During the recent concluded 2nd EAC Manufacturing Business Summit held in Kigali, Regional manufacturers were urged to embrace electronic trading platforms (e-commerce) to widen their market penetration and become more productive and competitive that will see an increase in their profitability.
However, the question is, how ready and knowledgeable, in terms of the use of e-commerce, are the EAC manufacturers in the existing potential markets and technological use within the EAC and outside the region. As they embrace the new tools of technology in trading and e-commerce, one has to consider all aspects of private international law. There are a number of issues an entrepreneur must consider before entering the e-commerce marketplace.
The following are some of the important issues that will improve the chances of a successful e-commerce, if thoroughly considered:
The applicable international legal framework: As e-commerce gains momentum, lawmakers around the world endeavor to adapt the rules of traditional paper-based documents to the technical environment of e-commerce transactions. Entrepreneurs must therefore discover which organizations, treaties, conventions and agreements create and harmonize national legislations in an effort to establish a global framework for e-commerce
The challenge for private international law makers is to provide a workable legal framework and implementation guidance for domestic lawmakers to adapt legacy laws or to create new legislation for electronic contracts. This will harmonize the rules of individual nations, which in turn will remove the potential for conflicting national rules that would impede international e-commerce trade through a predictable and transparent legal structure.
The Model Law on Electronic Commerce(1996) determines how the principles of paper-based documents could be reconciled with their electronic equivalents. It facilitates the development of a unified method to ensure the validity and enforceability of international contracts while the Model Law on Electronic Signatures (2001) establishes common standards of signature authentication and enforceability.
Be equipped with knowledge on the new types of e-commerce contracts. The growing prevalence of e-commerce contracts has opened up an entire new set of issues pertaining to the validity of a commercial contract. Entrepreneurs and consumers must be aware of the rights and obligations of offers, acceptances, authentications, signatures and payments. In addition, the responsibilities of virtual service providers (web hosting services, internet service provides) in the event of service interruptions and security breaches must be addressed.
Know which legal jurisdiction applies and what are the laws. The lack of a tangible physical location of the Internet has added an even more complex element to the rules and dispute resolution of cross-border commerce.
The regulations imposed on online businesses and contracts by nations around the world have become a major point of contention in e-commerce’s evolution. The pace of regulation is not uniform, so accounting for the disparities between technological and regulatory systems of various nations can be quite difficult. For example, some nations do not regulate the Internet at all in such areas as taxation, making those nations tax havens for offshore investors.
Other nations are studying the success of ground-breaking nations such as the U.S. and the EU to determine which model to implement domestically. Will these national disparities in online regulations create barriers in the free market as entrepreneurs and consumers struggle to determine where it is most advantageous to buy and sell goods and services online? The issue of self-regulation is at the center of this debate. Many believe the Internet has been able to enjoy global expansion because governments have not actively been regulating its activity. As with competition laws, while government regulations are at times necessary, they can also interfere or restrict the free market’s ability to self-regulate. Despite this, it is safe to say that national legislation will have a major impact on the evolution of thriving international e-commerce.
Need to protect consumers and prevent cyber-crime. Purchasing goods or services online presupposes a great amount of trust on behalf of the buyer who is usually giving out credit card and other personal information without the benefit of face-to-face interaction. E-commerce merchants must keep up with the evolving technical demands of network security to ensure consumer protection and privacy. International organizations, national governments and regional authorities must consider how to prosecute cyber criminals to compensate victims of theft, fraud and forgery. Failure to do so will render an enterprise uncompetitive. Also, merchants who use e-commerce as a means to conduct illegal operations be dealt with.
Need to ensure safety of intellectual property (IP). In addition to protecting consumer information, ecommerce enterprises must consider how they can protect their own valuable information from all types of copyright infringement.
The World Intellectual Property Organization (WIPO) established the Madrid Protocol in 1989. The Madrid Protocol and Treaty allows an individual or company to register for trademark protections in one process. This streamlined approach helps with the registration process, but does not actually harmonize trademark protection standards between member countries. With more countries signing on regularly, there are now 92 countries claiming to adhere to these international registration protocols of mark protection. I say ‘claiming’ because China is on that list, and China is by far the greatest source of IP infringement in the world.Some companies discover that, by law, they cannot use their own trademark in an overseas market because someone else already registered the mark.
The famous recent case of this was Tesla, the car manufacturer being sued in China for trademark infringement. The Tesla name and logo had been registered by a Chinese businessman well before Tesla’s entry into the market. By rights, the Chinese trademark holder can register the marks without any proof of actual use. In some countries, including the U.S., intellectual property rights are normally awarded to the first to use a mark or invention (with proof of use, of course). This is not universally the case
The mode to be used in electronic payments and collect taxes? E-commerce enterprises must decide on an appropriate payment system that is secure and legally authorized to process various payments. Entrepreneurs are struggling to keep up with the complex issues of taxation in the various countries they sell to around the world. Governments are still trying to determine how to best collect taxes on goods and services sold in a borderless Internet.
By Rwakiseta Herbert
The author is Masters student in International Trade Law and Policy at University of Lundi Sweden coordinated by TRAPCA/EASMI
Email: [email protected]