Act does not acknowledge or accept foreign certifica- tion authorities. Hence, it remains uncertain whether certificates issued by foreign certifi- cation authorities are recognised in Sri Lanka. The certificates from foreign certification

Information & Communications Technology Law 55

authorities will need to be as valid as those from local certification authorities when such certificates are accepted by a certification authority registered in Sri Lanka under international agreements, (or under approval from another foreign authority registrar similar to the Directorate). If such certificates are not recognised, e-commerce conducted on a cross-border basis will be unnecessarily limited in scope. Legislative initiatives should be established to enable acceptance of foreign certification authorities because it is vital that e-commerce conducted cross-border be recognised.

Nor does the Act address some highly pertinent issues integral to the development of e- commerce, such as privacy, secure electronic-payments systems, and the strengthening of data privacy. These measures need to be addressed to facilitate a more secure electronic environment for consumers. Especially as when dealing with electronic transactions, customers are concerned about the privacy of their personal information on the Internet. Thus, the personal and data subject identity must be subject to a special protection, to a national privacy scheme or to separate privacy legislation in a way that enables both consumers and businesses to benefit from e-commerce. In particular, such developments need to be introduced in relation to establishing secure methods for paying online and which create the level of trust that is normally found in face-to-face transactions. The protection of personal privacy is an important element in developing consumers business and this issue needs to be addressed very carefully.

The Act recognises that online transactions are valid, but contains no specific provision dealing with consumer protection. The Act is silent about online consumer protection in relation to, for example, information disclosure, delivery, transaction confirmation, cancellation and refund policy. Consumers engaging in e-commerce should receive clear and efficient protection and the Act must establish consumer trust in e-commerce. It is argued that ‘without the confident e-consumer, there would be no e-commerce. Thus it is imperative to ensure that online traders observe specific rules and guidelines to allay the fears of the consumer and promote ethical online transactions.’

25 Consumer protection is

vital for the building of trust in the online environment in Sri Lanka. 26

The Act does not address intellectual property rights, such as digital copyright issues. E-commerce has a tremendous impact on copyright and related issues, and the scope of copyright is affecting how e-commerce evolves.

27 Specifically, commerce on the Internet

often involves the use, sale, and licensing of intellectual property. 28

As it is argued:

Internet commerce raises a number of potential copyright problems. For example once copyright materials has been place [sic] on the Internet its further use and dissemination may be difficult to control. Copying is simultaneously both easy and inexpensive to carry out and both difficult and costly to detect.

29

It is therefore essential that digital technology bolsters the basic doctrine of copyright and related rights and assures perfect control over copyrighted content via digital rights. Some provisions need to be introduced into the Act to ensure effective protection and enforcement of rights in the digital era. Otherwise, the Copyright Act of Sri Lanka must be further amended to extend copyright protection into the online environment.

Further, the Act is conspicuously silent in relation to the taxation of online transactions. The electronic transactions may have negative effects on tax revenues and, therefore, existing tax and duty regulations and procedures should be applied to online transactions.

In addition, the interpretations of general terms in the Act are not appropriately placed within the body of the Act – they should be moved to the beginning of the Act, rather than appearing at the end.

56 K. Kariyawasam

These gaps must be addressed through amended legislation in order to enhance the legal and regulatory framework of e-commerce in Sri Lanka. Specifically, the Act needs to address security concerns by ensuring that there are reliable methods of building consumer trust and confidence in e-commerce. Internet users will be unlikely to use the Internet on a routine basis for commerce unless they have confidence that their communications and data are safe from unauthorised access or modification.

30 The laws should therefore be

aimed at keeping the confidence of the e-consumers at a high level. Moreover, new enforcement measures must be designed in relation to consumer protection, privacy and intellectual property. In addition, the government of Sri Lanka must promote the development of the legal and business infrastructure necessary to implement secure electronic commerce.

