Salient Features of Electronic Transactions Act 1998

Introduction

1. The advent of e-commerce and the use of the digital medium as an alternative to the physical have created some novel legal issues where there are no clear answers. In the physical world today, there are requirements for documents to be in writing and for hand-written signatures. Such requirements need to be translated into the electronic realm. For communication and transactions occurring over a faceless network, there is a need for reliable methods to authenticate a person's identity and to ensure the integrity of the electronically transmitted documents. The Electronic Transactions Act aims to address these important issues and to create the legal framework for e-commerce transactions in Singapore.
    
2. In drafting the Electronic Transactions Act, the following guiding principles were adopted:
   1. The need to conform to international standards and international models in order to be integrated with the global e-commerce framework;
   2. The need to avoid over regulation;
   3. The need to be flexible and technologically neutral to adapt quickly to a fluid global environment; and
   4. The need for transparency and predictability in our laws.
       
3. Broadly, the Act seeks to do the following:
   1. Enact a Commercial Code to support e-commerce transactions;
   2. Provide for a Public Key Infrastructure;
   3. Enable Electronic Applications and Licences for the Public Sector; and
   4. Clarify Network Service Providers' liability for third party content.

These four objectives will be described below.

Commercial Code for E-Commerce Transactions

4. To clearly define the rights and obligations of transacting parties, a commercial code to support e-commerce transactions is needed. The first objective of the Act is thus to set out a commercial code that combines the best features of international models. The Act contains provisions dealing with how a contract can be formed electronically by addressing issues of time and place of sending and receipt of electronic messages. The Act also provides legal status on the use of electronic records and signatures and their secure counterparts.

Public Key Infrastructure

5. Singapore has been developing a public key infrastructure to facilitate the use of digital signatures. Under this infrastructure, the Certification Authority, or CA, certifies that a given public key is associated with a given individual. A CA may perform a face-to-face verification of the individual before such a certification is given, in the form of a digital certificate. This certificate can subsequently be used to confirm the public key of an individual, and verify the signature that is generated by the individual. Netrust is the first CA in Singapore to issue keys for digital signatures.
    
6. The CA, being in a position of trust, needs to be subject to some standards and controls, so that there will be public confidence in the services it offers. A voluntary licensing scheme is proposed in the Act. Only licensed and approved CAs will enjoy the benefits of the Act for signatures generated from the certificates issued. The exception to this is where parties agree to be bound by signatures created by a commercially reasonable procedure.
    
7. The Act provides for the appointment of a Controller of CAs. The Controller will, amongst other duties, license, certify, monitor and oversee the activities of CAs.

Electronic Applications and Licences for the Public Sector

8. To promote a culture in using the electronic medium in the public sector, the Act will contain an omnibus provision for Government departments and statutory boards to be able to accept electronic filing without having to amend their respective Acts. It also allows public bodies to issue permits and licences electronically. It is an "opt-in" provision, so that those agencies that are not yet ready to go "paperless" are not compelled to do so. However, the Government is committed to making available counter services in the electronic medium as far as possible and where it is cost effective.
    
9. A related amendment is also made to the Interpretation Act to allow regulations on the manner and method of electronic filing and issuance to be made by these public bodies under their respective Acts. The amendment to the definition of "Gazette" and "Government Gazette" in the Interpretation Act is to enable the Government to publish the Gazette electronically on the Internet, in addition to the hard copies printed by the Government Printers. The Government will take advantage of Internet technology to enable the Gazette to be published electronically on a daily basis instead of only once a week.

Network Providers' Liability

10. It is essential for the growth of a national information infrastructure that the exposure of network service providers to the risks of liabilities for third party content be managed. For example, an Internet Service Provider (ISP) should not be held liable for objectionable contents or defamatory statements on the thousands of web sites that are accessed daily, and over which the ISP has no control.
      
11. The Act provides that a network service provider is not subject to criminal or civil liability for third party materials for which the provider merely provides access. Where network service providers engage in activities which are indistinguishable from those of common carriers such as telephone companies and post offices, they should be given the assurance that they will be treated in the same way in respect of such activities. The clause, however, will not affect the obligations of a network service provider under any licensing or other regulatory regime established under the law, e.g. Singapore Broadcasting Authority's class licenses. It will also not affect any obligation founded on contract or any obligation imposed under any written law or by a court to remove, block or deny access to any material. Network service providers will of course continue to be liable for their own content, or third party content that they adopt or approve of.

Conclusion

12. This Act sets the basic legislative framework for e-commerce and electronic transactions. It removes existing legal impediments and instils confidence in businesses and individuals to engage in e-commerce. This Act will bring Singapore to the forefront of international e-commerce developments and will help us achieve our vision of turning Singapore into an international e-commerce hub.