Notes on the United Nations Convention on the use of Electronic Communications in International Contracts and its effects on the United Nations Convention on Contracts for the International Sale of Goods.

• Author: Mazzotta, Francesco G.

1. INTRODUCTION

   The goal of this article is to introduce the reader to the recently approved United Nations Convention on the Use of Electronic Communications in International Contracts ("Convention"), also referred to as the Electronic Communications Convention ("ECC"). (1) This work will describe the main provisions of the Convention and consider to what extent this newly approved Convention interacts with the United Nations Convention on Contracts for the International Sale of Goods ("CISG"). (2)

   The Convention is intended to complement other international trade law texts, including the CISG. In order to explore the mechanics and the extent of the Convention's complementary nature, I will analyze its main provisions. I will match each relevant provision with its closest CISG "counterpart." There will be times when the two sets of provisions are very similar because the CISG and the United Nations Commission on International Trade Law ("UNCITRAL" or "Commission") Model Law on Electronic Commerce (3) were the two main drafting sources. For each match, I will first summarize the content of the CISG provision and then compare it with the Convention provision. Upon comparing the two sets of provisions, I will summarize what are the effects of the Convention on the CISG.

2. THE ELECTRONIC COMMUNICATIONS CONVENTION: A BRIEF HISTORY

   The UNCITRAL started working on what became the ECC in 2001 when, at its thirty-fourth session, it entrusted the Working Group on Electronic Commerce ("Working Group") with the preparation of a draft convention aimed at facilitating and removing legal obstacles to electronic commerce. (4) It took "only" six sessions of the Working Group to come up with a text on the use of electronic communications in international contracts] The final draft of the ECC was approved by the United Nations Commission on International Trade at its thirty-eighth session, held in Vienna in July 2005. (6) After the approval, the UNCITRAL requested that the Secretariat of the Commission to prepare explanatory notes to the text of the convention, which were presented to the Commission at its thirty-ninth session, held in New York in June and July 2006. (7) The Commission requested that the Secretariat establish a drafting group to edit the text of the draft convention for minor linguistic adjustments. Once the review was completed, the draft convention was submitted to the General Assembly of the United Nations, which considered the adoption of the draft convention at its sixtieth session and adopted the treaty on November 23, 2005. (8)

   The Convention is open for signature from January 16, 2006 through January 16, 2008. (9) It is subject to ratification, acceptance or approval by the signatory States, and open for accession by all States that are not signatory States. The Convention "enters into force on the first day of the month following the expiration of six months after the date of deposit of the third instrument of ratification, acceptance, approval or accession.'' (10) The "signature event" took place at the UNCITRAL's thirty-ninth session held in New York on July 6, 2006. (11)

   As stated in article 20, the Convention is specifically intended to address those issues posed by electronic means of communication in the context of international contracts governed by the CISG, as well as other specific international instruments. (12) It should be clear, however, that the ECC might be applied well beyond the list of treaties indicated in article 20(1). In fact, unless a contracting state makes a declaration not to be bound by article 20(2), the ECC will also be applied to electronic communications dealt with by any other relevant international conventions to which the ECC signatory state is or may become a contracting state. (13) Under article 20(2), "such an expansion operates automatically, without the need for Contracting States to submit numerous opt-in declarations to achieve the same result." (14)

   The purpose of listing some international conventions in article 20(1) was

   to remove doubts as to the relationship between the rules contained in the draft convention and rules contained in other international conventions. It was not the purpose of the draft article to amend any other international convention. Through the draft article, the Contracting States could use the provisions of the draft convention to remove possible legal obstacles to electronic commerce that might arise from the interpretation of those conventions and to facilitate their application in cases where the parties conducted their transactions through electronic (15) means. The Convention complements the CISG when the CISG contract is negotiated or concluded electronically or when performance takes place in connection with electronic communications. However, the Convention is not intended to merely supplement the CISG or the instruments listed in article 20(1). (16)

   The Convention introduces two specific ancillary principles intended to enhance the operation of a general principle already stated in article 11 of the CISG, the freedom of form. In the context of the ECC, the freedom of form is a well-stated principle not only in its general terms ("[n]othing in this Convention requires a communication or a contract to be made or evidenced in any particular form"), (17) but also in two other, more specific, terms (the principles of functional equivalence and technological neutrality). (18) Although these principles have already been included in other domestic and international texts, (19) the Convention specifically takes them in the context of the CISG. While there has been little doubt among the commentators as to whether electronic communications were "writings" for purposes of the CISG, (20) the real challenge concerns the legal effects of the electronic communications. The difficult tasks the Working Group had to tackle included one main goal: to set forth some basic, internationally uniform rules governing the use of electronic communications in international transactions. (21) Although the goal is easy to state, it proved hard to achieve because of the difficulty of reconciling the desire to enhance and promote the modernization of business methods with the need for legal certainty and uniformity. Different domestic legal treatment of electronic communications is synonymous with legal limitations on international commerce, which is exactly what the Working Group intended to address. In fact, the underlying goals of the draft convention are: (i) removing legal obstacles to electronic commerce, including those that arose under other instruments; (ii) enhancing confidence in the use of electronic communications; (iii) curbing possible abuses and commercial fraud; and (iv) setting up a system of rules aimed at facilitating economic development in all regions and countries at different stages of development. (22)

   Once the members of the Working Group found common ground on the goals of the convention, the next step was finding a common approach for achieving these goals. The approach is summarized by the principle of technological neutrality and, more importantly, the principle of functional equivalence. The first aims at setting forth provisions which do not favor or disfavor any particular technology or medium. (23) This neutrality involves not only those means of communication currently known, but it also applies to future developments. (24) The second establishes the rule of equivalency among the means of communication: e-mails or paper-based letters used for purposes of negotiations, for example, are equivalent in terms of their legal consequences. (25)

   Of course, functional equivalence does not mean that technical and factual differences would disappear merely by stating that the two means are equivalent. An electronic communication, clearly, is not an equivalent of a paper-based document. The goal of the Convention is not to introduce computer-based equivalents to paper-based documents. Instead, "it singles out basic functions of paper-based form requirements, with a view to providing criteria which, once they are met by data messages, enable such data messages to enjoy the same level of legal recognition as corresponding paper documents performing the same function." (26)

   The Convention, as with many other instruments that deal with the matter, (27) accomplishes these goals by establishing minimum requirements for electronic communication to achieve the same legal consequences as traditional writings. (28) It should also be noted that the necessity of setting some minimum requirements should not be used in a way that compromises the underlying principle by mandating stricter legal requirements resulting in a "bump" that slows down the flow of international commerce. (29) While it makes sense to set strict rules aimed at preventing or reducing abuses, the goal should, nonetheless, be accomplished by means that do not ultimately compromise transactions. On the other hand, setting forth some basic, uniform rules concerning the requirements and the legal value of electronic communications in international transactions will produce more predictability and certainty in the business world, which is one the most important factors in creating a favorable environment for commerce. To that end, the Convention merely establishes that an electronic communication should not be denied legal effectiveness due to the way the information is presented or retained, but it does not "establish[] the legal validity of any given electronic communication or of any information contained therein." (30)

   With this background in mind, we can begin to examine the Convention's provisions from a CISG perspective. (31)

3. THE ELECTRONIC COMMUNICATIONS CONVENTION'S MAIN PROVISIONS

   (1) Relationship with the CISG

   ECC article 20(1):

   The provisions of this Convention apply to the use of electronic communications in connection with the formation or performance...