Other legislative initiatives in Asia

This section broadens the focus of this article to a more comparative perspective and seeks to draw attention to similar or parallel developments in the regulation of e-commerce in certain Asian countries. It should be pointed out that specific laws addressing e-commerce have been enacted by several countries in Asia, including China, Singapore, Malaysia, the Philippines, India, Hong Kong, Thailand, and Korea. The object of these various legislative frameworks is to provide legal security and certainty for the utilisation of electronic signatures over the Internet. All the countries have the same objectives; however, there are some disparities in terms of the scope, form and principles of their regulations.

China enacted electronic transactions legislation which became effective on 1 April 2005. The legislation is expected to increase and facilitate rapidly growing online business by promoting electronic commerce. This Act aims to regulate Acts associated with electronic signatures; to provide legal validity to electronic signatures; and to protect the lawful rights and interests of relevant parties.

31 Article 2 of the Act defines the electronic

signature as ‘data in electronic form contained in or attached to a data message and that is used to identify the signatory and indicate his endorsement of the contents of such document’.

32 The law provides that a reliable electronic signature has the same legal effect

as a signature made by hand or seal. A negative aspect of the law is its lack of a set guideline for identification requirements for purchasers of a reliable electronic signature, more commonly known as a digital signature, from electronic certification service providers.

33 Despite the few negative aspects, the electronic signatures law should

encourage the development of e-business in China. 34

With the Electronic Transactions Act 1998 (ETA), Singapore was one of the first countries in the world to enforce a law derived from both the UNCITRAL Model Law on Electronic Commerce as well as the Illinois Electronic Commerce Security Act and the Utah Digital Signature Act.

35 The ETA aims to facilitate electronic communications; to

eliminate barriers to electronic commerce; to facilitate electronic filing of documents with government agencies and statutory corporations; to promote efficient delivery of government services; to minimise the incidence of forged electronic records; to help to establish uniformity of rules, regulations and standards regarding the authentication and integrity of electronic records; and, finally, to promote public confidence in the integrity and the reliability of electronic commerce.

36 The ETA also aims to facilitate and to

promote public confidence in electronic commerce and enable the business community to use electronic transactions in their day-to-day activities, all of which is essential to the success of Singapore economy.

37 Moreover, s 11(2) of the ETA clarifies that where an

Information & Communications Technology Law 57

electronic record is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that an electronic record was used for that purpose. The ETA grants legal validity and sanctity to electronic signatures and gives predictability and certainty to contracts formed electronically.

38 In addition to that, the

Act also ensures legal certainty in the usage of the Internet by clarifying intellectual property rights for copyright owners, but it is yet to review the existing intellectual property laws, such as the Copyright Act, to ensure they can adequately deal with new technology. It is said that even though the ETA has been around since 1998, there have yet to be any reported cases to test any of its provisions.

39

Malaysia’s Digital Signature Act 1997 (MDSA), which came into effect on 1 October 1998, provides legal certainty for secure online transactions through the use of digital signatures. It provides a framework for the licensing and regulation of certification authorities and the recognition of digital signatures.

40 As it is digital signature legislation,

the MDSA primarily focuses on digital signatures and certification authorities. 41

It states that in the absence of any written law to the contrary,

(a) a document signed with a digital signature in accordance with this Act shall be legally binding as a document signed with a hand-written signature, an affixed thumb-print or any other mark; (b) a digital signature created in accordance with this Act shall be deemed to be a legally binding signature.

42

It only gives legal recognition to ‘digital signature’ and does not cover other forms of electronic signatures in its digital signature legislation. Section 64 of the Act further provides that a digitally signed document will be treated as a written document. The copies of a digitally signed document are also enforceable as an original.

43 In addition, s 4(1)

states that licensing by a Certification Authority is mandatory in Malaysia. This implies that a digital signature is legally valid only if it is certified by a licensed Certification Authority.

44 If an unlicensed Certification Authority were used, the validity of the digital

signatures would be governed by a contract between the contracting parties, instead of by the MDSA.

