Volume 7, Number 4, Page 1

Electronic Commerce in the Western Hemisphere: An Ongoing Series

Electronic Signature Systems - Are certification authorities currently operating in your country? Are these authorities private companies, cryptonotaries/ cybernotaries, chambers of commerce, etc.? Please describe how these certification authorities operate and whether they have been regulated. Does your system accept other electronic signatures that do not require the intervention of a third party, such as two-party or self-generated signatures?

M. Devoto - Argentina

Currently, no certification authorities are formally operating in Argentina.

R. Nogueira / L.H. Ventura - Brazil
Certification authorities are currently operating in Brazil. In general, these authorities are private international companies. Signatures on paper-based contracts are normally authenticated by public notaries in Brazil. In contrast, electronic signatures, web sites, and domain names are authenticated by aforementioned authorities. However, as mentioned in other responses, authentication certificates are not legally valid in Brazil.

Certification authorities operate through Brazilian representatives. Currently, no specific rules regulate their activities.

J. Remsu - Canada

In Canada, private companies and banks (the Canadian Payments Association, the Bank of Nova Scotia, Bank of Montreal through its affiliated subsidiary Cebra) are operating, or are planning to operate, as certification authorities (CAs). The Government of Canada is establishing its own Public Key Infrastructure for service delivery and for communications with citizens. In Quebec, La Chambre des Notaires du Quebec is working to establish a system of cybernotaries to support e-commerce.

Currently, there are no statutes, regulations, or licensing schemes that specifically govern how CAs are established or how CAs operate, other than general corporations laws in force at both the federal and provincial levels. CA operations are conducted in accordance with policies, practice statements and contractual frameworks. Bill C-54, discussed in previous editions of the Trade Report, contemplates the recognition of two- party or self-generated signatures as an electronic signature technique, but does not recognize them as secure electronic signature techniques.

Practices are developing in Canada that utilize electronic signature techniques other than digital signatures supported by a trusted third party, and such techniques would probably be accepted under Canadian law. However, the only decided cases in Canada relating to electronic forms of communication dealt with faxed signatures (and upheld them as valid under the circumstances).

J. Otero - Chile

To date, there are no certification authorities operating in Chile. Certain Chambers of Commerce have stated their interest in assuming such role.

The draft law on electronic documents does not reference certification authorities or the eventual regulations that should govern them.

F. Reyes - Colombia

Due to the recent promulgation of Law 527 of 1999, certification authorities are still not operating in Colombia. However, Article 29 of the statute provides for the creation of these authorities and establishes provisions to govern them. Specifically, certification authorities in Colombia may be private or public individuals or legal entities, either domestic or foreign. Chambers of Commerce also qualify to act as certification authorities. Applications to form, and for authorization to operate as, a certification authority are submitted to the Superintendence of Industry and Commerce. In addition, the National Government has stipulated certain requirements for certification authorities.1

Pursuant to Article 45 of the Law, within 12 months of the law's entry into force, the Superintendence must designate a division or office to supervise the activities of the certification authorities. The regulations defining such oversight functions have yet to be issued.

Law 527 does not regulate the use of electronic signatures that are not verified by a trusted third party. However, according to the broad construction principles provided for in the law, such electronic signatures may be used unless expressly prohibited. Nevertheless, the probative value afforded such uncertified signatures will be less than that afforded certified signatures.

J.A. Avellan - Colombia

With the creation of registration and certification authorities in chambers of commerce worldwide, the ICC will be providing "trust-enhancing services for PKI" by establishing a top-level accreditation scheme, with the support of the International Bureau of Chambers of Commerce (IBCC). The accreditation will be voluntary, but its enforcement will be based on clear contractual arrangements. By definition, the system will not be technology neutral, and the accreditation criteria is yet to be established.

O. Becerril - Mexico

As mentioned in previous editions of the Trade Report, the draft e-commerce law pending in Mexico contemplates the creation of a certifying authority, which is likely to be a governmental body. Hopefully, the existence of such authority will result in the legal acceptance of electronic signatures. At the present time, however, Mexico considers any electronic signature totally invalid for any legal purpose.

