ORGANISATION OF EASTERN CARIBBEAN STATES ELECTRONIC TRANSACTIONS BILL (FIRST DRAFT) Prepared by: LEGISLATIVE DRAFTING FACILITY LEGAL UNIT May, 2004
JUSTIFICATION FOR HARMONIZED ELECTRONIC TRANSACTIONS LEGISLATION IN OECS MEMBER STATES Introduction The transacting of business and international trade through electronic means (ecommerce) is undeniably beneficial to the economies of the OECS Member States. E- commerce and its use of information and communication technologies makes it very easy for information to be collected, stored, transferred, manipulated and retrieved through electronic means. However, the legal significance of electronically stored or communicated information remains uncertain owing to the archaic nature and the inadequacy of legislation relating to storage and communication of information in the OECS Members States. The attached draft Electronic Transactions Bill seeks to give effect to a regulatory framework to give legal effect to information that is in electronic form or that is communicated by electronic means and is submitted to the OECS Member States for consideration. Justification The inappropriateness of the present legal framework in the OECS Member Sates to deal with modern business transactions is apparent mainly because electronic documents are not recognized in our current legal framework. This means that persons in OECS Member States who engage in e-commerce take more risk than those in foreign countries which have made legislative provision for recognition of electronic information and are therefore automatically at a disadvantage. In order to promote consistency between the laws of the OECS Member States and those of major trading partners and to foster economy and efficiency in e-commerce, it is necessary for Governments of the OECS Member States to create a legal environment that facilitates the expanded use of e- commerce and electronic information thereby providing equal treatment to users of paper-based documents and users of computer-based information. It is proposed that for all the OECS Member States this could be achieved using principles advanced in the UNICITRAL Model Law on E-Commerce 1996. Policy objectives The draft Electronic Transactions Bill prepared by the OECS Legislative Drafting Facility is based on the UNCITRAL Model Law on Commerce 1996 and Electronic Transactions Act 2002 of New Zealand 1 and specifically on the following guiding policy objectives: 1 This Act was used because of its simplicity and because it took it was drafted in consideration of the UNCITRAL Model Law on E-commerce, the provisions of the most recent legislation relating to e- commerce in Canada, Australia Ireland and Singapore. 2
1. That the OECS Member States ensure that their people enjoy the social and economic benefits offered by the growth of the new electronic economy. 2. That a regulatory framework is created for the use of electronic communication and information in transactions. 3. That the existing legal impediments that prevent the use electronic communications to communicate legally significant information is removed thereby creating a more secure legal environment for e- commerce. 4. That the fundamental principles of law should remain uncompromised; and 5. That the legislation should be technologically neutral to accommodate future technological developments and capacities. In summary the Bill: 1. Gives legal effect to electronic information and communications. 2. Specifies where and when electronic communications are sent and received. 3. Permits certain legal requirements to be met electronically. 4. Gives legal effect to electronic signatures. 5. Permits the retention of electronic versions paper-based records. 6. Is permissive and not mandatory because it allows parties to transact electronically without requiring to do so. 3
4
ELECTRONIC TRANSACTIONS BILL EXPLANATORY NOTES 1. The Bill for consideration is the Electronic Transactions Bill. 2. The purpose of the Bill is to promote the development of e-commerce by reducing uncertainty about the legal effect of electronic information and electronic communications by allowing certain paper based legal requirements to be met by electronic means. 3. Part 2 (clauses 4 to 9) of the Bill contains provisions intended to give the legal effect of information that is in electronic form, or that is communicated by electronic means, and to provide some default rules in relation to the time and place of dispatch and receipt of electronic communications. 4. Clause 4(a) ensures that, if there is no other impediment to giving effect to a communication or other information, the fact that it was in electronic form will not of itself prevent it being given legal effect. Clause 4 (b) addresses the related issue of incorporation by reference. Therefore, it ensures that incorporation by reference using electronic means is not automatically invalid. However, all other legal requirements continue to apply and are not affected in any way by clause 4. 5. Clause 5 of the Bill makes it clear that clauses 6 to 9 of the Bill set out default rules which do not apply if the parties to a communication agree otherwise, or if an enactment provides otherwise. 