45 The Act further states that the issue of formation of electronic contracts can

be resolved by referring to the Malaysia Contract Act 1950 and English common law. 46

The Malaysian government has designed laws specifically to protect online intellectual property rights. For example, the Copyright (Amendment) Act 1997 extended the powers of the copyright tribunal that regulates licences for reproducing copyrighted works; provided protection to educational works, entertainment products and online informa- tion; and amended definitions such as ‘broadcasting’ to cover electronically disseminated information in general. The amendments give multimedia developers full intellectual property protection through online registration of works, licensing and royalty collection.

47 However, Malaysia’s income tax laws do not at present cover business

conducted over the Internet. Thus, income from online business is not legally subject to income tax. Even though the Act provides an avenue for secure online transactions through the use of digital signatures, the Malaysian Consumer Protection Act specifically excludes protection for electronic transactions.

48

The Philippines enacted its Electronic Transactions legislation in 2000 and its aim is to provide legal recognition to electronic data messages and electronic documents; facilitate domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information through the utilisation of electronic, optical and similar media, modes; recognise the authenticity and reliability of electronic documents related to such activities; and promote the universal use of electronic transactions in government and by the general public.

49 The Philippine law was patterned after the

58 K. Kariyawasam

UNCITRAL Model Law on Electronic Commerce adopted by the United Nations Commission on International Trade Law in 1996.

50 Similar to Acts of other countries, the

Philippines Act offers legal recognition to electronic writing or documents and data messages, and provides penalties for unlawful use thereof.

The Indian Information Technology Act 2000 (ITA) came into effect on 17 October 2000 and is based on the Model Law on E-Commerce adopted by UNCITRAL. Its objective is to provide legal recognition for electronic transactions and digital signatures, regulation of Certification Authorities and cyber-conservations, by establishing an Adjudicating Authority and the Cyber Regulatory Appellate Tribunal. Section 5 of the ITA gives legal recognition to digital signatures

51 in that it provides that this recognition is

available to digital signatures that are affixed in the manner prescribed by the central government.

52 It covers not only Internet commerce, but also transactions through other

electronic media. Unlike other legislation, the ITA aims to address the related issues of electronic crimes and evidence and to enable further regulation as regards electronic funds transfers.

53 Further, it amends the Indian Penal Code 1860, the Indian Evidence Act 1872,

Bankers Book Evidence Act 1891 and the Reserve Bank of India Act 1934. The main purpose of these amendments is to address the related issues of electronic crimes and evidence, and to enable further regulation as regards electronic funds transfers. It is argued that:

This Act is a set [sic] too far, the over-complex provisions relating to contract formation, the ties to particular technology in the regulation of digital signatures, the over elaborate mechanisms for controlling certification authorities and the attempts to define the technology stand in stark contrast to more minimalist approaches adopted in other jurisdictions.

54

Hong Kong’s Electronic Transactions Ordinance 2000 aims to provide a clear legal framework for electronic transactions by promoting and facilitating the development of e-business in Hong Kong. The Ordinance aims to:

(1) remove any legal impediments to the conduct of electronic transactions; (2) provide certainty and security in the conduct of electronic transactions and thereby

enhance the confidence and trust of the public in carrying out such transactions; (3) adopt a technology-neutral approach to cope with rapid technological changes; (4) adopt a minimalist regulatory approach so as not to unnecessarily constrain the

development of electronic commerce in the private sector.

Hong Kong gives legal recognition to the digital signature standing alone. It is argued that digital signature is currently the only technology that is technically mature enough to provide a quality of security to satisfy the need for user authentication, to ensure the integrity and confidentiality of data and to protect non-repudiation of transactions’.

55

However, the Ordinance has certain inadequacies, ‘such as failure to deal with foreign certification authorities, failure to impose adequate legal sanctions on the subscribers of the certification authorities, and failure to deal with insolvency of the certification authorities’.

