The growth and development of e-commerce: an analysis of the electronic signature law of Sri Lanka

Abstract

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

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 at<http://elj.warwick.ac.uk/jilt/98-3/swindells.html>. 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 at<http://www.richmond.edu/jolt/v6i2/note2.html>. Accessed 2 May 2007.

 9. Smedinghoff, T J (1999) Electronic signature legislation. Available at<http://library.findlaw.com/1999/Jan/1/241481.html#note20>. 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 at<http://www.naifa.org/advocacy/privacy_guide/documents/privacy_appendix11.pdf>. Accessed 10 November 2006.

12. Op cit, fn 8.

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 communication 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 at<http://www.une.edu.au/asiacenter/KKaur.pdf>. 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 <http://www.witsa.org/papers/3rdEd-GlobalActionPlan.pdf>; quoted in De Villers, M R H (2002) Consumer protection under the Electronic Communications and Transactions Act of 2002. Available at<http://etd.rau.ac.za/theses/available/etd-10192005-125204/restricted/MRHdeVilliers.pdf>. Accessed 30 March 2007.

27. Nasir, A (2004) Legal issues involved in e-commerce, Ubiquity, 4(49). Available at<http://www.acm.org/ubiquity/views/v4i49_nasir.html>. 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 at<http://www.apec.org.au/docs/paterson.pdf>. 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 <http://www.american.edu/initeb/ym6974a/legalenvironment.htm#CYBERLAWS>. 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 <http://globaltechforum.eiu.com/index.asp?layout=rich_story&doc_id=8706&categoryid=&channelid=&search = procurement>. Accessed 12 October 2007.

48. Kaur, K (1999) Consumer protection in e-commerce in Malaysia: an overview. Available at<http://www.une.edu.au/asiacenter/KKaur.pdf>. 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.

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 <http://elj.warwick.ac.uk/jilt/00-1/wu.html>. Accessed 20 November 2006.

56. Ibid, Wu.

57. E-commerce (2005). Available at<http://www.tillekeandgibbins.com/publications/thailand_ legal_basics/e-commerce.pdf>. 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 Transactions Act and Digital Signature Act: background, major provisions and implication, OECD Forum on Electronic Commerce, 12–13 October 1999, Paris. Available at <https://www.oecd.org/dataoecd/13/41/2092960.pdf>. 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.