Introduction

The background to the Model Law on Electronic Transferable Records (‘ML-ETR’) requires 11.01 an appreciation of the approach taken in, and the purposes underlying, the previous texts promulgated by Working Group IV (Electronic Commerce) of UNCITRAL.^[1080] UNCITRAL was formed by resolution of the United Nations General Assembly in December 1966.

In 1996, UNCITRAL released what is currently the most popular model law for ensuring 11.02 consumer and commercial protection in an electronic environment. The UNCITRAL Model Law on Electronic Commerce (‘ML-EC’)^[1082] provides nations with a template of inter­nationally acceptable and robust rules that would remove legal obstacles to electronic com­merce and create a more secure legal environment for those participating in such activity. The ML-EC was intended to facilitate the use of electronic forms of communication and the digital storage of information in electronic records.

To this end, the ML-EC provides standards to assess the legal force of electronic messages 11.03 and legal rules for electronic commerce in specific areas, such as the carriage of goods.

equivalent to the traditional paper-based form, it should be treated equally by the law; and the law should not discriminate against transactions because of their electronic form. These core principles permeate virtually all domestic legislation based on the ML-EC. An additional principle underlying the ML-EC is that of technology neutrality. This term was chosen in response to the recognition that technology is constantly developing. For ex­ample, as the term ‘electronic mail' connotes a particular medium of communication, the ML-EC uses the more generic expression ‘data message' to avoid that concept and its de­scriptive language becoming anachronistic.

11.04 More specifically, the ML-EC addresses the legal recognition of data messages; the notion of ‘writing' in the electronic sphere; the legal validity of electronic signatures; the recogni­tion of an electronic record as an ‘original' record; the legal admissibility of, and eviden­tiary weight to be attributed to, data messages; the retention of data messages; the formation and validity of contracts by electronic means; the recognition by parties of data messages; the attribution of data messages to particular parties; the acknowledgement of receipt for data messages; and the determination of the time and place of dispatch and receipt of data messages.^[1083]

11.05 The ML-EC represented a significant step forward in relation to the regulation of electronic commerce and largely achieved its objectives of removing legal obstacles, promoting com­mercial certainty, providing a more secure legal environment for electronic commerce, and being ‘of use to individual users of electronic commerce in the drafting of some of the con­tractual solutions that might be needed to overcome the legal obstacles’.^[1084] The ML-EC has gained significant international acceptance, being incorporated into legislation in more than 150 jurisdictions.^[1085] The drafting process was attended by representatives of over fifty nations and ten international organisations.

11.06 In 2005, the United Nations released the UN Convention on the Use of Electronic Communications in International Contracts (‘the Electronic Communications Convention').^[1087] The Electronic Communications Convention is intended to assure commer­cial parties and financial institutions internationally that contracts negotiated electronically are as valid and enforceable as traditional paper-based transactions. The provisions build on and improve both the ML-EC and the UNCITRAL Model Law on Electronic Signatures promulgated in 2001.^[1088]

The Electronic Communications Convention implemented several improvements to the 11.07 ML-EC. First, certain definitions were refined and extended. For example, ‘communica­tion’ and ‘electronic communication’ were added to expand the limited meaning of ‘data message’. ‘Communication’ now includes ‘any statement, declaration, demand, notice or request, including an offer and the acceptance of an offer, that the parties are required to make or choose to make in connection with the formation or performance of a contract’.^{style='font-size:9.0pt; font-family:"Times New Roman",serif;color:black'>[1089]} ‘Automated messaging system’ was inserted to address the issue of transactions and mes­saging being generated by a computer program without human review or intervention. ‘Originator’ and ‘addressee’ were refined to apply to the expanded meaning of electronic communications.

Second, the test for the functional equivalence of a ‘signature’ was expanded.

Third, the test for determining the time of dispatch and receipt was outmoded. The ML-EC 11.09 test for ascertaining the time of dispatch did not take into account the possibility that the sender might retain the ability to retrieve a sent message. The ML-EC test for determining time of receipt referred to a communication entering a ‘designated information system’ without any further explanation. As regards email, courts were unsure whether ‘desig­nated information system’ meant the Internet generally, the recipient’s internet service pro­vider or the recipient’s email inbox. This was rectified by the Electronic Communications Convention using the expression ‘capable of being retrieved’^[1092]

11.10       Fourth, the Electronic Communications Convention introduced provisions governing con­tracts involving electronic communications in order to deal with invitations to make offers, the use of automated message systems for contract formation and for the correction of errors in electronic communications.^[1093] The Convention also removes any legal obstacles that may arise from treaty provisions concluded before the widespread use of electronic com­munications.

11.11       The ML-EC and the Electronic Communications Convention were intended to apply to electronic forms of writing, signatures, transactions, and contracts. They were not in­tended to apply to negotiable instruments, documents of title, and similar trade documents. Indeed, Article 2(2) of the Electronic Communications Convention specifies certain exclu­sions, which include:

[B]ills of exchange, promissory notes, consignment notes, bills of lading, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money.^[1096]

11.12       The reason for this deliberate exclusion was a concern regarding the potential consequences of unauthorised duplication of documents of title and negotiable instruments. Indeed, any transferable instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money makes it necessary to develop mechanisms to ensure the ‘singularity' of those instruments. Additionally, the issues raised by negotiable instruments and similar trade documents involve considerations that go beyond merely ensuring the equivalence between paper-based and electronic forms.

[F]inding a solution for this problem required a combination of legal, technological and business solutions, which had not yet been fully developed and tested.^[1097]

11.13       The Working Group quite deliberately put aside the thorny issues of the functional equiva­lence of electronic transferable records until a later time. That time came in 2011 when UNCITRAL held a colloquium ‘with a view to identifying a roadmap for future work by the Commission in the area of electronic commerce, with particular regard to legal issues relating to electronic transferable records’.^[1098] As a result of that colloquium, UNCITRAL mandated Working Group IV (Electronic Commerce) with drafting rules concerning elec­tronic transferable records. In the first few sessions, the delegates debated whether the work should take the form of a convention, a model law or some other form of text. The Working Group eventually settled on a model law.

II.