56

Thailand’s Electronic Transactions Act (TETA) came into force in 2002 and is based on the UN Model Law on Electronic Commerce 1996 and on the Electronic Signatures Act 2001. (Both the UNCITRAL Model Laws on Electronic Commerce (1996) and Electronic Signatures (2001) were intended to assist countries in the framing of legislation that would enable and facilitate electronic contracting.) It is technology-neutral in that it does not require signatures to be made or documents to be retained through the use of a

Information & Communications Technology Law 59

specific technology. 57

As does legislation of other countries, this Act regulates more extensively the electronic signature that has the same legal validity as the paper documents. Its main aims are to (i) encourage the establishment of infrastructure, including a legal and security base to enhance e-commerce growth in the domestic market; (ii) facilitate the flow of e-commerce transactions by eliminating obstructive regulations, supporting fair and competitive circumstances and providing consumer protection; (iii) develop cooperation between the government and the private sector on e-commerce roles and national interests.

58 Under Thai law, certain documents and transactions must be

made in writing, evidenced in writing, or signed by the parties; for example, loan agreements, receipts, agreements for the hire or lease of land or buildings, guarantees, settlement agreements, insurance policies, hire purchase agreements, contracts for the sale of land or buildings, mortgage agreements, documentation for the appointment of an agent, and other documents and agreements.

59 In general, TETA made electronic

transactions secure and reliable and this had the ultimate effect of encouraging the business community to conduct its business and commercial activity electronically. However, it has yet to address issues related to consumer protection law, intellectual property rights, tax laws, and electronic crimes.

The government of the Republic of Korea enacted both the Electronic Transactions Act and the Digital Signature Act in 1998 with the specific purpose of giving electronic documents legal validity equivalent to that of more conventional paper documents.

60 The

Digital Signature Act 61

was enacted to achieve both the security and reliability of electronic documents and thereby facilitate e-commerce.

62 It is argued that ‘the greatest

significance of the Electronic Transactions Act and the Digital Signature Act is that they provide a stable legal platform for electronic merchants and buyers so that they can use digital media in commerce with confidence’.

63 Both Acts aim to stimulate the use of

electronic communications by encouraging business communities to do more business online. The Act provides that electronic signatures shall be treated in the same manner as hand-written records and signatures.

The rapid growth in e-transactions in Asia has led to the removal of existing legal and institutional barriers to the legal efficacy of electronic data. These new laws will spur the growth of e-business in Asia and also prompt legal certainty and legal confidence among merchants and buyers in respect of their electronic communications and transactions. Undoubtedly, the necessary legal and institutional underpinnings are now in place to enable the various Asian nations to more generally respond to, and facilitate, electronic commercial activity. The introduction of these legislative initiatives in Asia will successfully facilitate the growth and the development of e-commerce in the region which will in turn promote Asia’s economic growth and development more generally.

Conclusion

Sri Lanka currently lacks telecommunications facilities and the necessary infrastructure to take full advantage of e-commerce. However, as has been shown, numerous policies have been introduced recently to support the establishment and promotion of Sri Lankan information infrastructure, and these include a focus on new ICTs

64 such as the Internet

and e-commerce. It is imperative to understand that the benefits of e-commerce cannot be reaped merely by enacting laws or imposing regulations or policy reforms. The infrastructure must be in place to ensure a secure environment for commercial transactions to take place. However, in short, significant barriers to the growth of Internet commerce have been removed by the introduction of the new Act, which has been welcomed by the

60 K. Kariyawasam

Sri Lankan business community. It would seem undeniable that this legislation will encourage traders and merchants to use electronic transactions, conduct business electronically, and negotiate their contracts through email. This may also reduce administrative activity and the costs and delays associated with the use of paper documents, and allow consumers to complete transactions more quickly and efficiently. Productivity therefore can be expected to increase with the promotion of e-commercial technology and regulatory frameworks.

