Potential of Custom in Overcoming Legal Uncertainty in Global Electronic Commerce

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ABSTRACT

The law has failed to keep apace with the rapid rise in e-commerce. This is particularly so when e-commerce spans national boundaries. There exists a regulatory gap that may result in unexpected outcomes for e-commerce companies involved in litigation. This paper investigates the possibility and feasibility of employing the concept of international commercial custom (hereinafter referred to as "e-custom") as a source of law, as a potential solution to legal disputes in contractual global electronic commerce. The paper sets out the issues that need to be addressed to make this proposal work and analyses them using developments from neighbouring fields of legal knowledge, mainly international public law and international trade law.

INTRODUCTION

The electronic commerce era has brought unprecedented benefits to the companies that have connected their resources to the Internet in order to better link their enterprises with their national and international customers and suppliers. However, these radical new business practices have not yet found recognition in law, which has traditionally lagged behind new developments. As a result international electronic trade functions to a large extent in a legal vacuum. Given the current state of computer technology and the legal regulation pertaining to that phenomenon, it is obvious there is a large regulatory gap that needs to be filled. To remedy this situation, the international community has several times expressed its interest in defining legal policy in relation to an Internet commercial environment e.g. (White House 1997; European Commission 1997; Australia Electronic Commerce Expert Group 31 March 1998; UNCITRAL 1996; OECD 1997; UNCITRAL 2001).

However, both international as well as national legislatures have problems with regulating global electronic commerce mainly because it is changing too fast. So far, the international community has managed to propose only a very basic framework for global digital trade, aiming at recognition of electronic documents, signatures and contracts. Specific parties' rights and obligations in relation to each other are left to merchants to set out in a contract If however a formal contract does not exist or the contract proves inadequate to regulate the disputed matter, both parties may find themselves in the state of impasse.

The aim of this paper is to investigate the possibility and feasibility of employing the concept of international e-commerce custom (hereinafter termed "e-custom") as a source of law (Polanski and Johnston 2002) in order to supplement global electronic commerce law with a new way of establishing electronic merchants' rights and obligations. It is argued, that certain digital mercantile practices, which are, widespread, of legal importance, but not necessarily immemorial, (van Caenegem 1992) might (under circumstances described later) attain a status of law in international electronic commerce.

The most important benefit of the proposed concept is e-custom's ability to adapt to the fast changing digital world without government intervention. As a result, the community of Internet merchants can be provided with a set of norms as to how to deal on the Net without complex and long lasting political debate. Governments can benefit from the incorporation of commonly recognised practices into their national legislation thus providing the Internet community with norms deeply rooted in their everyday practice and already known to majority of its members.

Another advantage of e-custom is that it is the best filler of gaps left by mercantile contracts and prospective governmental regulation of electronic commerce. It is not hard to notice that current developments in the area of electronic commerce law are very general, in accordance with legislative policy established by 1996 UNCITRAL Model Law on Electronic Commerce and unanimously accepted by international community. …