ZeePedia Add to Favourites   |   Contact us


E-Commerce

<<< Previous GLOBAL LEGAL ISSUES OF E-COMMERCE - 1 Next >>>
 
img
E-COMMERCE ­ IT430
VU
Lesson 44
GLOBAL LEGAL ISSUES OF E-COMMERCE
The jurisdiction to try offences under the ETO is vested with the session courts in Pakistan. It may not be
out of place to mention here about the hierarchy of courts in Pakistan (see Fig. 1 below). Law is broadly
divided into two classes on the basis of nature of wrong, namely, civil law and criminal law. Civil law deals
with the private rights of the parties, whereas the object of criminal law is to punish the wrong-doer. Civil
wrongs such as breach of contract are deemed to violate only the rights of individuals and not the society in
general. On the other hand, a criminal wrong (crime) is an act deemed by law to be harmful to the society in
general such as theft or murder etc. and the state itself is a party in such matters.
At the bottom of hierarchy, the court having jurisdiction to try civil wrongs is the civil court and the one
having jurisdiction to try crimes is the court of magistrate. Appeal against the decision of a civil court or
magistrate, in many cases, can be filed in the District court (in civil matters) and in the Session court (in
criminal matters), respectively. Further, an appeal can be filed in the High court, in most cases, against the
decision of the district/session court.
Likewise, the decision of the High court can be challenged in most cases before the Supreme Court of
Pakistan, which is the apex court (the court at the top of the hierarchy). It may be noted that High Court in
certain matters has an extraordinary jurisdiction to entertain cases under Article 199 of the Constitution of
Pakistan, which is called the writ jurisdiction of the High Court. For instance, where a government body has
breached any law, a writ can directly be filed in the High court against such a body.
Hierarchy of Courts
Suprreme
Supeme
Courrt
Cout
High
High
Courrts
Couts
Dissrrcc//Sesson
Di tti i ttSessi ion
Courrss
Coutt
CivvlilCourrss/
Ci i Coutt /
Courrtsoff
Couts o
Magissrrates
Magi ttates
Fig. 1
Most of the countries have, by now, made laws providing recognition to electronic documents and
electronic signatures. They have basically followed a model law on e-commerce proposed by a U.N. body
called UNCITRAL (United Nations Commission on International Trade Law) in 1996. On analysis, it
appears that ETO has certain deficiencies. For instance, difference between an electronic signature and an
advanced electronic signature is not clear. Sections dealing with the offences of violation of informational
privacy and damage to information/informational systems are too broadly worded, which may lead to
confusion. International aspects of e-commerce such as recognition of the foreign certificates and electronic
signatures etc. are missing. Difference in the role of accredited certification service providers and non-
accredited ones has not been logically defined in the ETO. Above all, the rules (to be made by the Federal
Government) and regulations (to be made by the Certification Council) under the ETO are not in place
after so many years have elapsed since its enforcement.
176
img
E-COMMERCE ­ IT430
VU
Let us now examine some major global legal issues of e-commerce. They are listed as follows:
Territorial jurisdiction
Online contracts
in cyberspace
Domain name and trademark conflicts
Online defamation
Online privacy
Issues of taxation on internet
Cyber crimes
Territorial Jurisdiction
There are different forms of jurisdiction. Territorial jurisdiction refers to the competence of a court to
decide a case on the basis of certain geographical area/territory. So, if a dispute arises in Karachi, the courts
in Karachi would only have territorial jurisdiction, and the case cannot be filed in Islamabad or Lahore.
Ordinarily, territorial jurisdiction lies where the defendant resides or carries on business or the cause of
action has wholly or partly arisen or the immoveable property is situated (in case the matter relates to land
etc.).
Note that the person who files a lawsuit is called plaintiff and the person against whom it is filed is called
defendant. Thus, if a contract is signed at Lahore under which Mr. Ali has to deliver certain goods to Mr.