In conclusion, the enactment of a regulatory framework for government e-commerce is likely to have a significantly beneficial impact on developing countries’ economies. It can achieve competitiveness in the market place; promote use of e-commerce on a local, national and regional basis; and lead to economic growth and sustainable development in countries. However, to gain the maximum benefit inherent in this technology and the laws that underpin it, developing countries must increase awareness within their respective nations; develop appropriate infrastructure; address legal issues and security problems associated with e-transactions; and be mindful of the need to enhance national and international policies that encourage competition and investment. In short, more needs to be done before we can fully exploit the latent benefits which are inherent in e-commerce technology.

Notes

1. ‘Electronic commerce has the ability to eliminate the time span between ordering, delivery invoicing and payment by using the world wide web’, Swindells C et al., Legal regulation of electronic commerce, The Journal of Information, Law and Technology (JILT), 1998 (3). Available at5http://elj.warwick.ac.uk/jilt/98-3/swindells.html4. Accessed 23 October 2006.

2. Sri Lanka signed the UN Convention on the use of Electronic Communication in International Contracts known as Electronic Contracting Convention at the special even held at the UN Headquarters on 6 July 2006.

3. Section 2 of the Sri Lanka Electronic Transactions Act 2006.

Accordingly, the objectives of the Act shall be (a) to facilitate domestic and international electronic commerce by eliminating legal barriers and establishing legal certainty; (b) to encourage the use of reliable forms of electronic commerce; (c) to facilitate electronic filling of documents with Government services by means of reliable forms of electronic communications; and (d) to promote public confidence in the authenticity, integrity and reliability of data messages, electronic documents, electronic records or other communications.

4. Section 3 of the Sri Lanka Electronic Transactions Act 2006. 5. Section 2 of the Sri Lanka Electronic Transactions Act 2006. 6. Article 7 of the 1996 UNCITRAL Model Law for electronic Commerce specifically addresses

electronic signatures. The law assumes that the two basic functions of a signature are to: (1) identify the author and (2) confirm that the author approved the contents of a document.

7. Section 26 of the Sri Lanka Electronic Transactions Act 2006. 8. Lupton, E (1999) The digital signature: your identity by the numbers, The Richmond Journal

of Law & Technology, 2. Available at5http://www.richmond.edu/jolt/v6i2/note2.html4. Accessed 2 May 2007.

9. Smedinghoff, T J (1999) Electronic signature legislation. Available at5http://library.findlaw. com/1999/Jan/1/241481.html#note204. Accessed 16 April 2007.

10. Digital signatures can be referred to as advanced or secure Electronic Signature as a result of a cryptographic operation.

11. The Electronic Signatures Act requirements. Available at5http://www.naifa.org/advocacy/ privacy_guide/documents/privacy_appendix11.pdf4. Accessed 10 November 2006.

12. Op cit, fn 8.

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13. Section 3 of the Sri Lanka Electronic Transaction Act 2006. 14. Notwithstanding the fact that the provisions of written laws for the time being in force in

Sri Lanka attach legal validity to certain instruments, only if such instruments have been reduced to writing, such requirement shall be deemed to be satisfied by a data message, electronic document, electronic record or other communication in electronic form if the information contained therein is accessible so as to be usable for subsequent reference.

15. Section 11 of the Sri Lanka Electronic Transaction Act 2006. It states that in the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed in electronic form. A contract shall not be denied legal validity or enforceability on the sole ground that it is in electronic form.

16. According to s 9 of the Sri Lanka Electronic Transaction Act 2006, where any Act or enactment provides that any Proclamation, rule, regulation, order, by-law, notification, or other matter shall be published in the Gazette, then such requirement shall be deemed to have been satisfied if such rule, regulation, order, by-law, notification or other matter is published in an electronic form of the Gazette.

17. Section 12 of the Sri Lanka Electronic Transaction Act 2006. 18. Ibid. 19. Section 13 (a) of the Sri Lanka Electronic Transaction Act 2006. 20. Section 13 (b) of the Sri Lanka Electronic Transaction Act 2006. 21. Section 13(2) of the Sri Lanka Electronic Transaction Act 2006 states that where the originator

has stipulated that data message, electronic document, electronic record or other communica- tion shall be binding only on receipt of an acknowledgement of receipt of such data message, electronic document, electronic record or other communication by him, then, unless acknowledgement has been so received, the data message, electronic document, electronic record or other communication shall be deemed to have never been sent by the originator.

