June 25, 2008
MEMORANDUM
TO: Scope and Program Committee
FROM: Harriet Lansing, ULC Vice President
John Sebert, ULC Executive Director
SUBJECT: Proposal for Establishing a Drafting Committee on Implementing the United Nations E-Commerce Convention
In 2005, the United Nations adopted the Convention on the Use of Electronic Communications in International Contracts (“the E-Commerce Convention” or “the Convention”). The Convention creates uniform rules that remove obstacles to the use of electronic communications in international contracts. It applies only to business-to-business transactions and only between parties whose places of business are known to be in different countries. The Convention is basically a set of default rules, because it gives parties great latitude to contract-out of the Convention by establishing different rules for electronic communications in their agreements. A copy of the Convention is attached.
The Convention has important implications for the Electronic Signatures in Global and National Commerce Act (“E-Sign”), 15 USC 7001 et seq, and it also has implications for the Uniform Electronic Transactions Act (“UETA”). Copies of both acts are attached. The Convention also may have implications for other uniform acts, such as the Uniform Commercial Code.
The State Department Office of Private International Law (“L/PIL”) has been reviewing the Convention carefully together with the Department of Commerce. In January of this year, Harold Burman of L/PIL informed John Sebert that State would like to begin the process of gaining United States “accession” [the equivalent of ratification] to the treaty and invited the ULC to participate in discussions aimed at identifying the issues that would need to be addressed in seeking accession. The State Department has taken the position that, because the Convention contains several provisions that are not found in E-Sign, and because not all states have enacted UETA, E-Sign would have to be amended in order to implement the Convention. The question whether there also should be amendments to UETA would also need to be considered.
Commissioner Pat Fry, who chaired the UETA drafting committee, had already been participating in some conference calls or meetings organized by Hal Burman of L/PIL to discuss the potential implementation of the E-Commerce Convention. Mr. Burman’s advisory, in addition to Commissioner Fry, , includes many members of the ABA Cyberspace Committee and the ABA Science and Technology Section who were involved in the drafting of E-Sign, together with other interested ABA members. At President Walters’ request, Commissioner Fry continued to participate in these sessions as a representative of the ULC. She attended a meeting that Hal Burman organized at an ABA Cyberspace Committee meeting in January. When Commissioner Fry reported back to us on the developments at the January meeting, President Walters asked Vice President Lansing to join in working on this matter, and shortly thereafter, and in the wake of the Supreme Court’s decision in Medellin v. Texas, we asked Kathy Patchel to lend her considerable expertise in treaty implementation to our group.
Shortly after the Convention was adopted in 2005, Commissioner Henry Gabriel analyzed the Convention and concluded that it was consistent with E-sign and UETA in all material respects. His memorandum is attached. Those who have participated with Mr. Burman’s group in considering means for implementing the Convention continue to agree with that judgment, but they have identified some divergences between the Convention and E-Sign or UETA. For example: (1) the Convention has provisions similar to UETA’s defining when a communication is sent and received, but there are no similar provisions in E-Sign; and (2) the Convention’s error-correction provision does not include all of the error-correction provisions that are contained in UETA, and E-Sign does not have any error-correction provisions. In addition, Article 11 of the Convention provides that online public advertisements are treated as invitations to make an offer, consistently with the long-standing U.S. common law rule, but neither E-Sign nor UETA contain similar provisions. Perhaps most significantly, there are limitations on party autonomy found in UETA, particularly with respect to the rules concerning sending, receipt and error correction, whereas the Convention gives the parties to a business-to-business transaction great latitude to vary the provisions of the Convention by agreement.
At another meeting of Mr. Burman’s advisory group, during the April 2008 meeting of the ABA Business Law Section, a draft was circulated containing a variety of possible options for amending E-Sign in order to implement the Convention. John Sebert has since been advised by Mr. Burman that the particular options contained in the memorandum that was circulated in April are no longer being considered by the State Department, and that an alternative discussion draft is now available that reflects directions that he and his colleagues believe may be more fruitful to pursue, since they rest upon UETA. Mr. Burman has provided that memorandum and asks that, if an Implementation Committee is appointed, the method of implementation suggested in the memorandum be among the options considered by the Implementation Committee.
In a telephone conversation last week in which Kathy Patchel, Harriet Lansing, and John Sebert participated, along with David Stewart and Hal Burman of L/PIL, it was agreed that it would be appropriate to recommend to the ULC Scope and Program Committee and the Executive Committee the formation of a ULC Committee to Implement the UN E-Commerce Convention. The role of the Committee would be very similar to that of the current Committee to Implement the UN Convention on Independent Guarantees and Stand-by Letters of Credit. That is, the E-Commerce Committee should be charged to:
It will be necessary to involve in this process many of those who have been participating in the informal group advising Mr. Burman concerning implementation of the Convention, and it will be easy to do so in the roles of ABA Advisor, advisors from particular ABA sections, and observers. The Letters of Credit implementation committee and the UIFSA drafting committee provide excellent examples of the ULC’s ability to involve a wide range of interested entities and individuals in a project focused on implementing an international treaty.
It is always difficult to predict in advance the likely length and nature of a project. Because the core provisions of the Convention are so consistent with UETA, there is a widely shared view that it may not be necessary to amend UETA in order to implement the Convention. If that in fact is the case, it may well be possible to complete this project in one year, and with only one in-person meeting of the committee, with the remainder of the committee’s work being accomplished by e-mail and conference calls.
The E-Commerce Convention can provide an important model for implementation of a convention through cooperative federalism since the Convention applies to an area in which there already is a strong cooperative federalism model through the interaction of UETA and E-Sign. We ask that the Scope and Program Committee recommend, and that the Executive Committee approve, the establishment of a Committee to Implement the UN E-Commerce Convention as described in this memorandum.
Attachments.
Cc: Patricia Fry
Kathy Patchel
Harold Burman
This Proposal was approved by the Scope and Program Committee, and the Executive Committee of the ULC approved it with the following language:
RESOLVED, that a committee to implement the U.N. E‐Commerce Convention be formed to determine and report back on the best methods for implementing the Convention and then to assist in implementation, including preparing any necessary revisions of uniform legislation, as proposed in the memorandum of June 25, 2008.