6. Clause 6 of the Bill provides that an electronic communication is treated as being dispatched at the time it first enters an information system outside the control of the originator. That is, as soon as the originator ceases to have control of the communication (and so ceases to be able to prevent it being transmitted), it is dispatched. 7. Clause 7 of the Bill provides a default rule in relation to the time of receipt of an electronic communication. An electronic communication is taken to be received at the time the electronic communication enters an information system designated by the addressee for that purpose or, if no particular information system has been so designated, at the time the electronic communication comes to the attention of the addressee. 8. Clause 8 of the Bill sets out default rules in relation to the place from which an electronic communication is taken to be dispatched. Where an originator does not have a place of business, the communication is treated as dispatched from the originator's ordinary place of residence. Where the originator does have a place of 5
business, the electronic communication is treated as dispatched from that place of business or, if there is more than one, the place of business that has the closest relationship with the underlying transaction. If there is no one place of business that has a closest relationship with the underlying transaction, the communication is treated as dispatched from the originator's principal place of business. 9. Clause 9 of the Bill provides a corresponding rule in relation to the deemed place of receipt of electronic communications. An addressee who does not have a place of business is treated as receiving electronic communications at that addressee's ordinary place of residence. Where the addressee does have a place of business, the communication is treated as being received at that place of business. Where the addressee has more than one place of business, the place of receipt is treated as being the place of business that has the closest connection with the underlying transaction or, if there is no one such place of business, the addressee's principal place of business. 10. Part 3 (clauses 10 to 30) of the Bill contains provisions that enable a range of legal requirements in enactments to be satisfied using electronic technology that is functionally equivalent to the paper-based technology contemplated by those laws. 11. Subpart 1 of Part 3 (clauses 10 to 13) of the Bill contains a number of preliminary provisions. Clause 10(1) provides that Part 3 of the Bill is over-arching legislation, which applies to every enactment passed either before or after the Bill comes into force. Clause 10(2) sets out exclusions from Part 3. These exclusions are enactments which require use of particular electronic technology, or a particular kind of data storage device, or a particular kind of electronic communication and the enactments or parts of enactments to be specified in the Schedule to the Bill. Clause 10(3) permits Cabinet to amend or replace the Schedule. 12. Clause 11 of the Bill sets out the basic requirements that must be met in order to use electronic technology to meet legal requirements. 13. Clause 12 (1) of the Bill is intended to make it clear that nothing in Part 3 of the Bill requires any person to use, provide, or accept information in an electronic form without that person's consent. Clause 12(2)(a) of the Bill makes it clear that where the Bill requires a person to consent to the use or provision of information in electronic form, that consent may be conditional on use of particular technology, or format, or other similar requirements. This is implicit in the consent requirement, but is set out in paragraph (a) to avoid any doubt on the matter. Clause 12(2)(b) of the Bill makes it clear that consent to receipt of electronic information may be inferred, and need not be expressed in every case. 14. Subpart 2 of Part 3 (clauses 14 to 27) of the Bill indicates the way in which certain legal requirements (e.g. for writing, or a signature) can be met by electronic means. 6
15. Clauses 14 to 17 of the Bill are concerned with legal requirements in relation to written information. They address requirements for information to be in writing (clause 14), to be recorded in writing (clause 15), and to be given in writing (clause 16). 16. Clauses 18 to 20 are concerned with legal requirements for a signature, and specify the circumstances in which such requirements can be met using an electronic signature. 17. Clause 21 permits legal requirements to retain information that is in paper or other non-electronic form to be met by retaining an electronic copy in certain circumstances. 18. Clause 22 is intended to clarify how legal requirements to retain information can be met where that information is initially in electronic form. Clause 23 sets out some additional requirements where the information that must be retained is contained in an electronic communication. 