The Fundamental Principles of E-Business Legal Framework

 

By Sonny Zulhuda

 

The increasing numbers of transactions in both international and local trade are carried out by means of electronic data interchange and other means of communication, commonly referred to as electronic commerce (e-commerce). This e-commerce seeks at the use of alternatives to paper-based methods of communication and storage of information (Chissick & Kelman, 2000). This substitution is increasingly phenomenal today where more and more applications are used to eventually turn the Internet as a virtual business sphere. Nevertheless this initiative is more technologically advanced rather that its other aspects. If the traditional trading activities are already well equipped with traditional sets of laws and regulatory frameworks, its new electronic environment is not the same. Certainly this was the motives that pushed the United Nations Commission on International Trade Law (UNCITRAL), an international body under the United Nations, to look at possible model laws that seek to equip this new environment.

 

In an electronic business environment, a good law is supposed to provide a conducive framework in which the compliance would eventually serve as facilitator instead of barrier to the business (Lallana, 2004). Thus, the first and utmost function of the law here is to legitimize the use of electronic tools and methods for the purpose of contract and commercial transactions. Furthermore, there are general principles that ought to be considered by the policymakers and lawgivers in this country in respect with the law of electronic commerce, which include: preservation of national interest, harmony with national legal system and international initiatives, a balance between potential conflicting interests such those of industry and public consumers, and last but not least, being technology neutral, and anticipative of future challenges, given the evolving nature of the Internet and information technology.

 

One of the important pillars of an e-business legal framework is the preservation of national interest. It follows that all legal and regulatory frameworks to be put for facilitating the e-business would have to observe the objectives of national comprehensive development program, be it economic, educational, social, cultural and political goals. Thus any measures of adopting principles of any international or foreign laws and practices shall not contradict this first requirement.

Another crucial work to do in providing e-business laws is that they need to ensure a harmonious framework within the existing national legal system and in accordance with current international initiatives and expectation, given the borderless nature of the e-business (The United Nations, 2004). Thus, the e-business legal framework should not undermine the existing legal and regulatory framework on commercial activities such as existing laws on contracts, sales of goods, banking, and property as well as consumer protection. Unless this principle is given sufficient care, we would only end up having clashing laws and therefore obsolete and inapplicable.

While keeping the harmony of national legal system is very important task yet not an easy one, the policymakers should also bear in mind the current initiatives of the international community which reflect their expectation when it comes to trans-border electronic commercial trades. This approach is imminent because e-commerce and Internet are both global and trans-border. Constructive adoption and comparison needs to be looked at, either from international legal instruments or other foreign jurisdictions.

This international community may be represented in the UNCITRAL who had come up with a series of model laws such as e-commerce model law and e-signature model law. These model laws, amid their non-binding nature, provide very useful guidelines of certain benchmark acceptable by international community. Besides, Malaysia should also be mindful of their trading partners’ expectation specifically on certain issues. Fro example, the European partners’ strict expectation on trans-border data flow that is required on their international trading activities. This requirement, envisaged in the EU Directives 1995 on Personal Data Protection, had created some lengthy debates between the EU and their trading partners especially from the US and Australia (Abu Bakar Munir & Siti Hajar, 2002). Other than this issue, others such as intellectual property requirements (under the TRIP/WTO Agreements) and information security and privacy requirements under the APEC Privacy Framework, US’ Sarbanes-Oxley Law or Cybercrime Convention 2001 (which Malaysia, however, is not a member yet). It is noteworthy that the international regulatory framework has experienced its fastest change lately especially due to the increasing worry over global terrorism and dramatic increase of trans-border cybercrime.

Apart from the above principles, any initiative to lay down the legal and regulatory framework on e-business should always remember that the aim of such law is to facilitate the business and encourage the industry and technology developers, not to slow down them. Technology is by nature insensitive about laws and rules. Thus law is needed to keep the technology in track, benefiting everybody not only the industry but also the consumers at large. These two interests, though often conflict each other, were necessary to keep the e-business and the country’s economy alive. Therefore no one should be ever sacrificed for the sake of another. This is another balance that has to be taken care of. The laws and regulations should provide solutions instead of problems.

Another fundamental principle for e-business legal and regulatory framework is that the law, regulation or accompanying policy must be technology neutral. That means that the law and regulations to be produced should not limit themselves to one specific technology and thus close the way to adopt other technologies. This is more crucial in dealing with the information and communications technologies that are fast evolving and ever-changing. Thus, the law and regulation shall be technology neutral, making it applicable to adapt into ever-evolving technological environment and infrastructures.

This anticipative objective is essential in order for the proposed legal and regulatory framework to accommodate future problems and challenges surrounding the protection of national information infrastructure. On this basis, the proposed legal and regulatory framework being sought should be practicably workable, feasible and enforceable.

References:

Abu Bakar Munir & Siti Hajar Mohammad Yasin. (2002). Privacy and data protection: a comparative analysis with special reference to the Malaysian proposed law. London: Sweet & Maxwell.

Chissick, M. & Kelman, A. (2000). Electronic commerce: law and practice. 2^nd Ed. London: Sweet & Maxwell.

Lallana, I.C. (2004). An overview of ICT policies and e-strategies of select Asian economies. (UNDP-APDIP). New Delhi: Elsevier.

United Nations. (2004). Harmonized development of legal and regulatory systems for e-commerce in Asia and the Pacific: current challenges and capacity-building needs. New York: UN.