Part One: Additions/Changes to Uncitral Model Law

Author:Gregory, John - Pestaina, Mr Gene
Profession:General Counsel, Policy Branch - Attorney-at-law

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1 Issues arising from Chapter I of Model Law
a) Scope of the Commonwealth model law

The Group recommended that the Commonwealth model should apply at least to all matters within the definition of "commercial" as defined in the Note to Article 1 of the UNCITRAL Model Law. Although the Group made no recommendation beyond this, it noted that some countries have drafted their legislation in wider terms (e.g. the Australian Electronic Transactions Act applies to "transactions" and is not therefore limited to commercial transactions; the same is true of Singapore. Canada's uniform legislation applies to all rules of law, commercial or not, except where expressly excluded.)

Conscious of the issue of equal access, the Group recommended the insertion of a separate provision which makes it clear that any obligation on Governments to publish documents or information, or to make them available for public access and inspection, cannot by reason of this Model Law be satisfied solely by publication or access in electronic form. Individual programs or departments may decide to use exclusively electronic communications, but this general legislation will not give it the authority to do so. In other words, in order to publish only in an electronic form the relevant body will need to point to authority outside the model legislation for such an approach.

b) "Data message"

The UNCITRAL Model Law employs the term "data message". The Group was of the view that labels and definitions were now available which better captured the concept. There are several pieces of legislation either in force or drafted as models that employ a different set of terms and definitions. The Group suggested a preference for the set of definitions in the Canada Electronic Evidence Act. The terms used there are:Page 8

- data

- electronic record

- electronic records system.

In this Report for convenience' sake there are references to data message where that term is used in the model law. However, the Group recommends that when the Commonwealth Model Law is drafted, the above definitions should be employed throughout the Act.

c) Inclusion of a general consent provision

The Group recommended that the Commonwealth Model Law should state more clearly than the UNCITRAL Model Law does, that no-one is forced by the Model Law to accept any information by electronic means. An electronic communication will be effective in law only if a recipient consents to receive information by such means. It was felt that UNCITRAL provision was ambiguous. The Group suggested that this extra consent provision should include:

- a general provision that the recipient must have indicated consent to receiving the information in that electronic form; if the circumstances support it, consent may be inferred from the conduct of the recipient;

- where the transaction involves the government, a specific provision that makes it clear that not only must the Government consent, but that in the case of a Government, consent must always be express and cannot be inferred from its conduct;

- a provision which makes it clear that a Government can specify the manner, form and any other control processes under which it will accept information in electronic form.

The Group intends that the last bullet-point above will be addressed in the Explanatory Guide to the model law to show why it is important that Governments be capable of verifying identity and authenticating electronic documents, indicating the threats to efficiency and the risk of public costs if insecure processes are used. References:

Section 6 - Uniform Electronic Commerce Act - Canada

Section 47 - The Electronic Transactions Act - Singapore

Sections 5 and 18 - Uniform Electronic Transactions Act - USA Page 9

d) Specific Exceptions to the Application of the model law

The Group noted that most enactments in this area have included a list of specific exceptions. The effect of an exception is to maintain the position that the "writing" requirement in the law can only be satisfied by paper documentation. The primary rationale for exclusion is that an appropriate level of security cannot be provided in a statute of general application to allow these transactions to be included, and the public interest in the transactions is large enough to disallow people from taking the risks associated with inadequate security.

In keeping with settled practice elsewhere, the Group recommended that the Commonwealth model should contain exceptions. The Group divided the options into three categories, namely:

a) Definite Exclusions

b) Possible Exclusions

c) Government Documents.

Each is considered in turn.

I Definite Exclusions

The following are almost always excluded and the Group agreed that this should be the case with the Commonwealth model:

- Wills

- Negotiable Instruments

- Documents of Title

- Transfers of Land Generally.

Wills are always excluded, though they are not in themselves a commercial transaction. The Group recommended that the model legislation reflect this general practice. However, if a country's legislation is specifically limited to commercial transactions, then that country may wish to consider whether wills should be excluded.

As regards transfers of land generally, it was felt that the exclusion here should only relate to...

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