19. Legal requirements to retain information are usually coupled with legal obligations to provide or produce that information to some other person, either periodically or on request, and requirements to permit some third party to have access to that information. Clauses 24 to 27 of the Bill are intended to ensure that where information has been retained electronically in accordance with the Bill, obligations to provide or produce that information, or permit access to it, can also be met in an appropriate way. They also remove some uncertainty surrounding how obligations to provide or produce information in an electronic form can be met at present, and what it means to provide access to information stored in electronic form. 20. A number of enactments require copies of documents to be compared with an original, for example, for the purpose of preparing a certified copy of the original document. If the original document has been stored electronically and the original hard-copy document has been destroyed, difficulties might arise in carrying out this comparison. To avoid any uncertainty about whether such provisions still apply, clause 28of the Bill makes it clear that where there is a legal requirement to compare a document with an original, that requirement can be satisfied by comparing the document with an electronic form of the original if the original form reliably assures the maintenance of the integrity of the document. 21. Subpart 3 of Part 3 of the Bill (Clauses 29 to 30) contains a number of general provisions that ensure that Subpart 2 will achieve its intended effect. 22. Clause 29 of makes it clear that nothing in Part 3 of the Bill affects any legal requirement that relates to the content of information. The Bill permits the same information to be provided in electronic form. It does not permit any information that must be retained or provided etc. to be omitted or altered, where electronic technology is used. 7
23. The records that a business is required to retain or produce under the law in force may, in some cases, be the subject of copyright held by some other person. Clause 30 provides that copyright in any work is not infringed where an electronic form of a document is generated, or information is produced by means of an electronic communication, if this is done for the purposes of meeting a legal requirement by electronic means. Very importantly, the scope of the protection conferred is limited to that necessary to enable electronic technology to be used to meet some legal requirement. 24. The Regulation making power of the Minister is contained in Part 4 (clause 31) of the Bill. Pursuant to that clause the Minister has the power to make regulations for giving effect to the provisions of the Bill. 8
ELECTRONIC TRANSACTIONS BILL ARRANGEMENT OF SECTIONS SECTIONS PART 1 PRELIMINARY 1. Short title and commencement 2. Interpretation 3. Application PART 2 IMPROVING CERTAINTY IN RELATION TO ELECTRONIC INFORMATION AND ELECTRONIC COMMUNICATIONS 4. Validity of information 5. When default rules in sections 6-9 apply 6. Time of dispatch 7. Time of receipt 8. Place of dispatch 9. Place of receipt PART 3 APPLICATION OF LEGAL REQUIREMENTS TO ELECTRONIC TRANSACTIONS Subpart 1-Preleiminary 10. Application of Part 3 11. Satisfaction of legal requirements through use of electronic technology 12. Consent to use of electronic technology 13. When integrity of information maintained Subpart 2-Legal Requirements Division 1-Writing 14. Requirement that information be in writing 15. Requirement to record information in writing 16. Requirement to give legal information in writing 17. Additional requirements relating to information in writing Division 2-Signatures 18. Requirement for signature 9
19. Requirement that signature or seal be witnessed 20. Presumption about reliability of electronic signatures Division 3-Retention 21. Requirement to retain document or information in paper form 22. Requirement to retain information in electronic form 23. Extra conditions for communications Division 4-Provision and production of, and access to, information 24. Requirement to provide or produce information in paper form 25. Requirement to provide or produce information in electronic form 26. Requirement to provide access to information in paper form 27. Requirement to provide access to information in electronic form 28. Originals Division 5-Originals Subpart 3-General 29. Content requirements 30. Copyright 31. Regulations PART 4 MISCELLANEOUS SCHEDULE 10
ELECTRONIC TRANSACTIONS BILL AN ACT to provide for the use of electronic communication for the communication of legally significant information and for related matters related matters: BE IT ENACTED PART 1 PRELIMINARY Short title and commencement 1.(1) This Act may be cited as the Electronic Transactions Act 200[]. (2) This Act shall come into force on a day to be fixed by the Minister by Order published in the Gazette. Interpretation information system means a system for producing, sending, receiving, storing, displaying, or otherwise processing electronic communications; electronic includes electrical, digital, magnetic, optical, electromagnetic, biometric and photonic; electronic communication means a communication by electronic means; information includes information, whether in its original form or otherwise, that is in the form of a document, a signature, a seal, data, text, images, sound or speech; information system means a system for producing, sending, receiving, storing, displaying, or otherwise processing electronic communications; legal requirement - (a) means a provisioni. in an enactment to which this Part applies; and ii. of a kind that is referred to in subpart 2; and (b) includes a provision that imposes an obligation or that provides consequences depending on whether or not the provision is complied with; Minister means the Minister responsible for the administration of justice; 11