22. Section 14(1) of the Sri Lanka Electronic Transaction Act 2006 states that unless otherwise agreed to between the originator and the addressee, the dispatch of a data message, electronic document, electronic record or other communication occurs when it enters an information system outside the control of the originator, or if the data message, electronic document, electronic record or other communication has not left an information system under the control of the originator or of the party who sent it on behalf of the originator, the time when the data message, electronic document, electronic record or other communication is received.

23. According to s 23 of the Sri Lanka Electronic Transaction Act 2006, the provisions contained in this Act shall not apply to:

(a) the creation or execution of a will, or any other testamentry disposition by whatever name calld; (b) a license for a Telecommunication system issued under subsection (6) of Section 17 of the Telecommunications Act, No. 25 of 1991; (c) a Bill of Exchange as defined in subsection (1) of Section 3 of the Bills of Exchange Ordinance (Chapter 82); (d) a Power-of-Attorney as defined in Section 2 of the Power of Attorney Ordinance (Chapter 122); (e) a Trust as defined in the Trusts Ordinance (Chapter 87) excluding a constructive, implied and resulting trust; (f) a contract for sale or conveyance of immovable property or any interest in such property; (g) or any other document act or transaction specified by the Minister by regulations made under Section 24.

24. According to s 24(1) of the Sri Lanka Electronic Transaction Act 2006,

The Minister may, in consultation with the Minister in Charge of the subject of Information and Communication Technology, make regulations in respect of any matter required or authorized by this Act to be made, or for the purpose of carrying out or giving effect to the objectives of this Act, as specified in subsection (2).

25. Kaur, K (1999) Consumer protection in e-commerce in Malaysia: an overview. Available at5http://www.une.edu.au/asiacenter/KKaur.pdf4. Accessed 25 June 2007.

26. Alliance for Global Business (2002) Action Plan for Electronic Business Prepared by Business with Recommendations to Governments 24. Available on the International Chambers of Commerce website 5http://www.witsa.org/papers/3rdEd-GlobalActionPlan.pdf4; quoted in De Villers, M R H (2002) Consumer protection under the Electronic Communications and

62 K. Kariyawasam

Transactions Act of 2002. Available at5http://etd.rau.ac.za/theses/available/etd-10192005- 125204/restricted/MRHdeVilliers.pdf4. Accessed 30 March 2007.

27. Nasir, A (2004) Legal issues involved in e-commerce, Ubiquity, 4(49). Available at5http:// www.acm.org/ubiquity/views/v4i49_nasir.html4. Accessed 17 September 2007; see also Barr, D D (2000) The need of a broad standard in global e-commerce, The Internet Law Journal.

28. Patterson, M (2001) Infoeconomy issues: E-commerce Law. Available at5http://www. apec.org.au/docs/paterson.pdf4. Accessed 13 November 2007.

29. Ibid. 30. Ibid. 31. Article 1 of the China Act. 32. Article 2 of the China Act. 33. Srivastava, A and Thomson, S B (2007) E-business law in China, Electronic Markets, 17(2),

126–131. 34. Ibid. 35. Phang, A et al. (1998) The Singapore Electronic Transactions Act 1998 and the proposed

Article 2B of the Uniform Commercial Code, International Journal of Law and Information Technology, 7(2), 104–105.

36. Section 3 of the Singapore Electronic Transactions Act 1998. 37. The Singapore Electronic Transactions Act addresses commercial code for e-commerce

transactions, use of electronic applications and licences for public, liability of service providers, provision for a public key infrastructure (PKI), and intellectual property rights.

38. It declares that where a rule of law requires a signature, or provides for certain consequences in the absence of a signature, that rule is satisfied by a digital signature.

