By Sergei Blagov
Sept. 30 — Ukraine's newly enacted e-commerce law will significantly facilitate doing business with U.S. companies in the country, a Ukrainian practitioner told Bloomberg BNA.
The E-Commerce Law “opens opportunities for the significant business expansion in terms of the volume of commerce and its penetration to the target consumers,” said Olexander Martinenko, a senior partner at CMS in Kyiv.
“What is more important, it puts electronic contracting mechanism onto the solid legal foundation now, back from the shaky legal grounds where it used to operate before,” he added.
Ukrainian Law No. 675-VIII, which went into effect Sept 30, determines procedures for concluding e-contracts, including exchanging electronic messages and filling in electronic forms. The law also regulates the use of electronic digital signatures and one-time electronic identifiers.
The E-Commerce Law is aimed to fully legalize e-contracts and put them on an equal footing with traditional paper-based contracts, according to Martinenko. Parties to an e-contract, he said, may now use it as written evidence in court and/or administrative proceedings.
Martinenko said that the new law facilitates the use of e-money, money transfer or cash payments for online transactions. It doesn't, however, apply to public procurement, real estate transactions, gambling or transactions that are subject to the state registration requirement.
Martinenko described the new law as “a step forward in approximation of the Ukrainian legislation to that of the EU.” He said it brings it closer to EU standards by introducing legal instruments familiar to the markets of the EU and other developed jurisdictions, including the U.S. and Canada.
While the Ukrainian law fully equates the legal status of electronic contracts with that of written ones, he added, it places stringent requirements on the confirmation of identities of the parties to an electronic contract.
De facto, electronic contracts have been in use in Ukraine for quite a while, Martinenko said, but they didn't have a solid legal foundation. Subsequently, proving the existence of e-contracts in court was difficult, and parties of these contracts struggled with banks and tax authorities when making payments and complying with reporting requirements, he said.
To bypass these difficulties, Ukrainian businesses used a trick whereby electronic contracts were mostly used as expressions of interest on the part of the consumers. Once such expression of interest was made, the contracting partners or their agents would meet and sign regular paper contracts to remove the above risks. Martinenko said that with the new law, the latter step will become superfluous as electronic contracts are now good in the eyes of the law.
Although the law is silent on the matter, Martinenko added, it leaves the impression that the legislator's intent was more to focus on the business-to-consumer (B2C) market rather than the business-to-business (B2B) one. For example, there are several references in the law to the Consumer Protection Act of Ukraine that relate only to the protection of the end consumers' rights.
It remains to be seen if and how the law will be used by businesses within B2B settings, Martinenko said.
To contact the reporter on this story: Sergei Blagov in Moscow at email@example.com
To contact the editor responsible for this story: Alexis Kramer at firstname.lastname@example.org