Regulations means Regulations made pursuant to section 31; transaction includes- (a) a transaction of a non-commercial nature; (b) a single communication; (c) the outcome of multiple related communications. Application 3. This Act binds the Crown. PART 2 IMPROVING CERTAINITY IN RELATION TO ELECTRONIC INFORMATION AND ELECTRONIC COMMUNICATIONS Validity of information 4. For the avoidance of doubt, information is not denied legal effect solely because it is- (a) in electronic form or is communicated by electronic means; or (b) referred to in an electronic communication that is intended to give rise to that legal effect. When default rules in sections 6-9 apply 5. Sections 6 to 9 apply to an electronic communication except to the extent that- (a) the parties to the communication otherwise agree; (b) an enactment provides otherwise. Time of dispatch 6. An electronic communication is taken to be dispatched at the time the electronic communication first enters an information system outside the control of the originator. Time of receipt 7. An electronic communications is taken to be received- 12
(a) in the case of an addressee who has designated an information system for the purpose of receiving electronic communications, at the time the electronic communication enters that information system; or (b) in any other case, at the time the electronic communication comes to the attention of the addressee. Place of dispatch 8. An electronic communication is taken to be dispatched from- (a) the originator s place of business; or (b) if the originator has more than 1 place of business,- i. the place of business that has the closest relationship with the underlying transaction; or ii. if there is no place of business to which subparagraph (i) applies, the originator s principal place of business; or (c) in the case of an originator who does not have a place of business, the originator s ordinary place of residence. Place of receipt 9. An electronic communication is taken to be received at- (a) the addressee s place of business; or (b) if the addressee has more than 1 place of business,- i. the place of business that has the closest relationship with the underlying transaction; or ii. if there is no place of business to which subparagraph (i) applies, the addressee s principal place of business; or (c) in the case of an addressee who does not have a place of business, the addressee s ordinary place of residence. PART 3 APPLICATION OF LEGAL REQUIREMENTS TO ELECTRONIC TRANSACTIONS Application of Part 3 Subpart 1- Preliminary 10.(1) Subject to sub-section (2), this Part applies to every enactment that is part of the law of [OECS Member State] and that is passed either before or after the commencement of this Act. (2) This Part does not apply to- (a) an enactment that requires information to be recorded, given, produced, or retained, or a signature to be given, or a signature or seal to be witnessed- 13
i. in accordance with particular electronic technology requirements; or ii. on a particular kind of data storage device; or iii. by means of a particular kind of electronic communications; (b) the enactments or parts of enactments specified in the Schedule. (3) Cabinet may by Order published in the Gazette, amend the Schedule or repeal the Schedule and substitute a new Schedule. Satisfaction of legal requirements through use of electronic technology 11. A legal requirement can be met using electronic technology if- (a) the provisions in subpart 2 are satisfied; and (b) any conditions prescribed by the Regulations are satisfied. Consent to use of electronic technology 12 (1) Nothing in this Part requires a person to use, provide, or accept information in an electronic form without that person s consent. (2) For the purposes of this Part,- (a) a person may consent to use, provide, or accept information in an electronic form subject to conditions regarding the form of the information or the means by which the information is produced, sent, received, processed, stored, or displayed; (b) consent may be inferred from a person s conduct. When integrity of information maintained 13. For the purposes of this Part, the integrity of information is maintained only if the information has remained complete and unaltered, other than the addition of any endorsement, or any immaterial change, that arises in the normal course of communication, storage, or display. 14
