NZ lags Australia on e-commerce legislation

While the New Zealand government continues to put off making a decision on electronic commerce legislation, the Australian attorney general has published draft legislation to remove some of the uncertainty surrounding e-commerce. A draft of the Electronic Transactions Bill launched for public comment takes a technology-neutral stance, giving a generic framework for e-commerce rather than mandating specific technologies.

While the New Zealand government continues to put off making a decision on electronic commerce legislation, the Australian attorney general has published draft legislation to remove some of the uncertainty surrounding e-commerce.

The Australian federal government and attorney general launched a draft of the Electronic Transactions Bill for public comment on 28 January. The draft takes a technology-neutral stance, giving a generic framework for e-commerce rather than mandating specific technologies. The stated object of the bill is to provide a "regulatory framework recognising the importance of the information economy to the future prosperity of Australia" by raising business and consumer confidence. A transaction, it says, is not to be seen as invalid merely because it took place by electronic communication: requirements for information to be given in writing, for a signature or for information to be produced, recorded or retained can all be covered by electronic means. The bill is based on the United Nations Commission on International Trade Law's (UNCITRAL) Model Law on Electronic Commerce which aims to provide a template of internationally acceptable rules.

According to reports in Computerworld Australia, the bill has been greeted with general approval although it has been criticised in some quarters for being too light-handed. The federal government's aim was to allow competition in technology development to produce the most efficient solutions, but the open approach may mean some situations still have to be resolved in the courts.

The New Zealand government is still looking at what changes, if any, need to be made to legislation. The Ministry of Commerce's Information Technology Policy Group, which is charged with looking at current e-commerce issues across all government departments, is due to report its findings in a cabinet paper by the end of February. "We've been directed to carry out a work programme," says MOC policy analyst Andrew McCallum, "coordinating e-commerce work across departments and making sure there are no gaps or overlaps in what's being done." While the government's initial view is that existing laws are probably broad enough to cover electronic transactions and no further legislation is needed, "a decision on that won't be made until after our cabinet paper is complete". No deadline has been set for a decision on legislative change, he says, but any legislation would be technology-neutral and would stress "functional equivalence" — a digital signature would be equvalent to an ink one.

Glen McCauley, secure e-business solutions manager with Deloitte Touche Tomatsu, says the Ministry of Commerce has been looking at setting down guidelines for a couple of years but says it's been slow and cautious. "So it looks as though someone will have to take it to court to get a precedent set." Companies in New Zealand, he says, "are starting to transact e-business anyway, in the absence of any statement of whether or not its legal — that's not a nice footing to be on. What happens if it turns out they're in the wrong, and their deals aren't legal? Basically they're having to write complicated contracts stating how the electronic transaction will be done."

Digital signatures, he says, are covered by legislation in a number of European countries, some American states, Australia and Malaysia. "Others, as New Zealand is likely to decide, are leaving it to market forces and you have to decide whether or not you trust that."

A private sector certification authority, 128i, was launched in Wellington in September last year. The company issues digital certificates to identify and authenticate users. Director David Young says the company is getting quite a bit of business, though "mainly pilots at the moment, as companies get a handle on it".

As a member of ITANZ, he says 128i is involved in submissions to the Law Commission, which has released the first of four reports on e-commerce, a guide for the legal and business community. "We generally endorse the conceptual framework they've put together to date," says Young, "but we don't agree that the general law will provide a good enough framework — it lags behind the commercial reality. Business people want certainty if they're going to move to something new."

If the government is unwilling to legislate, he says, "it could at least build a 'de facto' infrastructure and influence how things develop". He would even like to see the New Zealand government go further than the Australians, by defining a digital signature and certificate standard. "We're now at the point where the basic framework won't change. We'll see new algorithms develop, for sure but the basics won't change that fast."

And who will certify the certifiers? asks McCauley. 128i, he says, "has good standards and appears to be doing a good, honest job, but how do you control others who enter the market?" McCauley says he is not calling for legislation, necessarily, "because I do believe that it can work in a market oriented way. But there do have to be some guidelines, or precedents, set".

At the moment, he says, because of the lack of certainty, most e-commerce is still between "known business partners, because there's security in that. I think it'll be five years before people are confident enough to do blind business transactions in total anonymity."

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