JURISDICTIONAL ISSUES OF E-COMMERCE AND CONSUMER

PROTECTION.

Presented By-Akshay Sharma

Scheme of Presentation.IntroductionGrowth of E-Commerce.E-contractJurisdiction issues in E-Commerce.Role of International bodies and

framework for E-commerce.Consumer Protection.Case Study-Flipkart Big Billion SaleConclusion

INTRODUCTIONWhat is E-commerce???

Integration of Web and telecommunications technologies for purpose of selling and buying products or services.

E-Commerce classification B2B/B2G (Eg. Mcmaster, Fastenal ) B2C (Eg. Flipkart, Jabong etc) C2C (Eg. Olx.com) C2B (Eg. Elance.com)

Growth of E-CommerceFrom 1995, global electronic

commerce is estimated to reach $236 billion USD in 2007, which got a huge hike in 2012 at the sales passed $521 billion.

The total business expectation till 2018 is $1200 billion USD.

Since 2007 online revenue growth has averaged 17% compound per annum.

PWC and Assocham, reports that present Indian E-Commerce business is $17 billion which is expected to be $ 90 billion.

E-CONTRACTFormation of an contract made over online

medium through any electronic means, such as e-mail is termed as E-Contract.

Essentials of an E-Contract An offer needs to be made The offer need to be accepted Both parties must be legally bided in a lawful

contract

Common Form of E-Contracts Browse Wrap Shrink Wrap Click Wrap

Laws Apply on E-Contract in India

Indian Contract Act, 1872Information Technology Act, 2000

Indian Evidence Act, 1872

Disputes in E-CommerceContractual Dispute

Business-to-business (B2B) Business-to-consumer (B2C) Consumer-to-consumer (C2C) Internet Service Provider (ISP)

Non Contractual Dispute Copyright Right of free expression Domain name disputes

Jurisdiction Issue in E-Commerce.Ecommerce exists in a borderless

environment. Hence, create concern- whose jurisdiction, where to take action, what test & laws to be followed when individual resides outside jurisdictional area. This calls for single jurisdiction.

o Cross-Border Issues.o Intellectual Property Rights.o Digital Products – Services or goods?

(Bespoke & Off-the-Peg)o Contract with Minors.o Taxation.

Cross Border Issue.The 3 main concerns prevail –

1. Forum Jurisdiction.2. Choice of Law.3. Enforcement.Traditional principles like-4. Personal jurisdiction

General Jurisdiction.Specific Jurisdiction.

2. Long arm statue.

1.) Personal Jurisdiction. ( Applied in U.S)It require determination of whether person is subject to the court in which the case is filled.

1.1 ) General Jurisdiction.General jurisdiction refers ‘continuous and systematic ‘contact to forum state or domicile of person .

1.2) Specific Jurisdiction.It subjects to ‘minimum contacts’. The greater the degree of interactivity between the website and a particular State, the greater is the likelihood of a court of that State being able to assert jurisdiction over the website operator.

An e-commerce , may exits in form of -Passive Websites :-It provides only information and not at all

aims at soliciting the business, hence personal jurisdiction does not exit.

Interactive Websites :-It provides information as well as facilitates

purposeful solicit business. As this represents revenue model hence personal jurisdiction may exist depending upon minimum contact test or purposeful availment test. (Cody v. War 1997)

Purposeful Availment Test:-It is one of the criteria for establishing minimum

contact with forum state in order to get privilege of doing business in particular state. (EDIAS Software International v. BASIS International Ltd 1996). The test consist of –a) contract with plaintiff.b) communication with plaintiff.c) sales of software products to plaintiff.

Sliding Scale Approach:-It classifies the website on the basis of interactivity and

commercial nature of the exchange of information that occurs on website. (Zippo.com case 1997).

Effect test:-It categories on basis of extent of harm defendant

suffered.in forum state. (PurCo Fleet Services, Inc. v. Towers 1999)

Jurisdiction in IndianSection -75 of Information Technology Act, 2000 amended 2008,

provides Indian judiciary to enact laws outside India. Section 75 provides for punishment for commission of any offence or contravention by a person outside India irrespective of his nationality if the act or conduct constituting the offence or contravention involves a computer, computer system or computer network located in India.

As per ITAA 2008, Section 75 is given as follows: Act to apply for offence or contraventions committed outside India:(1) Subject to the provisions of sub-section (2), the provisions of

this Act shall apply also to any offence or contravention committed outside India by any person irrespective of his nationality.

(2) For the purposes of sub-section (1), this Act shall apply to an offence or contravention committed outside India by any person if the act or conduct constituting the offence or contravention involves a computer, computer system or computer network located in India.

Intellectual Property Rights.

Copyright Infringement

• Websites software • Hyperlinking, deep hyperlinking

Trademark Infringements. (Tagline/Logos)

• Cybersquatting(DNS Issue)

• Meta tagging

Patents

• Functionality of the software

Digitalized product- Goods or Services???Digitised product fulfilled condition for

tangible item, it is best characterised as goods while intangible constitute services.

The second distinction, runs on the basis of supplied in physical form or those supplied digitally- internet download. “Bespoke" and "off-the-peg" products.

The "bespoke" product has more in common with the contract for professional services, such as a contract of sales of goods.

Contract with MinorDue to nature of e-commerce it is

virtually impossible to check the age of anyone who is transacting online. This may pose serious problems and liabilities for e-commerce platforms.

Having regard to sections 2, 10 and 11 of the Contract Act, that the Act makes it essential that the contracting parties should be competent to contract and that a minor’s contract is void.

TaxationIn context to taxation of income generated by

nonresidents from e-commerce transactions, primarily, there are two main issues.

1.) characterization of income:- whether income earned is sale of goods is royalty or business income.

2.) permanent establishment:- Establishment of server within national boundaries.

Role of international bodies and framework for e-commerce.E-commence is predominantly driven by the

private sector.Introduction of harmonization process has

through the adoption of multilateral treaties.Different Framework:-

UNICTRALOECD

UNCITRAL, OECD and ICC “Guidelines on Advertising and Marketing on the Internet”ICC- International Chamber of Commerce.

Introduction of new convention regulating international jurisdiction. Hague Convention Rome Convention.International treaties. Berne Convention Paris Convention TRIPS Agreement. International Safe Harbor.Indian initiative:- Indian the Ministry of Consumer affairs

proposed amendments to Consumer Protection Act , 1986

Consumer Presentation1.) Legal aspect.

Privacy Issues.Fake use of brand names. (WebTrust)Settlement of disputes.

2.) Technical aspect.Cryptographic tools.SSLSETPETDigital signature for Authentication.

Flipkart Big Billion DayOn 6th October 2014, flipkart announced the

‘Big Billion Day’ Sale on their website.As the sale ended many issues arises in the e-

commerce market. Technical Failure Predatory Pricing Misleading Consumers Taxation Issue Flipkart Policies

Conclusion & SuggestionEvolution of E-commerce from B2B till C2C,

evidently implies for introduction of framework.

Contracts between different countries, with different sovereign calls for single jurisdiction.

Stringent technical obligation to seek privacy and protection from fraud.

Thank you!!!!