Subpart 2 Legal requirements Division 1-Writing Requirement that information be in writing 14. A legal requirement that information be in writing is met by information that is in electronic form if the information is readily accessible so as to be usable for subsequent reference. Requirement to record information in writing 15. A legal requirement that information be recorded in writing is met by recording the information in electronic form if the information is readily accessible so as to be useable for subsequent reference. Requirement to give information in writing 16.(1) A legal requirement to give information in writing is met by giving the information in electronic form, whether by means of an electronic communication or otherwise, if (a) the information is readily accessible so as to be usable for subsequent reference; and (b) the person to whom the information is required to be given consents to the information being given in electronic form and by means of an electronic communication, if applicable. (2) If sub-section (1) applies, a legal requirement to provide multiple copies of the information to the same person at the same time is met by providing a single electronic version of the information. (3) Sub-section (1) applies to a legal requirement to give information even if that information is required to be given in a specified manner, for example by filing, sending, serving, delivering, lodging, or posting that information. (4) Legal requirement to give information includes, for example, - (a) making an application; (b) making or lodging a claim; (c) giving, sending, or serving a notification; (d) lodging a return; (e) making a request; (f) making a declaration; (g) lodging or issuing a certificate; 15
(h) making, varying, or canceling an election; (i) lodging an objection; (j) giving a statement of reasons. Additional requirements relating to information in writing 17. To avoid doubt, a legal requirement relating to the form or layout of, or the materials to be used for writing, information, or any similar requirement, need not be complied with in order to meet a legal requirement to which any of sections 18 to 20 apply. Requirement for signature Division 2-Signatures 18 (1) Subject to subsection (2), a legal requirement for a signature other than a witness signature is met by means of an electronic signature if the electronic signature (a) adequately identifies the signatory and adequately indicates the signatory s approval of the information to which the signature relates; and (b) is as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required. (2) A legal requirement for a signature is not met by means of an electronic signature unless, in the case of a signature on information that is required to be given to a person, that person consents to receiving the electronic signature. Requirement that signature or seal be witnessed 19.(1) Subject to subsection (2), a legal requirement for a signature or a seal to be witnessed is met by means of a witness electronic signature, if- (a) in the case of the witnessing of a signature, the signature is an electronic signature that complies with section 18; and (b) in the case of the witnessing of a signature or a seal, the electronic signature of the witness i. adequately identifies the witness and adequately ii. indicates that the signature or seal has been witnessed; and (c) is as reliable as is appropriate given the purpose for which, and the circumstances in which, the witness signature is required. (2) A legal requirement for a signature or seal to be witnessed is not met by means of a witness electronic signature unless, in the case of a witness signature on information 16
that is required to be given to a person, that person consents to receiving the witness electronic signature. Presumption about reliability of electronic signatures 20.(1) For the purposes of section 18 and 19, it is presumed that an electronic signature is as reliable as is appropriate if (a) the means of creating the electronic signature is linked to the signatory and to no other person; and (b) the means of creating the electronic signature was under the control of the signatory and of no other person; and (c) any alteration to the electronic signature made after the time of signing is detectable; and (d) where the purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable. (2) Subsection (1) does not prevent any person from proving on other grounds or by other means that an electronic signature- (a) is as reliable as is appropriate; or (b) is not as reliable as is appropriate. Division 3 -Retention Requirement to retain document or information in paper form 21.(1) A legal requirement to retain information that is in paper or other non electronic form is met by retaining an electronic form of the information if- (a) the electronic form provides a reliable means of assuring the maintenance of the integrity of the information; and (b) the information is readily accessible so as to be usable for subsequent reference. (2) To avoid doubt, if information is retained in electronic form in accordance with sub-section (1), the paper or other non-electronic form of that information need not be retained. Requirement to retain information in electronic form 22. Subject to section 23, a legal requirement to retain information that is in electronic form is met by retaining the information- (a) in paper or other non-electronic form if the form provides a reliable means of assuring the maintenance of the integrity of the information; or 17
