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In June 2023, I was requested by the United Nations Commission on International Trade Law (UNCITRAL) to provide technical assistance to the Government of the nation state Tuvalu in the field of Electronic Commerce legislation. Having attended all UNCITRAL Electronic Commerce Working Groups sessions since 2014, most recently as the Australian representative, I have made contributions and gained insights into the latest texts of the Working Group. As such, it is timely to reflect on the utility of international trade generally, and of course, to smaller nations.
Tuvalu is the world’s second smallest country, recognised by the UN, with a population of less than 12,000. Located approximately 1,000 kilometres north of Fiji, Tuvalu is a tropical nation just south of the equator, comprised of 9 inhabited atolls with an area of 26 sq km (10 sq miles). About half of Tuvalu’s population lives in its capital of Funafuti. The capital has one airport. 8 km of road, and is itself an atoll of some 29 islets. The UK declared a protectorate over the islands in 1892. During World War II, the US set up a military base and airstrip. In 1978, the islands gained independence and Tuvalu was admitted to the UN with full membership in 2000. Its isolation, small size, and minimal natural resources pose challenges for Tuvalu. Nevertheless, the nation is part of the world community and engages in international trade.
While it may seem unusual to carry out technical assistance work on digital trade law in such a small country, this activity implements a clear strategy of UNCITRAL and other international stakeholders. Small Pacific islands are vulnerable to natural disasters and climate change, and remoteness magnifies their vulnerability. Digital connectivity is critical to overcome remoteness, and the buy-in of the private sector is key to infrastructure development and building of human capacity in the digital space. In turn, an enabling legal environment is a requirement of digital transformation. For that reason, the UNCITRAL Secretariat, in cooperation with a number of global and regional partners such as the UN Economic and Social Commission for Asia and the Pacific and the Pacific Islands Forum Secretariat is supporting digital trade law reform in the Pacific. Countries where UNCITRAL has worked include Fiji, Papua New Guinea and, lately, Tuvalu’s northern neighbour, Kiribati.
Dr. Alan Davidson (center) with members of the Tuvalu Trade Ministry and business leaders.
Tuvalu had already made good progress towards digital transformation. Tuvalu’s Te Kete – National Strategy for Sustainable Development – stated as it first Strategic Priority Outcome to be: “Harnessing the digital transformation to improve lives through developing inclusive digital economy”. Its aim was to develop a legal, regulatory, and standards framework required to promote investment in, and use of, digital technology. In 2020, the Government of Tuvalu developed a Legal Framework Gap Analysis, covering four key areas: (1) electronic transactions; (2) data protection and privacy; (3) consumer protection; and (4) cybercrime.
Electronic transactions law is foundational to provide legal certainty to digital trade and to online transactions. In that regard, Tuvalu partnered with the Secretariat of UNCITRAL. In this capacity I liaised with UNCITRAL with regard to the preparation of an Electronic Transactions Bill for adoption by the Tuvaluan parliament. UNCITRAL texts are widely considered the prevailing global legislative model, having already been adopted in more than 100 States. In this regard Tuvalu acceded to the United Nations Convention on the Use of Electronic Communications in International Contracts, taking effect on 1 July 2023. This Convention applies to commercial transactions exchanged across borders.
The proposed Electronic Transactions Bill incorporates elements of the:
The Tuvaluan Electronic Transactions Bill provides legal recognition and status to the use of electronic communications and signatures. The Bill applies to all types of electronic transactions, including electronic letters of credit, and enables the use of electronic means by removing legal obstacles and illustrating the requirements under which paper-based and electronic communications and documents are considered equivalent. Although a relative late adopter of the earliest UNCITRAL texts, Tuvalu is positioning itself to be one of the pioneers to adopt MLETR and the first nation state to implement the MLIT (Model Law on the Use and Cross-border Recognition of Identity Management and Trust Services).