F. Galindo - Spain

Spain has certification entities as well as providers of certification services. These entities can be either public or private and include, among others, foundations, the State, and chambers of commerce. Typically, certification authorities and service providers are governed by general law provisions based on the contract between such entities and the providers.

Currently, Spain does not accept uncertified electronic signatures. However, the draft law on electronic signatures does recognize such other signatures and differentiates between electronic signatures and "advanced" electronic signatures, which are created through systems wholly within the control of the signatory. Of course, the probative value of the two signatures differs, as does the value afforded certified signatures.

O.T. Johnson - U.S.A.

In the United States today, a number of organizations are engaged in offering certification services. Generally, these organizations are private companies. However, there are some states in which a state entity is the ultimate certification authority. Some states' electronic signature or digital signature laws include provisions that relate to the regulation of certificate authorities. Such state regulation of certificate authorities may encompass a number of areas, including certification systems and personnel, the issuance and revocation of certificates, and certification authority liability (and limitations thereon).

Currently, state law varies with regard to the acceptance of two-party or self-generated electronic signatures that do not require the intervention of a trusted third party. Even where such electronic signatures are recognized, they are likely to be more easily challenged than electronic signatures accompanied by valid third-party certificates.

I. Rubinstein - U.S.A.

A number of certification authorities are operating in the United States. These authorities are almost exclusively private companies, although in some states with mandatory licensing, a state agency serves as the top-level or root CA. In some states, CAs have been regulated, particularly with respect to three areas. First, there are regulations concerning the quality of their systems and procedures and the nature of the personnel they can hire. Second, there are regulations regarding the issuance and revocation of certificates and the winding up of their business. Finally, there are regulations that impose certain types of liability on CAs, while limiting their liability in a number of other areas only to direct damages that occur as the result of negligence.

Jurisdiction and Applicable Law - Has your country taken any steps to address jurisdiction and applicable law issues related to e-commerce transactions in order to assure that these legal concepts do not require formalities that create needless obstacles to e-commerce?

M. Devoto - Argentina

So far, Argentina has not made any advances in this area.

R. Nogueira / L.H. Ventura - Brazil

Brazil generally permits parties to an international contract to select the applicable law and jurisdiction. Moreover, Brazilian courts and law permit the use of arbitration to settle disputes.

R. Lemos - Brazil

According to the Brazilian Civil Procedure Code, Brazilian courts have jurisdiction over:

a) Lawsuits in which the defendant is resident in Brazil;2
b) Lawsuits in which the defendant maintains agencies or branches in Brazil;3 and
c) Lawsuits concerning obligations to be enforced in Brazil4.

Therefore, the Brazilian courts have jurisdiction over lawsuits arising out of electronic contracts, provided the defendant maintains branches or agencies in Brazil.5 Brazilian Courts are equally competent to decide cases involving any obligations to be enforced in Brazil.6 Finally, cases involving real property rights in Brazil are within the exclusive jurisdiction of the Brazilian courts.7 Accordingly, the general rule is that choice of forum clauses can be included in electronic contracts, unless the underlying transaction involves rights to property located in Brazil, which disputes must be decided by domestic courts.

Notwithstanding the foregoing, the Brazilian Consumer Code contains special provisions applicable to commercial contracts between a consumer and a supplier. Consumers can bring disputes arising from such contracts before local courts. According to Article 101 of the Brazilian Consumer Code: "Lawsuits concerning the responsibility of the supplier of products and services ... are subject to the following provisions: I - the lawsuit can be filed at the domicile of the plaintiff."8 This, however, is a prerogative granted to the consumer. Such prerogative can be waived, and the consumer, at his discretion, can file the suite in a foreign jurisdiction.

The 1999 Draft Bill on E-Commerce proposed by the Brazilian Bar Association does not contain specific provisions on jurisdiction or applicable law. Therefore, the general rules discussed above would be applicable to such electronic contracts.

