Introduction
Technological advancements and globalization in the contemporary society have resulted in the identification of e-commerce as one of the tenets of economic development across the world. Several countries in the GCC and across the world have established laws that guide electronic commerce and guide the use of different electronic transactions. Aspects such as e-signatures, protection of confidential information and e-contracting are being used extensively across the world. In Kuwait however, there are still some legal constraints in the implementation of electronic commerce practices and engagement in all supporting electronic practices. The ensuing paper sections examine the relevance of various electronic transactions to the Kuwaiti legal and commercial environments.
E- Contracts and their Legality
An E-contract is a contract that is developed, modeled, deployed and executed through a software system. They are conceptually similar to the conventional paper based contracts used for commercial purposes. Vendors who are into e-contracting develop presentations of their products, prices and the terms of sale to the potential buyers.[1] The buyers then review their options and come up with their own negotiation points. Once the negotiations are completed, the buyers can place orders for products and make payments for the same. The vendors can then deliver the products agreed upon. While similar to traditional contracts in several ways, e-contracts pose significant legal and technical challenges in the development and execution process. The main challenges arise at three different levels including the conceptual, implementation and logical aspects. Nonetheless, it still offers flexibility in space, distance, time, place and payment, which are core requirements of the contemporary business environment.[2] The scope, nature and legality of e-contracts can be understood through comparison with the traditional contract model.
For the legality of e-contracts, the prospective contract parties have to ask various questions concerning the contract attributes. Measures used for the evaluation of legality of e-contracts are almost the same as those which are used in the traditional contracts. Tamrakar and Pal suggest that before concluding that an e-contract is legal, there has to be a consideration of factors such as validity of the contract, presence of an offer, and compliance with minimum legal requirements for contract legality.[3] The law currently recognizes contracts formed through other media such as telex, facsimile and other technologies. A contract is considered valid if it satisfies the requirements of the law regarding its formation. Primarily, it should be the result of registered intention between the vendor and the buyer. The agreement between the contracting parties is the minimum requirement for the formation of contracts in that the vendor has to give an offer while the buyer needs to accept it. Advertisement on company websites may not necessarily be considered a contract since offers and intentions to treat are considered two distinct features. The test of the intention is to determine whether the vendor intends to be legally bound by the communicated message or not. Where the vendor has the intention of being legally bound, an advertisement can be considered an offer.
The buyer can accept an offer either in writing or through conduct by making an order for the offered product. To create a valid e-contract, the acceptance needs to be unequivocally and unconditionally communicated. The general rule for contracting, which is extended to e-contracts is that the acceptance becomes effective upon receipt. The party that gives an offer should be aware of the rule of acceptance and thus make sure that all acceptances are delivered. The third condition for e-contract validity is the presence of a consideration and the performance of the contract. A consideration is whereby the promise to perform is made in exchange of something else. Alajaji describes the principle of Kuwaiti law in reference to the legality of e-contracts.[4] The Kuwaiti law goes contrary to the general rule that suggests that an advertisement or publication directed to the public can be considered in lieu of intention to treat. The Kuwaiti regulation on e-contracts posits that no advertisement, public communication or publication can be taken to be an implicit offer by the advertiser. In this essence, there would be no evaluation of whether the advertisement reflects an intention to treat or not. Instead, a prospective buyer has to wait for an official confirmation from the seller.
Consumer Protection in E-Contracts
Tamrakar and Pal suggest that while the present rules apply to e-contracts. There are concerns among consumers about the security of commerce over the internet.[5] In online selling, an e-directive that regulates security matters emphasizes minimizing abuse of the online spaces by clarifying the key points that must be supplied to the prospective buyer in comprehensible and clear format; ensuring that sellers provide a written confirmation of the offer in another format or medium and availing it to the prospective buyer; ensuring that the sellers give the buyers the right of withdrawal; and following up with suppliers for the reimbursement of financial losses through fraudulent processes. The right of withdrawal enables buyers to get out of deals that they were fraudulently involved in, those that they entered with enough knowledge and deals entered into inadvertently.[6] It also ensures that there is a seven day cooling period whereby buyers are allowed to return goods purchased to the vendors without any financial risks.