39. Tan, H S K (2002) The impact of the Singapore Electronic Transactions Act on the formation of e-contracts, Electronic Communication Law Review, 9, 85–112.

40. Malaysia Information and Communication Technology, Cyber laws. Available at 5http://www.american.edu/initeb/ym6974a/legalenvironment.htm#CYBERLAWS4. Accessed 12 January 2007.

41. According to s 63 of the MDSA,

a digital signature is defined as a transformation of a message using an asymmetric cryptosystem such that a person having the initial message and the signer’s public key can accurately determine (a) whether the transformation was created using the private key that corresponds to the signer’s public key and (b) whether the message had been altered since the transformation was made.

42. Section 62(2) of the Malaysian Digital Signature Act 1997. 43. Section 65 of the Malaysian Digital Signature Act 1997. 44. Zainol, Z A (1998) Electronic commerce: A comparative analysis of the Malaysia Digital

Signature Act 1997 and the Singapore Electronic Transaction Act 1998, 15th BILETA Conference: Electronic Datasets and Access to Legal Information, Friday 14 April 2000, University of Warwick, Coventry, England.

45. Ibid. 46. Ibid. 47. Economic Intelligence Unit (2006) Overview of e-commerce in Malaysia. Available

at 5http://globaltechforum.eiu.com/index.asp?layout¼rich_story&doc_id¼8706&categoryid¼ &channelid¼&search ¼ procurement4. Accessed 12 October 2007.

48. Kaur, K (1999) Consumer protection in e-commerce in Malaysia: an overview. Available at5http://www.une.edu.au/asiacenter/KKaur.pdf4. Accessed 8 July 2007.

49. Section 3 of the Philippines Electronic Transactions Legislation 2000. 50. During its 29th session (605th Meeting) on 12 June 1996. 51. Section 2(1)(p) of the Indian Act has defined digital signature as follows: digital signature

means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with provisions of Section 3.

52. Section 10 empowers the central government to prescribe rules regarding certain aspects of digital signatures.

53. Basu, S et al. (2005) Indian Information and Technology Act 2000: review of the regulatory powers under the Act, International Review of Law Computers and Technology, 19(2), 210–211.

Information & Communications Technology Law 63

54. Basu, S and Jones, R (2002) Legal issues affecting e-commerce: a review of the Indian Information Technology Act 2000, 17th BILETA Annual Conference, 5–6 April 2002, Free University, Amsterdam.

55. See the Hong Kong Government’s Response to Comments made by the Hong Kong Computer Society, LC paper No.CB (1) 297/9-00(04), quoted in Wu, R (2000) Electronic Transactions Ordinance – Building a legal framework for e-commerce in Hong Kong, Journal of Information, Law and Technology, 1. Available at 5http://elj.warwick.ac.uk/jilt/00-1/wu.html4. Accessed 20 November 2006.

56. Ibid, Wu. 57. E-commerce (2005). Available at5http://www.tillekeandgibbins.com/publications/thailand_

legal_basics/e-commerce.pdf4. Accessed 12 December 2006. 58. Singsangob, A (2005) Thailand’s consumer protection in electronic commerce: laws and

regulations, Proceedings of the Fourth International Conference on eBusiness, 19–20 November 2005, Bangkok, Thailand.

59. Section 8 of the Thailand Electronic Transactions Act 2002. 60. Ministry of Information and Communication Republic of Korea (1999) Electronic Transac-

tions Act and Digital Signature Act: background, major provisions and implication, OECD Forum on Electronic Commerce, 12–13 October 1999, Paris. Available at 5https:// www.oecd.org/dataoecd/13/41/2092960.pdf4. Accessed 5 January 2007.

61. This Act was amended in 2001. 62. Article 1 of the Korean Electronic Transactions Act 1998. 63. See above fn 61. 64. ICT means having access to the technologies and skills that connect one to the network society.

64 K. Kariyawasam