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Wednesday, 23 March 2011
Page: 3113


Ms ROWLAND (7:15 PM) —I would like to make a few comments on the amendments contained in the Electronic Transactions Amendment Bill 2011 as a former practitioner in this area. I dealt with the Electronics Transactions Act quite regularly in the ICT sphere, particularly in terms of contract formation in communications contexts. It is a very relevant piece of legislation that is used in the commercial space almost as a matter of norm rather than analysis. I do recall that in 1999, when it was introduced—my friend the parliamentary secretary here might have been practising at the time too—it was when we were having the Y2K provisions inserted into contracts, and we were only starting to form a body of jurisprudence and a body of statute law dealing with ICT. It was a very interesting time, because people were not quite aware of what an electronic transactions piece of legislation would do. In fact, at its core, it says that a contract is not invalid merely by reason that it may have been done by electronic means. The legislation was very clear—certainly consistent with the international convention which the member for Canberra described earlier—that ‘electronic means’ was not going to be limited to email or to internet. At the time, the internet was only starting to gain worldwide acceptance and usage. We were not going to limit it to facsimile means or any other means. So it was kept as very much a technology-neutral piece of legislation, and it continues to reflect that today.

The amendments in this bill are noncontroversial, and I think that reflects the fact that this legislation is working well. As I said, it is now legislation that is examined not so much for what it contains but in terms of what it might mean for countries that are continuing to contract and whether it would make any difference to their current practices. Again I will say that, as a practitioner in this field, and having seen some amendments go through over the years—and it is a model act which all states and territories ascribe to—there has not been controversy around this. In fact, I think that only one element of the legislation has ever been litigated. It concerned whether a digital signature would satisfy the requirements of signing, in this case involving a touch screen. It was a matter from last year involving the Electoral Commissioner. Other than that there has been zero litigation in this area to test the bounds of it. I think that is a good thing for laws in the e-commerce space to be functioning well and to be functioning well in the sense that they are widely accepted now. When we do have these amendments before us, they are to ensure that we are consistent with our international conventions rather than trying to remedy any particular faults.

As has been mentioned, there are a couple of key elements of this bill. In line with the convention, it looks at whether there are uncertainties in the formation and performance of contracts. There are provisions dealing with automated message systems and whether electronic signatures are reliable and the default rules regarding the place of business for the parties to a transaction. I will just deal very briefly with some of those elements. In terms of signatures, the Electronic Transactions Act makes it clear that an electronic communication will satisfy the requirement to obtain a person’s signature in certain circumstances, if the method used to identify a person and to indicate the approval of the information is communicated, and if the method was as reliable as was appropriate for the purposes for which the information was communicated.

This reliability test has worked quite well, but I note that the Attorney-General’s Department has consulted on this issue and made a recommendation that the Electronic Transactions Act be amended so that a party cannot argue that a signature fails the objective reliability test when the method used is proven in fact to have identified the signatory and the intention of that signatory. Again, this is not an area which has been litigated, so it is more about removing the potential for avoidance of doubt mechanisms.

Contracts and other electronic transactions often these days use automatic message systems without review or intervention by what we call a natural person. The Electronic Transactions Act previously did not contain a provision which made it clear that the absence of human intervention itself did not make a contract invalid or unreliable. I certainly do not believe that there was ever any question that there would be invalidity on those grounds, but we are now dealing with any such potential question that invalidity existed.

In relation to contracting electronically it is very useful to go back to first principles. My former colleague Kenneth Saurajen, a partner at Gilbert + Tobin, has noted that, with flexibility of contracting electronically, some people might think it is conceptually difficult to maintain that it is appropriate or justifiable to have a special set of rules for electronic transactions and digital communication. As he has observed from the writings of others and his own analysis, the fact that a contract is entered into electronically should in theory have no impact upon its legal validity, without any legal concerns restricted to the manner in which its terms might be evidenced, should disputes as to the contract’s existent or content later arise.

This indeed reflects the fact again that the Electronic Transactions Act, the national scheme that the Commonwealth administers and the state and territory schemes have continued to work very well and have continued to ensure that we have reliability in Australia. That reliability is reflected in the very large number of our trading partners who are also signatories to this convention.

I have had the privilege of being involved in the Joint Standing Committee on Treaties, which is examining further amendments that might be required to the electronic transactions legislation based on updates to the convention. In the hearings in February I referred to the department’s extensive report into the digital economy a year or so ago and asked departmental representatives whether there was anything in the report regarding any legislative reform of the Electronic Transactions Act or whether there were any submissions on that. The response was that there were no proposals for legislative reform out of that paper, but rather in any future amendments we would simply ensure we maintain consistency with the UN Convention on the Use of Electronic Communications in International Contracts. I commend the bill to the House.