Surfing uncharted waters

The much-awaited e-signature law is only the first byte of a hitherto unexplored, but necessary, legal structure, writes Ihab El-Sonbaty*

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After a long wait, the "electronic signature law" (Law 15/2004) has finally been issued, and all those who worked on it should be congratulated. The success of the e-signature law is dependent on it being part of an integrated structure covering all areas of the online world. This is why it is vital that we issue laws covering e-commerce, e-crime and online financial and economic services.

There is currently a worldwide debate over the correct legislative approach to the Internet. One position calls for absolutely no legislative intervention in the Internet on the basis that the Internet is an entirely new phenomenon that will, in time, generate its own regulatory system that is appropriate for its unique nature.

This is the position taken by a group of American professors, at the head of which is Lawrence Lessig. However, critics have pointed out serious flaws in this approach. Firstly, it is a somewhat fantastical and unrealistic position to take. It ignores the fact that despite its modernity, the Internet is still part of our world, and that by talking of a "unique entity" you risk creating a double standard, by which e-transactions are governed by rules and laws entirely different from those of the outside world.

The second position on the legislative approach to the Internet argues that there is no need for legislative intervention in online transactions, since the Internet is no more than a technological innovation that, like all previous inventions, will submit to the legal system currently in place. This is a dangerous oversimplification that displays an ignorance of the challenges that e- transactions pose to current legal systems. Most advanced legal systems have abandoned this thinking, following the wise recommendations of the UN's Commission on international trade law (UNCITRAL) and its model e- commerce law dating from 1996. Legislatures which have followed the UN's lead include those of the European Union (2000), the United Kingdom (2002), Hong Kong (2000), Spain (2002), Jordan (2001) and Tunisia (2000).

The second approach outlined above chooses to ignore the new aspects of e- transactions. An example of this would be international e-contracts, which pose a number of challenges to civil and commercial law such as the time, subject, place and parties involved in the contract. Our current legal system is unable to tell us when an e-contract was concluded. Was it the moment the e-mail was sent accepting the deal, the moment it arrived on the server hosting the e- mail account, the moment it arrived on the computer owned by the recipient or the moment the inbox was opened and the e-mail read?

As regards the subject of the contract, our current legal system is only designed to deal with goods and services, and it is unclear how it should approach e-goods that are bought and sold online, such as songs and computer programmes. Do they constitute a special kind of goods or services? What about the place the contract is concluded? The e-contract could be between an English seller, an Egyptian buyer and the exchange could take place in Sudan. What laws do we apply in this case? Which courts have jurisdiction?

The parties present another problem. How can our legal system make a ruling on the competence of the parties involved when they concluded their contract having never actually met or known each other? And what about transactions for goods that are treated differently under the law, such as cigarettes and alcohol? What about contracts and transactions made automatically by computers themselves without human intervention?

All these questions, the various laws that could be applied in each case, and the contradictory classifications that would result, demonstrate the necessity of appropriate legislation that encourages and protects all parties undertaking online activities in Egypt.

The third -- and most persuasive -- approach, is one that seeks to incorporate legislation pertaining to e-transactions into existing laws. This is not a call for a new legal system reserved solely for the Internet and e-transactions, but a legislative intervention that closes the gaps created by the unique nature of the online world.

One of the advantages about this new law, which is in accordance with the model law prepared with the assistance of the UNCITRAL in 2001, is that it is the first attempt to tackle the Internet and legislate for e-content, affording it the same status as paper documents. However, the law will not be able to achieve its desired goals without tackling all the issues that have been outlined above.

Furthermore, there are several questions that impose themselves when one deals with this law. One of the most obvious of these is: If one of the aims of this law is to encourage different parties to undertake online activities here in Egypt, then why is it that the Ministry of Communication's website does not contain even a summary --let alone the full text--of the new law in either English or Arabic?

In fact, the way the law has been issued has almost eliminated the very concept of e-signature before it has had a chance to be used. In my opinion, and that of many legal experts, the concept of the e- signature should not be limited to a numerical signature accompanied by a verification certificate accessible to those licensed to read it (i.e. an encrypted signature), but should include the full range of e-signatures; i.e. the signature at the end of an e-mail or a handwritten signature, scanned and interpolated into the e-text. In other words, all the various forms of signature that ensure the signatory's mark can be verifiably distinguished as his, in accordance with Article 18 of the law.

This is because -- as I have observed while studying legislation and experiments in various countries -- it is unlikely that companies and consumers will accept the numerical encrypted signature. As far as companies are concerned, they already have systems in place for exchanging information between themselves, such as the use of the SWIFT system between banks, so they are unlikely to be tempted by a new system that is both riskier and more costly. I can see no reason why the consumer, either, would participate given that the cost of his purchases may be less than a verification certificate that he would be forced to renew on a regular basis.

As for the Agency for the Development of the Information Technology Industry (ADITA), created in Articles 2 to 13 of the law, I am forced to ask about the legislative framework in which this agency is to work since our current legal system does not cover the new aspects of this industry and its transactions. The agency has been given broad powers over online activities and e-issues, without this authority having any clear basis in law.

The law has given this agency wide- ranging powers, from monitoring to dispute resolution, but these powers are vaguely defined and generally impractical. There needs to be a law regulating various fields within e-commerce. For example, Article 4 of the new law maintains that the regulator has the authority to "issue and renew certificates required for operating e-signature services and other online activities in accordance with the relevant laws and regulations". In the absence of an e- commerce law, what are the laws and regulations governing such e- transactions?

The law maintains that the regulator also has the authority to "receive complaints related to e-signatures, e- transactions and other IT activities and take necessary action." How will the agency determine the legitimacy of these online activities? What are the laws and regulations governing e-transactions? How can one determine the legitimacy, and limits of, any actions taken by ADITA?

I have already expressed my concern about the effect this law will have in an environment where different state bodies are unable to cooperate, and where the government is unwilling to adopt other more necessary and important codes such as an e-commerce law, and a well-tailored regulatory mechanism for the e-signature law.

Criticisms aside, this law must be one part of an integrated legislative structure generating an environment that allows Egypt to compete in the world of technology and the Internet. Alongside e- commerce, e-crime and financial and economic services, this structure must be prepared with precision and foresight.

* The writer is an expert on commercial law.