Legal aspects of e-commerce
Date: November 04, 2003Source: Computer Crime Research Center
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Thus, settlements can be only made through credit establishments by using electronic technologies. According to Item 2.1 of RF Central Bank’s Provision “About effecting clearing settlements on the part of credit establishments in the Russian Federation” “clearing settlements are made between credit establishments, affiliated organizations through:
- Payment network of Russia’s Bank;
- Credit establishments (LORO and NOSTRO correspondent accounts);
- Nonblank credit institutions effecting payment transactions;
- Intrabank payment system (interbranch payment accounts).
The existence of payment e-documents generally depends on the following conditions to be observed:
1) Documents are attested with an analogue of the authoritative person’s (-s’) own signature(s);
2) There is a preliminary (writing) agreement about using such documents.
Since electronic payments can be effected only by credit establishments, they should have a corresponding bank license according to the law “On banks and banking activities” and normative enactments of the RF Central Bank. When using models based on the logic of securities that will be considered undocumentary ones according to Item 1, Part 1, Article 149, RF Civil Code, it is necessary to obtain an additional special license granting a right to the electronic fixation of rights assigned with securities. It should be also noted that rights assigned with securities could be electronically fixed only in law-specified cases or in law-established order.
It is evident that the main goal of Internet payments is to accelerate the civil payments and make it easier for its subjects. However, this aim cannot be achieved without an adequate mechanism of settling possible disputes.
The current system of civil and arbitration courts cannot resolve this problem because of long terms of case hearings and judges untrained to deal with such processes.
The natural way-out is to create special arbitration tribunals. However, Russia’s imperfect civil and procedural legislation impedes it. According to Russian laws currently in effect, arbitration tribunals that handle conflicts between citizens can be established only to settle a concrete dispute on a gratuitous basis. Moreover, the legislation does not provide for the possibility of resolving a dispute between natural and juridical persons on the part of the arbitration tribunal.
Therefore, some amendments should be introduced to the current legislation. The system of electronic payments that ensure the required level of e-purchase security cannot be created without the infrastructure of certifying centers. That is why the law on e-signature is necessary to pass.
Since January 2004 Ukraine’s laws “About electronic documents and circulation of e-documents” and “About electronic signature” passed by the Parliament has come in to effect.
Ukraine’s law “On electronic signature” reflects the general conception of the European Council’s related directive, which is based on the voluntary accreditation of key certifying centers and the introduction of uniform procedures of recognizing the e-signature validity.
The questions of equating the electronic signature with the own one and regulating the work of the organizing and technical machinery that allows using the e-signature technology were mainly focused to elaborate the law and the directive as well. Besides, the machinery functioning limits were established, as well as laws and duties of the e-signature subjects were introduced.
The law specifies conditions, under which the e-signature can be equated with the own one [3]:
1. The e-signature is checked with the intensified key certificate including reliable e-signature means. They are means of the electronic signature that have a certificate of conformance or positive expert’s conclusion according to results of the state expertise as to cryptographic protection of information. Only the accredited key certifying centers have a right to form intensified key certificates;
2. The intensified signature key certificate being in effect for the moment of affixing an e-signature is used during the inspection.
3. The personal (secret) key of a person that sets his/her hand corresponds to the open key available in the certificate.
There exists and rapidly develops a potentially huge market of e-commerce in the world. Such a market will be of a serious commercial interest to CIS countries approximately in 3-5 years.
There is no doubt that banks actively attending plastic card sales organizations and purchases services will take advantage of the e-commerce technology in the near future. Plastic cards undoubtedly will play a dominant role as a tool of clearing settlements or e-purchases. Payment systems based on plastic cards will be remaining a single universal infrastructure of clearing settlements that give a guarantee to return money to a shop assistant for rendered services and sold goods.
It should be noted that there are some international standards of e-commerce. They facilitate the compatibility of various manufacturers’ software thereby are a necessary condition for the wide-scaled introduction of the latest technologies.
Unfortunately, the standardization of plastic card payment protocols will be subject to changes resulted from the unsuccessful implementation of SET protocol, the emergence of a new 3D Secure standard that pretends to be the global norm of authentication and the influence of the latest Internet access technologies. It is obvious that a new standard recognized and supported by the largest international payment systems needs some time to pass. It is important that the norm avoided mistakes that had been made to implement the SET. The 3D Secure protocol has high chances as compared with it because of low operating costs and increased efficiency in authenticating buyers and sellers on the part of emitters and attending banks.
It is evident that the plastic card with a magnetic strip is not an ideal tool of Internet commerce payments. The microprocessor card implementing reliable algorithms of dynamic cardholder authentication will replace it. The next step in the development of e-commerce payments will be the introduction of e-cash.
There is a lot of work to do for the legislation. In spite of that the e-commerce is at the very beginning of its development, the accumulated experience and worked out protocols allow asserting with confidence that it is time to start launching wild-scaled projects at the required transaction security level.
1. I. Bogdanovskaya Legal regulation of e-commerce: foreign practice. – http://www.conf3.parkmedia.ru/any_r.asp?URL=bogd.asp.
2. A. Kemradge Validity of transactions concluded through the Internet. – Legal aspects of using Internet technologies. – M., 2002. – P.88.
3. I. Konovalov. Electronic identification card. - http://www.crime-research.ru/library/2101.html.
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