New electronic transactions law essential

The Electronic Transactions Development Agency (ETDA) is drafting a new electronic transactions law to replace the 2001 edition, aiming to strengthen trust in these interactions, facilitate their use, and improve the confidence of participants.

These improvements are expected to enhance Thailand's competitiveness in a digital society, said the agency.

An online public hearing on the draft was held from May 12 to June 15. The new law is scheduled to come into force 180 days after publication in the Royal Gazette, according to the draft.

The new law does not apply to transactions that require people to show up in person in front of officials, or transactions where people have to express consent in person in front of officials, or transactions that are inappropriate as e-transactions.

Why is a new version of the law needed?

The current law on electronic transactions has been in force for more than 20 years. During that time, technology related to electronic transactions has developed rapidly, meaning portions of the statute are now outdated, noted ETDA.

Certain provisions now create limits or obstacles in enforcement, while others no longer reflect current practices in electronic transactions. This has affected public confidence in electronic transactions, said the agency.

In addition, the UN developed several new model laws to support electronic transactions in a wider range of contexts.

Khanit Phatong, an ETDA adviser, said although businesses have become familiar with e-commerce and the increasing use of electronic documents such as e-invoices, uncertainty remains over whether certain key documents can genuinely be converted into digital format.

"This is particularly the case for documents involving the transfer of ownership or rights through possession of an original document, such as bills of lading, negotiable instruments or cheques," she said.

Ploy Charoensom, assistant executive director of ETDA, said the most important issue for businesses is confidence that the electronic documents they use have genuine legal effect and can be used as evidence of rights, to transfer rights, and can be enforced in the same way as original paper documents.

Although Thai law recognises electronic contracts, electronic signatures and digital identity verification, it may not fully cover certain types of electronic documents, said Ms Ploy.

"These include bills of lading and other transferable instruments with specific characteristics involving possession and the transfer of rights," she said.

According to ETDA, the existing law does not sufficiently support the use of new technology by the public and businesses in conducting electronic transactions or providing related services because it requires compliance with rules set by the relevant authorities.

If those authorities have not yet issued relevant rules, or have not updated rules to cover new technologies, the law may become an obstacle to the use or provision of electronic methods, noted the agency.

Meanwhile, globalisation has led to more cross-border interactions, as large multinational companies providing electronic transaction services have effectively become standard-setters in practice.

If Thailand's electronic transactions law is not sufficiently flexible, it may be overlooked, or such companies may choose to limit their services in Thailand, noted ETDA.

Either outcome would be harmful to Thailand's image as an investment destination, said the agency.

How does the new law differ from the existing one?

The draft of the new law is based on consistency with international agreements and relevant model laws, though it introduces a different enforcement mechanism from the existing law.

The draft is designed to allow people to use new technologies for electronic transactions without having to wait for the relevant agencies to prescribe detailed rules first.

The draft also abolishes the licensing, registration and notification mechanisms on e-transaction service providers, replacing them with a trustmark mechanism. These providers include the issuers of certificates for PDF files, the providers of digital signature systems, and cloud providers.

The new law also sets the conditions for using each type of electronic method as a replacement for paper-based methods in transactions.

Once a person complies with those conditions, the electronic method has legal effect immediately, eliminating the need to wait for ETDA to issue detailed rules first.

The draft introduces provisions for electronic transferable records (ETRs) in line with the UN Commission on International Trade Law model law on ETRs. ETRs have certain special features that require specific legal recognition.

ETRs will play an important role in upgrading the country's trade and financial systems by helping to reduce reliance on paper documents, speeding up transactions and supporting data connectivity between agencies and trading partner countries, said ETDA.

The development of ETRs is based on three principles. The first is singularity, which ensures the authoritative version of a document can be clearly identified and duplicate claims can be prevented.

The second is control, which makes it possible to determine who has the right to possess the instrument at any given time.

The third is integrity, which allows the history of changes, endorsements, transfers of rights or additional information to be verified.

The draft also introduces a new regulatory mechanism for electronic transaction service providers, while abolishing the licensing, registration and notification systems, instead setting conditions with which service providers must comply.

Once a provider complies with those conditions, it is regarded as an electronic transaction service provider under the law.

What is ETDA doing to ensure successful implementation of the new law?

The agency is working with many sectors to support implementation, including a plan to provide a platform where businesses, service providers and technology developers involved in ETRs can seek advice and jointly learn about the development of ETR management systems.

ETDA is also collaborating with the University of the Thai Chamber of Commerce's law faculty to develop a draft self-assessment checklist. The checklist is intended as a tool for service providers and system developers to assess whether their systems comply with legal requirements and international standards.

After the new law comes into force, the agency may develop or refine the checklist into a tool for system certification if there is demand from users.