IMDA Conducted a Public Consultation on the Review of the Electronic Transactions Act

Jul 19 2019 | by OrionW

The Infocomm Media Development Authority of Singapore (IMDA) launched a Public Consultation on 27 June 2019 to review the Electronic Transactions Act (ETA).  IMDA aims to keep pace with international developments such as the adoption of the Model Law on Electronic Transferable Records (MLETR) by the United Nations Commission on International Trade Law (UNCITRAL), and with the arrival of new technologies which change the nature of electronic transactions.

More Transactions to be Covered under the ETA

The ETA provides a legal basis for electronic records or signatures to be recognised as the functional equivalent of hardcopy records or signatures (Functional Equivalence Provisions).  That is, if a law requires a document to be in writing or to be signed, the Functional Equivalence Provisions provide that an electronic record or signature will satisfy that requirement.

Under the current law, the Functional Equivalence Provisions exclude certain documents and transactions involving wills, indentures, trusts, immovable property and certain commercial documents such as negotiable instruments, documents of title, bills of exchange, promissory notes, consignment notes, bills of lading and warehouse receipts (Exclusions).  The Exclusions reflected the view that those documents and transactions were not ready to transition to the electronic medium in light of the infancy of e-commerce, evolving international developments and industry preference.

In view of swift technological advancements and a desire for Singapore’s laws to support the adoption of electronic solutions, IMDA proposes to remove the Exclusions except where dictated by overriding public interest considerations.  The removal of the Exclusions would effectively provide full legal recognition and enable the usage of electronic equivalents of transferable documents or instruments (Electronic Transferable Records) such as warehouse receipts, dock warrants, bills of lading and negotiable instruments such as promissory notes, bills of exchange or cheques.  That said, the amended ETA will seek to incorporate measures to guarantee that an obligor will be subject to only one set of obligations to the valid holder of an Electronic Transferable Record.  On the other hand, given the potential for abuse in familial contexts, Powers of Attorney (POAs), declarations of trust relating to immovable property and dispositions of equitable interest via a trust are not to be removed from the exclusion list, electronic POAs made for the purpose of enforcing security interests, which are typically executed in the context of commercial transactions, are proposed to be granted full legal recognition.

Where there are concerns about the consequences of the removal of Exclusions, various mitigating measures and safeguards may be implemented.  For example, IMDA proposes to require the use of secure electronic signatures in contracts for the sale or disposition of immovable property to ensure greater certainty, safeguard the interests of a vulnerable party and mitigate fraud concerns.  A “secure” electronic signature is one that is unique and tied to the identification of an individual, serving as evidence of authentication of a document by binding that individual to it.  This differs from a general electronic signature which is essentially a digital acknowledgement such as electronically pasting a signature or digitally writing a name in the appropriate place in a contract.

Offer Certainty on the Use of Emerging Technologies

IMDA recognises the potential of emerging technologies and aims to remove uncertainty that may hinder technology adoption and growth by illustrating and clarifying how the principles under the ETA would apply to specific technologies such as distributed ledger technology (DLT), smart contracts and biometrics.  IMDA has the following preliminary views:

  1. DLT is not inconsistent with ETA concepts such as “electronic record”, “in writing”, “electronic signature”, “secure electronic record” and “secure electronic signature” as these concepts may be applied to DLT in a blockchain scenario;
  2.  the ETA does not prevent the use and formation of smart contracts by organisations; and
  3. biometrics technology alone is unlikely to be understood as “secure” under the ETA (for example, errors or alterations in communications cannot be detected through biometrics) but permits biometrics to be deployed as supporting technology for authentication purposes.

Review of Certification Authority Framework

Currently, subsidiary legislation under the ETA provides for a legal framework for accreditation of Certification Authority (CA) services in Singapore.  In light of maturing Public Key Infrastructure (PKI) and the complexity of cybercrimes, IMDA will review the Compliance Audit Checklist setting out the requirements for an accredited CA’s operational policies, procedures and security.  IMDA proposes to adopt the standards of either WebTrust or the European Telecommunications Standards Institute (ETSI), or both, as a baseline requirement for CAs, and impose additional local requirements on top of those standards.  In keeping with the practices adopted by other countries, IMDA also proposes to retain the current voluntary accreditation framework and give CAs the flexibility to determine if there is a business case for applying for accreditation.

Comments to the consultation paper must be submitted to IMDA by 27 August 2019.