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THE UNITED NATIONS CONVENTION ON THE USE OF ELECTRONIC COMMUNICATIONS IN INTERNATIONAL CONTRACTS JEFFREY W T CHAN Principal Senior State Counsel (Singapore)

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Presentation on theme: "THE UNITED NATIONS CONVENTION ON THE USE OF ELECTRONIC COMMUNICATIONS IN INTERNATIONAL CONTRACTS JEFFREY W T CHAN Principal Senior State Counsel (Singapore)"— Presentation transcript:

1 THE UNITED NATIONS CONVENTION ON THE USE OF ELECTRONIC COMMUNICATIONS IN INTERNATIONAL CONTRACTS JEFFREY W T CHAN Principal Senior State Counsel (Singapore) 27 OCT 2004

2 UNCITRAL UN Commission on Intl Trade Law UN Commission on Intl Trade Law Estb. by UN General Assembly in 1966 Estb. by UN General Assembly in 1966 Purpose: “…further the progressive harmonisation of Intl. Trade law.” Purpose: “…further the progressive harmonisation of Intl. Trade law.” Membership: Membership: 60 states elected by GA for 6 year terms60 states elected by GA for 6 year terms Rotating membershipRotating membership Geographic representation.Geographic representation.

3 WORK OF UNCITRAL Products of UNCITRAL: Products of UNCITRAL: Intl. ConventionsIntl. Conventions Model LawsModel Laws Legislative GuidesLegislative Guides Information and Trg. ProgrammesInformation and Trg. Programmes Yearly Commission Meetings Yearly Commission Meetings Texts prepared by Working Groups Texts prepared by Working Groups Professional Secretariat. Professional Secretariat.

4 UNCITRAL WORK ON ELECTRONIC COMMERCE 1986 – Legal Guide to Electronic Funds Transfers 1986 – Legal Guide to Electronic Funds Transfers 1996 – Model Law on Electronic Commerce 1996 – Model Law on Electronic Commerce 2001 – Model Law on Electronic Signatures 2001 – Model Law on Electronic Signatures Wide acceptance of Model Laws Wide acceptance of Model Laws No complete harmonisation internationally. No complete harmonisation internationally.

5 THE ELECTRONIC CONTRACTING CONVENTION Assembling of cohesive group of experts Assembling of cohesive group of experts Greater recognition of potential of electronic commerce Greater recognition of potential of electronic commerce Global marketplaceGlobal marketplace More choices for consumersMore choices for consumers Equalisation of opportunities for entrepreneursEqualisation of opportunities for entrepreneurs Dramatic increase in electronic transactions Dramatic increase in electronic transactions Need for greater certainty for cross-border electronic transactions Need for greater certainty for cross-border electronic transactions Intl Convention preferred. Intl Convention preferred.

6 OBJECTIVES Project of Working Group IV (Electronic Commerce)-commenced in Fall 2002. Project of Working Group IV (Electronic Commerce)-commenced in Fall 2002. Intended to : Intended to : Harmonise national laws on the use of electronic communications in the formation and performance of cross- border contractsHarmonise national laws on the use of electronic communications in the formation and performance of cross- border contracts Update intl conventions relating to intl. trade to remove obstacles to electronic commerceUpdate intl conventions relating to intl. trade to remove obstacles to electronic commerce

7 Working assumptions: Applicability of Model Laws on Electronic Commerce and Electronic SignaturesApplicability of Model Laws on Electronic Commerce and Electronic Signatures Applicability of the Convention on the International Sale of Goods (CISG).Applicability of the Convention on the International Sale of Goods (CISG).

8 MAIN ISSUES IN THE E C CONVENTION Scope (applicability)Scope (applicability) Means of achieving functional equivalenceMeans of achieving functional equivalence Form requirementsForm requirements Time and place of dispatch and receipt of electronic communicationsTime and place of dispatch and receipt of electronic communications Contracting through Automated systemsContracting through Automated systems Application to other trade-related intl conventions.Application to other trade-related intl conventions.

9 BASIC DIRECTIONS Apply to international contractsApply to international contracts Update existing lawsUpdate existing laws Avoid substantive rulesAvoid substantive rules Confine to achieving functional equivalence for electronic communications in formation and performance of contractsConfine to achieving functional equivalence for electronic communications in formation and performance of contracts Party AutonomyParty Autonomy Flexibility for StatesFlexibility for States No mandatory rules for other intl. conventions but provide options for StatesNo mandatory rules for other intl. conventions but provide options for States

10 INITIAL ISSUES Rapidly evolving electronic commerce environment (esp. Internet)Rapidly evolving electronic commerce environment (esp. Internet) Need to update Model LawsNeed to update Model Laws Possibility of duality of regimes between contracts entered into electronically and other contracts (especially when mixed means are used)Possibility of duality of regimes between contracts entered into electronically and other contracts (especially when mixed means are used) Objections by the Intl Chamber of CommerceObjections by the Intl Chamber of Commerce Objections by agencies who formulated other trade-related international instruments.Objections by agencies who formulated other trade-related international instruments.

11 SCOPE Applies to:Applies to: electronic communications in connection with electronic communications in connection with formation or performance of formation or performance of contract between parties in different states contract between parties in different states

12 SCOPE Does not apply to:Does not apply to: Contracts for personal, family or household purposes Contracts for personal, family or household purposes “ contracts on regulated exchange; foreign exchange transactions; inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments; transfer of security rights in, sale, loan or holding of or agreement to repurchase securities or other financial assets or instruments held with an intermediary” “ contracts on regulated exchange; foreign exchange transactions; inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments; transfer of security rights in, sale, loan or holding of or agreement to repurchase securities or other financial assets or instruments held with an intermediary” “bills of exchange, promissory notes, consignments notes, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of money.” “bills of exchange, promissory notes, consignments notes, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of money.”

