Philippines Accedes to UN Convention on the Use of Electronic Communications in International Contracts
In June 2022, then President Rodrigo Duterte adopted the instrument of ratification for the United Nations Convention on the Use of Electronic Communications in International Contracts (UN ECC). The Convention which the Philippines signed in September 2007, lays down certain rules and regulations which parties to the convention adopts on the use of electronic communications in international trade. The parties, however, may exclude the application of this Convention or derogate from or vary the effect of any of its provisions. The salient points of the UN ECC are as follows:
The UN ECC applies to the use of electronic communications in connection with the formation or performance of a contract between parties whose places of business are in different states. It does not, however, apply to the following:
- contracts concluded for personal, family or household purposes;
- transactions on a regulated exchange;
- foreign exchange transactions;
- inter-bank payment systems, inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments;
- transfer of security rights in sale, loan or holding of or agreement to repurchase securities or other financial assets or instruments held with an intermediary;
- bills of exchange, promissory notes, consignment notes, bills of lading, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money.
The UN ECC provides the following rules and regulations with respect to use of electronic communications in international contracts:
- A communication or contract shall not be denied validity or enforceability on the sole ground that it is in the form of electronic communication.
- A party is not required to use or accept electronic communication but acceptance of the use of such may be inferred from a party’s conduct.
- UN ECC does not require a particular form. In case the law requires that such communication/contract be in writing, it is met by an electronic communication if the information contained therein is accessible so as to be usable for subsequent reference.
- In case the law requires that such communication/contract be signed by a party, such is met if the following conditions are present: a) A method is used to identify the party and to indicate that party’s intention; and b) the method used is either: (i) As reliable as appropriate for the purpose for which the electronic communication was generated or communicated, or (ii) proven in fact to have fulfilled the functions described, by itself or together with further evidence.
- In case the law requires that a communication/contract should be made available or retained in its original form, this is met if: a) there exists a reliable assurance as to the integrity of the information it contains from the time when it was first generated in its final form, as an electronic communication or otherwise. ; and b) where it is required that the information it contains be made available, that information is capable of being displayed to the person to whom it is to be made available. The criteria for assessing integrity shall be whether the information has remained complete and unaltered and the standard of reliability required shall be assessed in the light of the purpose for which the information was generated.
- The time of dispatch of an electronic communication is the time when it leaves an information system under the control of the originator. If the electronic communication has not left an information system, then the time of dispatch is the time when the electronic communication is received.
- The time of receipt is the time when it becomes capable of being retrieved by the addressee at an electronic address designated by the addressee. If it was sent at another electronic address, the time of receipt is at the time when the addressee becomes aware of such a fact and the addressee becomes capable retrieving the electronic communication. An electronic communication is presumed to be capable of being retrieved by the addressee when it reaches the addressee’s electronic address.
- An electronic communication is deemed to be dispatched at the place of the business of the originator and received at the place of business of the addressee.
- A proposal to conclude a contract made through one or more electronic communications not addressed to one or more specific parties, but is generally accessible to such, is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance.
- Contracts formed by the interaction of an automated message system and a natural person, or by the interaction of automated message systems, shall not be denied validity or enforceability on the sole ground that no natural person reviewed or intervened.
- Where a natural person makes an input error in an electronic communication exchanged with the automated message system of another party and the automated message system does not provide the person with an opportunity to correct the error, that person, or the party on whose behalf that person was acting, has the right to withdraw the portion of the electronic communication in which the input error was made under the following circumstances: a) the person, or the party on whose behalf that person was acting, notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication; and b) the person, or the party on whose behalf that person was acting, has not used or received any material benefit or value from the goods or services, if any, received from the other party.
It should be noted though that the following provisions apply only to international transactions. Domestic transactions continue to be governed by the Electronic Commerce Act.
Additional information on and the full text of the UN ECC may be found here.