29 July 2002
21 April 2005
13 April 2004
23 April 2001
2 February 2004
30 January 1996
The UK Govern-ment has been criticised for the approach taken in the Electronic Commerce (EC Directive) Regulations 2002. They are late, unclear and not sufficiently far-reaching. This view is somewhat harsh.
First, look at the questions they were asked to solve: what law should apply to transactions concluded over the internet? Is it necessary to amend the many statutes that require physical writing and signatures? How transparent should traders be when doing business in the online and wireless world? Who should be responsible for monitoring online content and do consumers need additional protections because of the additional risks posed to them by this new medium?
In defence of lateness (the deadline for implementation was 16 January 2002), it is fair to observe that the Department of Trade and Industry has conducted external consultations. On lack of clarity, it is not as if the Government had a free hand. The UK was required to implement the E-Commerce Directive.
For those less interested in the political debate, there is a practical question to ask: will the regulations help or hinder the development of e-commerce? My view is that they will help. One of the most significant obstacles to the universal acceptance of e-commerce is a lack of user confidence. Both suppliers and consumers have taken significant knocks over the last few years. On the supply side, companies have been subjected to the laws and regulations of countries they could not reasonably have anticipated would apply to them and have been sued in countries with which they have only the vaguest of connections. Consumers have faced the risk that, in the online world, everyone looks the same, with little or no assurance that either their personal data or their money will remain secure. As for the people in the middle - those that host services or provide telecommunication links - they faced the risk that, as the only identifiable player of substance, they would be asked to carry the can for both ends. The regulations (and the other initiatives in the areas of, for example, data protection and distance selling) will introduce a level of certainty, which in turn will bolster confidence.
There will, of course, be many who say that the regulations only partially answer some of the questions and that, having embarked on the task, the Government should have done a proper job. This is too simplistic. There are no fundamental truths in relation to e-commerce; it is always a matter of balancing conflicting or differing interests. The EU and member states are also forced to consider whether the role of legislation in this area is to support business as it is today or to compel it to develop in line with a preconceived grand plan. As emerged at every stage of the preparation of the directive and the regulations, there is no shortage of views. As articulated, the supporters of free trade anticipated total darkness if any attempts were made to regulate a global medium with no boundaries; in reply, the consumer lobby predicts total pillage if consumers are thrown into a void without additional layers of protection.
The regulation, perhaps more so than the directive, reflects the Government's desire to implement change gradually. This is exemplified in the Government's cautious approach to the review of UK statutes that limit the use of electronic communication and signatures (the best known of which is the creation or transfer of rights to real property). This approach is, in general, to be commended. The alternative is to seek an immediate and radical overhaul of the entirety of English law, in the belief that the introduction of e-commerce - which, after all, is only commerce over a new medium - dictates a series of dramatic changes. But that approach would have been a disaster. It would inevitably have been a fix for a day and been too rigid to allow the market to have the flexibility it needs to develop.
So, as an objective observer, I believe the regulations are pitched at around the right level. The downside is that there are likely to be many occasions when issues arise that are not resolved by the regulations (or the directive). This will no doubt lead to differences emerging between the domestic laws of member states and numerous trips to the European Court of Justice. This, of course, is just a feature of harmonisation.