13 “Electronic Communications” Defined as :Defined as : “…any communication that the parties make by means of data messages” “…any communication that the parties make by means of data messages” “Data Message” defined as :“Data Message” defined as : “..information generated, sent, received or stored by electronic, magnetic, optical or similar means, including but not limited to electronic date interchange (EDI), electronic mail, telegram, telex or telecopy”. “..information generated, sent, received or stored by electronic, magnetic, optical or similar means, including but not limited to electronic date interchange (EDI), electronic mail, telegram, telex or telecopy”.

14 LIMITATIONS TO APPLICABILITY Art 18 :Art 18 : No reservations permitted No reservations permitted States can declare to confine to – States can declare to confine to – Where other party is in a Contracting State, orWhere other party is in a Contracting State, or Where rule of Private Intl Law leads to the application of the law of a Contracting State, orWhere rule of Private Intl Law leads to the application of the law of a Contracting State, or Where the parties have agreed that the Convention applies.Where the parties have agreed that the Convention applies. State can by declaration exclude application of the Convention to any matter. State can by declaration exclude application of the Convention to any matter.

15 EFFECT OF CONVENTION Art 8 :Art 8 : “Contract or other communication not denied validity or legal enforceability on the sole ground that it is in the form of an electronic communication” “Contract or other communication not denied validity or legal enforceability on the sole ground that it is in the form of an electronic communication”

16 TIME AND PLACE OF DISPATCH (Art. 10) Departure from Model Law on E C.Departure from Model Law on E C. E/comm. dispatched when it leaves information system under control of originatorE/comm. dispatched when it leaves information system under control of originator For common information system – when it is received.For common information system – when it is received. “Information System” defined as :“Information System” defined as : “…system for generating, sending, receiving, storing or otherwise processing electronic communications”. “…system for generating, sending, receiving, storing or otherwise processing electronic communications”.

17 TIME AND PLACE OF RECEIPT (Art. 10) Distinction between e/comm sent to designated electronic addresses and other addressesDistinction between e/comm sent to designated electronic addresses and other addresses Designated addresses-Designated addresses- When capable of being received When capable of being received Other addresses- when :Other addresses- when : Capable of being retrieved, and Capable of being retrieved, and Addressee is aware that the e/comm has been sent to that address Addressee is aware that the e/comm has been sent to that address Departure from Model LawDeparture from Model Law

18 PRESUMPTION E/comm presumed capable of being retrieved when it reaches addressee’s electronic address.E/comm presumed capable of being retrieved when it reaches addressee’s electronic address. Note:Note: “Electronic Address” not defined. “Electronic Address” not defined.

19 FORM OF ELECTRONIC DOCUMENTS (Art. 9) General rule: no requirement as to formGeneral rule: no requirement as to form Where writing is required, e/comm valid if :Where writing is required, e/comm valid if : “..information contained therein is accessible for future reference” “..information contained therein is accessible for future reference”

20 ORIGINALS OF ELECTRONIC DOCUMENTS Art. 9 (4) & (5)Art. 9 (4) & (5) Applies where law requires an original document (e.g. New York Convention)Applies where law requires an original document (e.g. New York Convention) Need for “reliable assurance” of “integrity of information” from time information was “first generated in final form as an electronic communication”, andNeed for “reliable assurance” of “integrity of information” from time information was “first generated in final form as an electronic communication”, and “Capable of being displayed”“Capable of being displayed”

21 Proposed exclusion to rules on originals Art. 9 [(6)]Art. 9 [(6)] “[… where a rule of law or the agreement between the parties requires a party to present certain original documents for the purpose of claiming payment under a letter of credit, a letter of guarantee or a similar document].”“[… where a rule of law or the agreement between the parties requires a party to present certain original documents for the purpose of claiming payment under a letter of credit, a letter of guarantee or a similar document].”

22 WEBSITE SALES Art. 11Art. 11 Sales through websites are invitations to treat, not offersSales through websites are invitations to treat, not offers Not binding until final click by intending buyerNot binding until final click by intending buyer Effect of error thus significantEffect of error thus significant

23 ERROR Concern only with automated systemsConcern only with automated systems Confined to “input errors”, i.e. errors of action, not errors of choiceConfined to “input errors”, i.e. errors of action, not errors of choice Operator must provide opportunity for correctionOperator must provide opportunity for correction If not provided, input can be withdrawnIf not provided, input can be withdrawn Conditions apply.Conditions apply.

24 Withdrawal of wrong inputs Notification to other partyNotification to other party Reasonable steps to comply with other party’s instructions, inc.-Reasonable steps to comply with other party’s instructions, inc.- Return/destroy goods and services provided Return/destroy goods and services provided No material benefits enjoyed.No material benefits enjoyed.

25 Application to other intl conventions Art 19Art 19 Applies to 6 UNCITRAL ConventionsApplies to 6 UNCITRAL Conventions Applies to use of e/comm in formation/performance of other contracts under other intl. ConventionsApplies to use of e/comm in formation/performance of other contracts under other intl. Conventions States can opt out at any timeStates can opt out at any time Opt out can be general or specificOpt out can be general or specific Provision rather confusing.Provision rather confusing.

26 Remaining Work All substantive provisions (except Art 9 (6) completedAll substantive provisions (except Art 9 (6) completed “Final Provisions” not completed“Final Provisions” not completed Comments by StatesComments by States Final decision at UNCITRAL Session – July 2005Final decision at UNCITRAL Session – July 2005 Accession by StatesAccession by States CommentaryCommentary “Accession kit”.“Accession kit”.

27 CONCLUSION United Nations Convention on the Use of Electronic Communications in International Contracts


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