To foster relationship building between clients, e-contract conditions should be satisfied within thirty days after agreement unless there is an express agreement between the vendor and the buyer. Where buyers lose funds through fraudulent credit card use, e-commerce companies place liability for credit card fraud on the credit card companies. The companies are required to reimburse customers the losses they incur as a result of fraud.[7] Sellers also have to be protected from fraudulent buyers. For credit card systems and electronic payment methods, e-commerce companies provide charge-back clauses in e-contracts and also emphasize the importance of pre-payment as part of the contract agreements. Through the e-directives therefore, both consumers and sellers are protected from rogue sellers and buyers respectively.
As in the application of general law, the Kuwaiti law also provides for consumer protection through reliance on various Islamic principles. One of the Islamic law principles is that in any given contract context, the buyer and the seller should conclude contract arrangements even though meetings may extend beyond the contract agreement. The law stipulates that the parties to a contract have to meet since no publication can be considered to be an implicit contract even though all indications may show the same.[8] Without the support for explicitly electronic contracts, it is somehow difficult for the country to put in place measures for the protection of the consumers against e-commerce fraud in digital formats. The institution of liabilities for the breach of contracts is one of the strategies that Kuwait uses to protect its consumers and sellers against fraud. Any party that commits a breach of the initial contract agreements is likely to face liabilities under the contract law. The nature of the networks and systems used by businesses in the conduct of e-commerce provides a leeway for parties to be held liable for breaches where contracts originated from them. However, programming errors, deliberate misconduct and employee mistakes could result in legal proceedings. According to Tamrakar and Pal electronic commerce policies dictate that when prospective buyers receive offers, they can rely on the legal expressions made through the sender’s computer and be able to attribute any accompanying messages to the sender.[9]
Validity of Electronic Signatures
A digital signature is an authentication of an electronic record through the use of an electronic procedure or method. Digital signatures are also called e-signatures. They serve the same purpose in electronic documents, as hand written signatures do in printed documents. The signature should be an unforgettable piece of data which affirms that the named person is responsible for writing the undersigned content and also that they have the liability for any implications that their writings may have. It also confirms the signee agrees to the information in the document. According to Alajaji, an e-signature enhances the security of an electronic document better than the handwritten signature does for the printed document.[10] The recipient of a message that has been signed digitally verifies the authenticity of the received message by confirming that the message is from the indicated sender and is without any alterations.
Secure digital signatures cannot be changed, repudiated or disowned by the sender. They can thus be utilized for the authentication of digital messages by ensuring that the message recipient can identify the sender as well as the message integrity.[11] The key drawback associated with e-signatures on e-contracts is that there is no alternative procedure for authenticating the identity of the other party to the contract except the digital identities. It is therefore relatively easy to forge the identity of a person through digital platforms. The Kuwaiti electronic transaction law art 18 recognizes the relevance of e-signatures in electronic communication. The law states that the requirements for an individual’s signature would be considered satisfied upon the use of an electronic signature.[12] This law is similar to the law on electronic signature use in most of the other GCC countries.
The Importance of Personal Data and Privacy
In electronic commerce, personal data is an important feature of transactions. Personal data include aspects such as electronic identities and other confidential information such as residential information and credit card information. Personal data helps in the identification and authentication of the identities of parties to internet based transactions.[13] However, the use of personal data through internet based platforms raises a lot of concerns over data security and confidentiality. In response to this, different regulations have been established across the globe to ensure that internet users are aware of implications of sharing personal data over the internet and also providing alternative data protection processes.
Countries such as Malaysia have come up with regulations that require internet advertising companies to notify consumers of their internet profiling activities and to give the users the opportunity to choose whether they would like their data to be made available publicly or not.[14] Among the GCC countries, only Oman and Saudi Arabia have clearly established regulations on the management of personal data.[15] Other countries including Kuwait are still in the process of formulating regulations that support electronic transactions and data management. There are no specific laws for the collection or protection of personal data. On the contrary, the ET law places the burden of data protection on the organizations that collect such data.[16] Any transactions performed in the electronic form would therefore be subject to the risk of data security loss. Levac points out a potential discrepancy between chapter 2 and chapter 6 of the ET law which protects the data privacy concerns for governmental organizations, non- governmental institutions, public entities and agencies among others.[17] Such organizations have their confidential information protected under government law.
How Kuwait Regulates Electronic Signatures
While the ET law does not clarify the role of the national legislation on various aspects of electronic transactions, electronic signatures are recognized as a valid identity authentication procedure for digital documents. The use of electronic signatures in Kuwait is governed by regulations which require such e-signatures to provide the possibility of identifying the signatories of e- messages, providing an exclusive link between the signature and the signatory, implementing the signature through the use of a safe signature tool and under the control of the signatory during the signing process. There should also be a possibility of detecting changes in the data linked with the signature and relationship between the signatory and the date of signing.[18] The signature used should also be in compliance with the technical requirements of the ET bylaws.
