E-COMMERCE LEGAL FRAMEWORK FOR ASEAN: A MODEL CODE T A ANURAGINI NATIONAL UNIVERSITY OF SINGAPORE 2006 E-COMMERCE LEGAL FRAMEWORK FOR ASEAN: A MODEL CODE T A ANURAGINI (BL) (GLC, Chennai) A THESIS SUBMITTED FOR THE DEGREE OF MASTER IN LAW DEPARTMENT OF LAW NATIONAL UNIVERSITY OF SINGAPORE 2006 ACKNOWLEDGEMENTS This thesis would not have been possible without the kind support, the astute critiques, the probing questions, brilliant advices and the remarkable patience of my thesis mentor – Associate Prof Chin Tet Yung, I cannot thank him enough Simply put: Prof Chin Tet Yung is an Angel! I am deeply grateful to National University of Singapore, Faculty of Law, for having faith in me and granting me Graduate Student Research Scholarship that enabled me to have this study at almost no personal cost I thank the Law Faculty Management for encouraging masters students like me to excel in our chosen field through various forms like allowing us to attend conferences, seminars and the like I thank the Administrative and Library Staff to have guaranteed me a smooth interaction with the management and facilities in the faculty I am indebted to my Family, Mom-Dr A Bhawaani and my Dad- T.K Aswini Kumar for providing me the means to obtain education, for caring and being supportive and encouraging me in everything I did, at all times, from the day one I set out for my LLM at NUS till date My brother A Tarun Kumar, for letting his inbox being used as a backup space for my drafts, and for making sure that I can keep in touch with family by gifting me my headphones, webcam and mike, enabling me to be connected to all loved ones My best friend, Chandan Rajah and his family for giving me moral support and best wishes through out the period of research I would like to render a special thanks to Prof Victor V Ramraj, A/P Tan Keang Sood Prof Daniel Seng and Prof Gerald Drowkin from NUS, Professor Vijaya Lakhimi i (Dr Amebedkar Govt Law Univeristy), Prof Rajendran (Now, Honourable Justice, Madras High Court), Dr Robin.C (The Registrar Dr Ambedkar Govt.Law Univeristy) for guiding me in my research at various levels I would like to thank my colleague Sriram (Senior), Abhinav Batthachary, Aisulu Chaubarov, Maheswari A, and others who took the Graduate Research Methodology Module with me at NUS in June 2004, for rendering friendly advise on how to approach research in general I thank Priya Kailasam and Asha Joseph for helping in proof reading the dissertation and offering appropriate comments apart from being there at tough times during my research I truly believe that my stay at NUS would not have been exciting and meaningful without the numerous souls that stood by my side at time of need in the past two years (including friends from my home town) I chose not to mention all their names as it would run to many pages I take responsibility for the original insights, of the thesis These insights are the result of my decent intelligence and creative abilities I am also responsible for some of the portions of the thesis, which might seem intellectually unwarranted, mistaken, or incorrect These are a result of my limited understanding –incomplete digestion of the relevant concepts and literature on my part – and unjustifiable tardiness ii TABLE OF CONTENTS INTRODUCTION 1.1 Objective 1.2 Focus 1.3 Significance 1.4 Methodology and Thesis Outline Preliminary issues 2.1 Common terminology 2.2 Socio-legal issues and developments in e-commerce infrastructure within ASEAN 2.2.1 Technological and legal development in ASEAN with reference to e- commerce 2.3 2.2.1.1 IBM Global infrastructure Technology Report on E – Readiness 12 2.2.1.2 Network Readiness Index 15 2.2.1.3 Mosaic Group’s framework Internet Diffusion 17 Benefits and Barriers of e-commerce to ASEAN 19 2.3.1 Benefits of e-business 19 2.3.2 Barriers to E-business in ASEAN countries 23 2.4 Disparity in the Uptake of e-commerce and Basic legal infrastructure 27 2.5 ASEAN and Regional efforts towards e-commerce promotion 29 iii 2.5.1 ASEAN’s vision of legal infrastructure for promoting e- commerce 30 2.5.1.1 The Hanoi Plan of Action: 30 2.5.1.2 The e-ASEAN Framework Agreement adopted by Leaders under Article 31 2.5.1.3 The Initiative for ASEAN Integration, Policy and Legal Framework Program Area contains a Program Objective: 31 2.5.1.4 ASEAN Australia Development Cooperation Program (AADCP) – Program stream to harmonize e-commerce legal infrastructure 32 2.6 Conclusion 33 Legal Issues 34 3.1 Legal challenges to E-Businesses: Barrier to E-commerce 34 3.2 Legal Infrastructure for e-Commerce: ASEAN’s situation 34 3.2.1 3.3 Legal infrastructure includes 35 3.2.1.1 Laws 35 3.2.1.2 Regulations and Codes 35 3.2.1.3 Regulators 35 3.2.1.4 Registration, licensing and accreditation 36 3.2.1.5 Standards 36 3.2.1.6 Enforcement and review 36 3.2.1.7 Training, education and awareness raising 36 Core elements that make up a successful e-Commerce Legal Infrastructure 37 3.3.1 E-commerce laws (Online formation of Contracts and Authentication issues) 37 3.3.2 