Imran at Karachi and Mr. Ali resides at Rawalpindi, then Mr. Imran can file a suit against Mr. Ali for his
failure to deliver the goods. This suit can be filed at any of the three places, that is, Lahore, Karachi or
Rawalpindi.
Note that there is no question of any conflict of laws in this scenario since laws all over Pakistan are almost
the same. However, things get complicated when we talk of a legal dispute in cyberspace because of the
nature of the internet which transcends any geographical boundaries. Here, different countries, having
different set of laws, may come into picture having certain linkage with the internet transaction. The issue of
territorial jurisdiction becomes complicated when we try to find that the court of which country has the
lawful jurisdiction to decide the internet dispute.
For example, an Australian firm having web site in English doing ecommerce does not indicate to its
customers that it is an Australian firm. The web server hosting its site may be located in Canada, and people
maintaining this site may be the residents of England. Assume a Pakistani buys certain goods from this
Australian firm and is, later, unhappy with the goods received. He might want to file a lawsuit against the
Australian firm. The border/boundary based system of jurisdiction in the physical world does not help this
Pakistani in determining where to file the case. He may consider filing the case in any of the countries which
have linkage or connection with the transaction, namely, Australia, England, Canada or Pakistan. Another
example is of a defamatory message sent from England defaming a Canadian. The web site may be hosted
in Sweden, and the ISP providing services may be located in Brazil. Again, four different countries having
different set of laws are emerging in this transaction, that is, England, Canada, Sweden and Brazil.
In all such matters the plaintiff has an option to choose the country/forum for filing his case. Obviously,
the plaintiff would choose the forum whose laws are more favorable to him as compared to the defendant.
The relative ease with which the plaintiff in cyberspace can drag the defendant to the forum of the
plaintiff's choice is called forum shopping. So, if the law of evidence in Singapore suits the plaintiff and he
can also establish cause of action or linkage of the internet transaction with Singapore, then the case may be
legitimately filed there. One of the key tests that the courts have prescribed to determine territorial
jurisdiction in cyberspace is to examine the level of interactivity, commercial nature and effects of the
exchange of information.
177
img
E-COMMERCE ­ IT430
VU
Online contracts
In the physical world three elements must be satisfied in order to make a valid contract, namely, offer,
acceptance and consideration. The same three elements must also be present in case of a valid online
contract. An offer is a commitment with certain terms made to another party such as willingness to buy or
sell certain product.
A contract is formed when a party accepts the offer of another party for consideration. Consideration is the
agreed exchange of something valuable for both the parties such as money, property or services. For
example, Mr. `A' offers to buy a basket of apples for Rs. 200, which is accepted by Mr. `B' and thus a lawful
contract comes into existence between them. Here, consideration for Mr. `A' is the basket of apples he is
getting, and for Mr. `B', Rs. 200 in exchange of his apples. In most cases when you click `I accept' or `I
agree' button on a web page, it indicates your acceptance to the terms of a certain offer, and this can give
rise to a lawfully binding contract (also known as a click wrap agreement).
It is not necessary to have a written contract. The contract can be made orally or by conduct or through
correspondence. So, offers and acceptances can occur in the cyberspace when parties exchange email
messages, engage in EDI, fill out web forms or download a web page. An offer can be revoked as long as
no payment, delivery of service or other consideration has been accepted. Note where a seller advertises
goods for sale on a web site, it is not making an offer but is inviting offers from potential buyers.
Normally, by looking at a web ad, the buyer can send an order, which in fact is an offer the seller can
accept, to form a contract. If the seller cannot supply the ordered items it has an option to reject the offer
or make a counter offer. Then the buyer has the option to accept or reject the counter offer
(See Fig. 2 below to understand the concept).
Offer and Acceptance
Unconditional
Valid
Statement of
Contract
Acceptance
Offer
Acceptance
Conditional
Rejection of
Becomes
Statement of
Offer
Counter Offer
Acceptance
Offer
No Contract
Rejection
Terminates
Fig. 2
In online environment acceptances may be issued by an imposter/cheater that does not have authority to
bind the online business. To overcome this problem companies and individuals can use digital signatures to
establish identity in online transactions.