The implementation of these texts in law assists in domestic and international trade by providing the recognition of electronic commerce in trade. The Bill is based on three fundamental principles underpinning those UNCITRAL texts: non-discrimination of electronic means; technology neutrality; and functional equivalence. Those principles enable the use of electronic means by removing obstacles found in existing law, for instance with respect to form requirements assuming the use of the paper medium and by adapting pre-existing legal notions to an online environment. The principle of non-discrimination ensures that an electronic record is not denied legal effect, validity, or enforceability solely on the grounds that it is in electronic form (Bill - section 9). The principle of technology neutrality ensures that the law does not mandate or favour the use of any specific technology, method, product, or model, thus allowing advancements in technology to be accommodated without the need for legislative change (implemented throughout the Bill).
The principle of functional equivalence lays out criteria by which a data message is deemed to satisfy form requirements applicable to paper-based documents, such as the requirement that a document be in writing, in original form or signed (Bill - Part 3). Part 4 of the Bill deals with electronic contracting. In line with the UNCITRAL approach, it does not amend in any manner existing contract law but only enables the use of electronic means. It clarifies that contractual statements on websites, and similar, amount to an invitation to make an offer and validates the use of automated agents to conclude contracts. It also contains a rule safeguarding physical persons from the consequences of input errors.
Part 5 of the Bill deals with trust services, including electronic signatures. Electronic signatures are a trust service that offers assurance on the origin and integrity of an electronic communication. This part incorporates the relevant section of the newly-adopted UNCITRAL MLIT and is aligned to best international standards, including the EU eIDAS (electronic Identification, Authentication, and trust Services) Regulation. This should promote the use of trust services, including – importantly for Tuvalu’s economy – web authentication.
“Today the Tuvalu Department of Trade held a consultation for its stakeholders on a new eCommerce Bill on Electronic Transactions. This bill is one of the four buckets of laws for eCommerce to be done for Tuvalu to future-proof and safeguard its users when engaging in eCommerce. The workshop was led by Alan Davidson, a consultant from United Nations Commission on International Trade Law - UNCITRAL, who further explained the bill to the stakeholders. We appreciate the stakeholders who took time to attend this workshop and look forward to holding upcoming consultations for outer islands as well.”
Tuvalu Trade Ministry, online post of 5 July 2023, following the consultation
Part 6 of the Bill applies the MLETR dealing with electronic transferable records – which are electronic records that incorporate the right to demand the payment of a sum of money or the delivery of goods. These are the electronic equivalents of commercial documents such as bills of lading, promissory notes and cheques. Some eight nations have implement MLETR to date, including the UK and Singapore. The MLETR was included in the Bill to make it futureproof with respect to smart logistics and paperless trade facilitation.
The management of international trade is the management of international risk. All commerce involved elements of risk and international trade introduces additional elements of risk. Such risk includes – transaction risk, party risk, commodity risk, transport risk, jurisdictional risk, country risk, currency risk, political risk, exchange risk, and liquidity risk. The texts on electronic commerce by UNCITRAL and international stakeholders in the Asia Pacific region contribute significantly to the minimisation of such risks.
Governments and commercial parties must understand the various tools, rules, laws and processes applicable to their circumstances to successfully navigate and manage international trade. Tuvalu is a tropical and peaceful paradise, and I thank members of the Trade Ministry who hosted me and showed me such hospitality. It was a privilege and pleasure to meet with, converse, and consult with members of the Tuvalu Trade Ministry.
* Dr. Alan Davidson is an academic at the TC Beirne School of Law at the University of Queensland for 26 years. Dr. Davidson presents courses in International Trade Law, International Trade Finance Law, and Law and Technology. He has been a visiting academic in the USA, Thailand, Indonesia, Singapore, and China. Dr. Davidson has participated in all UNCITRAL Working Group IV sessions since 2014, has been Co-chair and has been the Australian delegate. He is a member of its Panel of Experts to assist with the future directions of the Working Group. Dr. Davidson is also a Fellow of IIBLP and member of DCW’s Editorial Advisory Board.