Jurisdiction and Private International Law 37 iv 3.3.3 Electronic Evidence laws 38 3.3.4 Banking laws (Electronic Payment) 38 3.3.5 Other elements 38 3.4 Overview of main issues in the chosen domain 39 3.4.1 E-Commerce laws (Contracts & Authentication) 39 3.4.2 Evidence law Issues 41 3.4.3 Banking law issues (Electronic Payment Systems) 43 3.4.4 Jurisdiction and Private international law issues 45 3.5 Regulatory and Institutional Challenges: An Brief Appraisal of Situation in Singapore 47 3.5.1 3.5.1.1 Case Study Report: Singapore 48 Four prominent areas that pose a challenge considering the current regulatory scenario for e-commerce in Singapore 49 3.6 3.5.1.2 Priority to e-commerce issues: 54 3.5.1.3 Conclusion 56 Introduction to the process of harmonisation, its benefits and perils to ASEAN 56 3.7 Benefits from embracing e-commerce to ASEAN community 60 3.8 Benefits from harmonization to legal development 62 3.9 Perils of harmonization by international or regional means that may be relevant to ASEAN 63 3.10 Best Approach to harmonisation process 65 3.11 Chapter conclusion: 71 v INTRODUCTION TO ELECTRONIC TRANSACTION MODEL CODE AND ITS PRINCIPLES 72 4.1 Introduction to the Electronic Transaction Model Code 72 4.2 Purpose 73 4.3 Objectives 73 4.4 Scope 75 4.5 Introduction to the principles of Model Code and its Basis 76 4.5.1 Reliability 76 4.5.2 Integrity 77 4.5.3 Transparency and Predictability 78 4.5.4 Confidentiality 78 4.5.5 Privacy 79 4.5.6 Security and Authentication 80 4.5.7 Technology Neutrality 80 4.5.8 Media Neutrality 81 4.5.9 Functional Equivalence 82 4.5.10 Minimalist approach to Electronic signature 82 4.5.11 Recognizing “Party Autonomy” to a maximum extent 83 4.6 Recommendations on Core issues 83 4.6.1 Online Contracts 84 4.6.2 Provision Recommended in the Model Code 84 4.7 Online contract (4.1) 84 4.7.1 Recognition of Electronic Contract (4.1.1) 84 vi 4.7.2 Formation of Electronic Contract (4.1.2) 85 4.7.3 Attribution/non repudiation (4.1.3) 85 4.7.4 Form requirement of electronic contracts (4.1.4) 86 4.7.4.1 Writing (4.1.4.1) 86 4.7.4.2 Signature (4.1.4.2), 86 4.7.4.3 Original (4.1.4.3) 88 4.7.5 Dispatch and Receipt of electronic communication (4.1.5) 89 4.7.6 Scope of these provisions (4.1.6) 90 4.7.7 Treating error in electronic contracting arising out of communicating with an automated information system (4.1.7) 91 4.7.8 4.8 Invitation to make offer (4.1.8) 92 Electronic Evidence 92 4.8.1 Provisions Recommended in the Model Code 95 4.8.1.1 Evidentiary requirement in terms of enforcement of electronic contract 95 4.8.1.1.1 General admissibility (7.1) 95 4.8.1.1.2 Scope of Section (7.2) 95 4.8.1.1.3 Authentication (7.3) 96 4.8.1.1.4 Application of Best Evidence Rule (7.4) .96 4.8.1.1.5 Presumption of Integrity (7.5) .96 4.8.1.1.6 Standards (7.6) .97 4.8.1.1.7 Proofs by Affidavit (7.7) .97 4.8.1.1.8 Cross Examination (7.8) .98 4.8.1.1.9 Agreement on Admissibility of Electronic Records (7.9) .98 4.8.1.1.10 Retention of electronic document (9.10) 99 4.8.1.1.11 Storage of electronic document (9.11) 99 4.8.1.1.12 Notarization (9.12) 99 4.8.1.2 Security and Authentication 101 vii 4.8.1.2.1 4.9 Security and Authentication (Chapter VIII) .101 Jurisdiction and Private International law 102 4.9.1.1 Provisions recommended in the Model Code 103 4.9.1.1.1 4.10 Jurisdiction and Private international law (Chapter XVII) 103 Banking law (Electronic payment) 107 4.10.1.1 Provision recommended in the Model Code 108 4.10.1.1.1 4.10.1.2 E-payment Frauds 114 4.10.1.2.1 4.11 Recommended Provision from the Model Code .114 Miscellaneous issues 115 4.11.1.1 Intellectual property 115 4.11.1.2 Cyber crimes 116 4.11.1.2.1 4.11.1.3 4.11.1.4 General Guidelines for consumer protection (Chapter XIV) 120 Rights and liabilities of third parties and intermediaries 122 4.11.1.5.1 4.11.1.6 Provision on Data Protection (Chapter XIII) 118 Consumer Protection 120 4.11.1.4.1 4.11.1.5 Cyber Crimes (Chapter XII) 116 Data protection 118 4.11.1.3.1 Rights and liabilities of intermediary Chapter XV 122 Intellectual Property and Content Regulation (Chapter V) 124 4.11.1.6.1 Intellectual Property Rights .125 4.11.1.6.2 Content Regulation 126 4.11.1.7 4.12 Electronic payment (Chapter XI) .108 Dispute settlement 127 4.11.1.7.1 Settlement of Disputes (Chapter XVI) .127 4.11.1.7.2 External Complaint handling 128 4.11.1.7.3 Role of Regional and Local Commerce Chambers 129 Conclusion 129 viii ... recognise and emphasis ASEAN? ??s need for a harmonised e- transaction legal framework and proposes an E- commerce Transaction Model Code for the entire region to serve as a comprehensive and effective... among traditional agencies of ASEAN nations An appeal is made to the policy makers of ASEAN to accept the Model Code for etransaction, and other recommendations, as this complements ASEAN? ??s existing... other developments are equally required for an effective legal framework for ASEAN Those are 1: Strengthening co-operation with other regional groupings on e- commerce policy formation, 2: ASEAN? ??s