Kuwait and Electronic Payments
Electronic payments in Kuwait are addressed through the Electronic Transactions Act (ET). The act covers aspects of electronic transactions such as electronic signatures, electronic documents and recording, electronic messaging, civil and commercial electronic transactions. According to Levac, the Kuwaiti ET law stipulates that no one is expected to make any transactions by electronic means.[19] One of the key concepts associated with the law is that it recognizes the validity of a printed version of an electronic document as evidence in a court of law. However, this has to be provided such that the hard copy is a direct match of the original electronic version of the document. For any electronic document to be accepted in court as evidence, the ET law requires that the document should have been saved in the original format in which it was sent, created or received or in any other way through which the data in it can be confirmed accurate. The data within electronic documents should also be maintainable and storable for spontaneous retrieving. The data should also show an authentic identity of the creator or sender and should be in electronic format.[20] Conversely, chapter 6 of the same ET law however states that electronic payments can now be considered acceptable as a form of payment in the country. The details of this position however, are not provided therein.
Conclusion
Electronic transactions are still a relatively new phenomenon in Kuwait. While the country recognizes e-signatures as a means of identification and authentication of digital data signatories, there are no explicit laws that regulate data protection, electronic payments and e-contracting. The available ET law stipulates that electronic transactions should be limited and supported by hard copy documentations, which limits the efficiency of the process. As technology continues to advance however, it is expected that Kuwait will open its doors for more aggressive electronic transactions to foster commercial efficiency.
Bibliography
Alajaji, Abdulrahman Abdullah. “An evaluation of e-commerce legislation in GCC states: lessons and principles from the international best practices (EU, UK, UNCITRAL).” PhD Thesis, Lancaster University, 2016. Retrieved from eprints.lancs.ac.uk/83401/1/2016Abdulrahmanphd.pdf
Azmi, Ida Madieha. “E-commerce and privacy issues: an analysis of the personal data protection bill.” International Review of Law Computers & Technology, vol. 16, no. 3, 2002, 317- 330. Retrieved from www.researchgate.net/publication/245995663_E-Commerce_and_Privacy_Issues_An_Analysis_of_the_Personal_Data_Protection_Bill
Jawahitha, Sarabdeen, Ishak, Mohamed and Mazahir, Mohamed. “E-Data Privacy and the Personal Data Protection Bill of Malaysia.” Journal of Applied Sciences, vol. 7, no. 5, 2007, 732- 742. Retrieved from scialert.net/fulltextmobile/?doi=jas.2007.732.742
Levac, Laurent. “Kuwait: Law Regarding Electronic Transactions in Force – Introduction of a Concept Akin to Data Privacy.” Global Compliance News, 2015 December 11. Retrieved from globalcompliancenews.com/kuwait-law-regarding-electronic-transactions-in-force-introduction-of-a-concept-akin-to-data-privacy/
Tamrakar, Vasudha and Pal, Pratibha. “E-contracts and its legality.” Legal Service India Inc., 2018. Retrieved from www.legalserviceindia.com/articles/ecta.htm
[1]Abdulrahman Abdullah Alajaji. “An evaluation of e-commerce legislation in GCC states: lessons and principles from the international best practices (EU, UK, UNCITRAL).” PhD Thesis, Lancaster University, 2016.
[2] Vasudha Tamrakar and Pratibha Pal. “E-contracts and its legality.” Legal Service India Inc., 2018.
[13] Sarabdeen Jawahitha, Mohamed Ishak and Mohamed Mazahir. “E-Data Privacy and the Personal Data Protection Bill of Malaysia.” Journal of Applied Sciences, vol. 7, no. 5, 2007, 732- 742.
[14] Ida Madieha Azmi. “E-commerce and privacy issues: an analysis of the personal data protection bill.” International Review of Law Computers & Technology, vol. 16, no. 3, 2002, 317- 330.
[15] Alajaji, An Evaluation, p. 248.
[16]Laurent Levac. “Kuwait: Law Regarding Electronic Transactions in Force – Introduction of a Concept Akin to Data Privacy.” Global Compliance News, 2015 December 11.