It is particularly desirable that where a contract is of significant amount, parties should require each other
to use digital signatures to establish identity and to confirm that person making an acceptance has the
authority to bind the company. Where due to the failure of a company to protect the passwords stored with
it, an imposter is able to enter company's system and accept an offer; a court might find such negligent
178
img
E-COMMERCE ­ IT430
VU
company to be responsible for the breach of a contract. In such circumstances the company may be
directed to fulfill the terms of the contract or pay compensation to the aggrieved party.
in cyberspace
is a huge area of concern in cyberspace due to the nature of internet technology. A is
an exclusive right granted by law to the author or creator of a literary or artistic work to reproduce, print,
publish or make copies of such work. Creations or works that can be ed include books, music,
artwork, audio and video recordings, computer software, architectural drawings, product packaging etc.
Note that there is no in ideas. Only, a particular form or expression of the idea can be
ed. If an idea cannot be separated from its expression, the work cannot be ed. Thus, in
most cases, mathematical calculations cannot be ed. Most web pages are likely to be protected by
because words, graphics and html tags are arranged in such a manner that it may give rise to an
original work. Naturally, it causes a problem. Each time an http request is made by a client, a copy of the
html document can be made on the client machine. Similarly, where ISPs are engaged in caching, an extra
copy of the web page is made/stored in cache memory on the system of the ISP. Some people had argued
that law could not be enforced on the internet in the above circumstances.
There is a concept of `fair use' or `fair dealing' in law that provides legitimate exceptions to
violation. Generally, fair use of a ed work includes copying it for use in criticism,
comment, news reporting, teaching, scholarship or research. Experts draw support from this concept of
`fair use' to deal with the problem of over the internet. It is also argued that in cases where the
author of a work has himself provided a hyperlink leading to his work, he should be regarded as giving the
implied authority or license to download or make copies of his work. In such an eventuality, the issue of
should not arise according to an opinion.
Generally, the protection under `fair use' may be sought on the following basis:
Nature of use:- the work has been used for educational and/or non-profit purposes only;
Nature of work:- if the copied work contains factual information then it may be more effectively covered
under the fair use clause as opposed to some creative work;
Extent of the work copied:- if the amount of work copied is insignificantly small then the courts might take
a view favorable to the accused;
Effect on the market value of the work:- A person alleged with the violation may escape any
liability arguing that the work has not been circulated to many people and there has not been any negative
impact on the value of actual work due to the circulation.
When you make fair use of a ed work you should provide citation to the original work to avoid
any charge of plagiarism. The charge of plagiarism can be leveled against a person who tries to copy the
expression of the original author presenting it be his expression in order to obtain credit for the academic
work. Academic institutions can take serious action against students/persons who are found guilty of
plagiarism.
It may be interesting to refer to the famous `Napster case', here. The company, Napster, had a web site. It
used to provide software and a network to millions of people using which they could exchange music files
on internet that they had copied and compressed into MP3 format. Many music recording companies sued
Napster for facilitating violations of their . Napster argued that it only provided the way or
machinery but was not directly involved in violation. Disagreeing with that the courts in America
found that Napster was guilty of vicarious or contributory infringement, as it was capable of
supervising infringing activity and was obtaining a financial benefit for such an activity. Eventually, the
court ordered that Napster site should be shut down. Napster agreed to pay 26 million dollars in damages
for infringement to a group of music companies and agreed to pay holders for the
music that would be downloaded in future.
179
img
E-COMMERCE ­ IT430
VU
World Intellectual Property Organization (WIPO) is a U.N. sponsored body. In 1996 it proposed two
international treaties on which were signed by many countries of the world. Those who signed
these treaties agreed to adopt or amend laws in their respective countries to ensure protection to
ed work of the author of a signatory country in view of the new infrastructure or technological
developments in respect of digital information exchange.
180