(b) in electronic form ifi. the electronic form provides a reliable means of assuring the maintenance of the integrity of the information; and ii. the information is readily accessible so as to be usable for subsequent reference. Extra conditions for electronic communications 23. In addition to the conditions specified in section 22, if a person is required to retain information that is contained in an electronic communication,- (a) the person must also retain such information obtained by that person as enables the identification ofi. the origin of the electronic communication; and ii. iii. the destination of the electronic communication; and the time when the electronic communication was sent and the time when it was received; and (b) the information referred to in paragraph (a) must be readily accessible so as to be useable for subsequent reference. Division 4-Provision and production of, and access to, information Requirement to provide or produce information in paper form 24. A legal requirement to provide or produce information that is in paper or other non-electronic form is met by providing or producing the information in electronic form, whether by means of an electronic communication or otherwise, if- (a) the form and means of the provision or production of the information reliably assures the maintenance of the integrity of the information, given the purpose for which, and the circumstances in which, the information is required to be provided or produced; the information is readily accessible so as to be usable for subsequent reference; and (b) the person to whom the information is required to be provided or produced consents to the information being provided or produced in an electronic form and, if applicable, by means of an electronic communication. Requirement to provide or produce information in electronic form 25. A legal requirement to provide or produce information that is in electronic form is met by providing or producing the information- (a) in paper or other non-electronic form; but, if the maintenance of the integrity of the information cannot be assured, the person who must provide or produce the information must- 18
i. notify every person to whom the information is required to be provided or produced of that fact; and ii. if requested to do so, provide or produce the information in electronic form in accordance with paragraph (b); or (b) in electronic form, whether by means of an electronic communication or otherwise, if- (i) the form and means of the provision or production of the information reliably assures the maintenance of the integrity of the information, given the purpose for which, and the circumstances in which, the information is required to be provided or produced; and (ii) the information is readily accessible so as to be usable for subsequent reference; and (iii) the person to whom the information is required to be provided or produced consents to the provision or production of the information in an electronic form and, if applicable, by means of an electronic communication. Requirement to provide access to information in paper form 26. A legal requirement to provide access to information that is in paper or other nonelectronic form is met by providing access to the information in electronic form if- (a) the form and means of access to the information reliably assures the maintenance of the integrity of the information, given the purpose for which, and the circumstances in which, access to the information is required to be provided; and (b) the person to whom access is required to be provided consents to accessing the information in that electronic form. Requirement to provide access to information in electronic form 27. A legal requirement to provide access to information that is in electronic form is met by providing access to the information- (a) in paper or other non-electronic form; but, if the maintenance of the integrity of the information cannot be assured, the person who must provide access to the information must- (i) notify every person to whom access is required to be provided of i. that fact; and (ii) if requested to do so, provide access to the information in electronic form in accordance with paragraph (b); or (b) in electronic form, whether by means of an electronic communication or otherwise, if- (i) the form and means of access to the information reliably assures the maintenance of the integrity of the information, given the purpose for which, and the circumstances in which, access to the information is required to be provided; and 19
(ii) the person to whom access is required to be provided consents to accessing the information in that electronic form. Division 5-Originals Originals 28. A legal requirement to compare a document with an original document may be met by comparing that document with an electronic form of the original document if the electronic form reliably assures the maintenance of the integrity of the document. Subpart 3 General Content requirements 29. Nothing in this Part affects any legal requirement to the extent that the requirement relates to the content of information. Copyright 30. The copyright in a work is not infringed by any of the following acts if they are carried out for the purposes of meeting a legal requirement by electronic means- (a) the generation of an electronic form of a document; (b) the production of information by means of an electronic communication. Regulations PART 4 MISCELLANEOUS 31.(1) The Minister may make regulations for the purpose of giving effect to the provisions of this Act. (2) Without prejudice to the generality of subsection (1), the Minister may make Regulations particularly to prescribe the conditions that must be complied with or to meet a legal requirement specified in those Regulations by electronic means. 20
SCHEDULE (Section 10) [ENACTMENTS OR PARTS OF ENECTMENTS EXCLUDED FROM PART 3] 21