Regarding Arbitration, Statute 9.307/96 (Arbitration Statute) recognizes arbitral procedures and awards in Brazil. The statute allows parties to a contract to choose the applicable law or other generic rules that would govern subsequent arbitration and to choose the arbitrators. Arbitration clauses can have limited enforceability in cases involving adhesion contracts. Article 5 of Statute 9.307/96 provides that "In Adhesion contracts, the Arbitration Clause shall only be enforceable when the adhering party is responsible for proposing the inclusion of such clause, or when the adhering party agrees to such inclusion in writing by means of an annex to the contract or in bold characters, with a special signature or visa for the arbitration clause."9 As a result of this provision, arbitration clauses in electronic adhesion contracts will probably not be enforceable.

J. Remsu - Canada

Currently, no legislative steps are being taken in Canada to address jurisdiction and applicable law issues related to e-commerce transactions. The current rules on jurisdiction for paper transactions are expected to work effectively within Canada with respect to electronic transactions. Canada acknowledges, however, that these are serious issues that, when addressed, would be dealt with at the international level. Canada is participating in discussions in various fora to determine the most useful approach to deal with jurisdiction and applicable law issues specifically related to e-commerce.

J. Otero - Chile

We are not aware if the country has taken any such steps.

F. Reyes Colimbia

Law 527 of 1999 does not include a specific provision regarding applicable jurisdiction and, therefore, provides little guidance concerning the appropriate forum for conflict resolution. However, it contains certain rules to determine the place an electronic contract is executed. Article 25 states that "unless otherwise agreed between the originator and the addressee, a data message is deemed to be dispatched at the place where the originator has its place of business, and it is deemed to be received at the place where the addressee has its place of business."

Concerning the validity of arbitration clauses, Law 315 of 1996 approved international arbitration clauses in commercial contracts and equally allowed parties to a contract to include a choice of forum clause.

Nevertheless, there may be legal obstacles associated with applicable taxes. Generally speaking, Colombia has not become a party to any treaty or convention regarding international taxation. Therefore, the subject of taxes is exclusively regulated by domestic law and could pose a problem for Colombian nationals engaged in international e-commerce.

J.A. Avellan - ICC

These are issues which are dealt with topically in some ICC instruments. The most recent approach being taken by the ICC experts is contained in the Uniform Rules on Electronic Trade and Settlement (draft - 08/1999). The URETS contemplate that when the parties have not stipulated the applicable law, the electronic agreement will be "..subject to the law of the country where the supplier of the goods and services has its principal place of business."

Apart from such specific approaches, the Global Action Plan referred to the need to avoid over-burdensome rules on applicable law in electronic commerce involving consumers.

O. Becerril - Mexico

As stated in prior editions of the Trade Report, Mexico has no law expressly regulating e-commerce. The draft law currently before the Mexican legislature does not contain provisions for eliminating formalities related to paper-based contracts for international e-commerce transactions; these include jurisdiction and applicable law issues.

O.T.. Johnson - U.S.A.

Thus far, these are issues that have been dealt with at the individual state level, and it is not possible to describe any clear pattern.

Hopefully, the existence of [a new certifying authority] will result in the legal acceptance of electronic signatures. At the present time, however, Mexico considers any electronic signature totally invalid for any legal purpose.

---O. Becerri MEXICO

1 The requirements referred to above can be summarized in three crucial aspects: (1) financial standing and credit rating; (2) appropriate technical capabilities to handle information; (3) certain professional qualifications for the entity's officers and managers. Articles 30 to 32 of Law 527 complement these requirements by establishing a number of duties and a series of activities that these entities are entitled to perform.

2 Civil Procedure Code, Article 88, I.

3 Civil Procedure Code, Article 88, I and Sole Paragraph.

4 Civil Procedure Code, Article 88, II.

5 Such competence does not exclude the competence of foreign jurisdiction. It is a case of concurrent jurisdiction.

6 Once again, that is a case of concurrent jurisdiction.

7 Civil Procedure Code, Article 89. "Brazilian Courts are exclusively competent to: I - decide lawsuits in connection with Real Estate property located in Brazil". Informal translation.

8 Brazilian Consumer Code, Article 101. Informal translation.

9 Statute 9.307 dated 1996. Article 5, second paragraph. Informal translation.