28 January 2021
On 4 January 2021, the Electronic Transactions (Amendment) Bill (“Bill”) was introduced for first reading in Parliament. Primarily, the Bill seeks to amend the Electronic Transactions Act (“ETA”):
- to adopt with modifications the UNCITRAL Model Law on Electronic Transferable Records adopted by the United Nations Commission on International Trade Law (“UNCITRAL”) on 13 July 2017 (“Model Law”);
- to delete item 2 of the First Schedule (briefly, this relates to matters such as negotiable instruments, documents of title, bills of exchange, etc.), in conjunction with the adoption of the Model Law; and
- to amend section 13 of the ETA to achieve consistency with Article 10 of the United Nations Convention on the Use of Electronic Communications in International Contracts (“ECC”).
The First Schedule sets out a list of matters which are excluded from the operation of Part II of the ETA - if the list in the First Schedule covers less matters, then Part II of the ETA, which contains provisions supporting the legal enforceability of electronic records and signatures, would apply to more matters.
The adoption of the Model Law, together with the deletion of item 2 of the First Schedule, is part of a wider and ongoing initiative by the Singapore Government to review and support the electronisation of various types of instruments or transactions, including the other matters specified in the First Schedule. These other matters set out in the First Schedule will be deleted when the legislative and administrative frameworks supporting the electronisation of these other matters are ready to be enacted or implemented.
Adoption of Model Law
Section 3 of the ETA will be amended to provide that a purpose of the ETA is to adopt the Model Law in its application to an electronic transferable record, whether the electronic transferable record is issued or used in Singapore or outside Singapore.
There will be a new Part IIA on electronic transferable records in the amended ETA which consists of sections 16A to 16S. Provisions in the new Part IIA will cover matters relating to, among others, definitions (e.g. definition of “electronic transferable record”, “bill of lading”, “electronic record”, “bill of exchange”), requirement of consent, functional equivalence rules, general reliability standards (e.g. an amendment in an electronic transferable record),cross border recognition and the accreditation of providers of electronic transferable records management systems.
Set out below is a summary of some key changes.
Legal effect and functional equivalence provisions
The new section 16E provides that an electronic transferable record is not to be denied legal effect solely on the ground that it is in the form of an electronic record.
Under the new section 16G, an electronic signature used in relation to an electronic transferable record would satisfy any rule of law that requires a person’s signature or provides for certain consequences if a transferable document or instrument is not signed if:
- the electronic signature is a reliable method that identifies the person; and
- indicates the person’s intention in respect of the information in the electronic transferable record.
Transferable document or instrument
Under the new section 16H, an electronic record would satisfy the requirements of a transferable document instrument if:
- it contains the information that would be required to be contained in the transferable document or instrument; and
- a reliable method is used:
- to identify that the electronic record as the authoritative electronic record constituting the electronic transferable record;
- to render that electronic record capable of control from the time of creation to the time it ceases to have any effect; and
- to retain the integrity of that electronic record.
The criterion for assessing integrity of an electronic record is whether the information contained in it, including any authorised changes, has remained complete and unaltered. Any change that arises in the normal course of communication, storage or display would not affect the integrity of such electronic record.
Possession of a transferable document or instrument
Under the new section 16I(1), an electronic record would satisfy any rule of law that requires the possession of a transferable document or instrument or provides for certain consequences if a transferable document or instrument is not possessed if a reliable method is used to:
- establish exclusive control of the electronic transferable record by a person; and
- identify the person in control.
A person in control of an electronic transferable record would be in the same legal position as the person in possession of an equivalent transferable document or instrument.
Additionally, the new section 16I(2) provides that the transfer of control over an electronic transferable record is the functional equivalent of the transfer of possession of a transferable document or instrument. The type of control that needs to be transferred under section 16I(2) is one that fulfils all requirements under the new section 16I(1).
Indorsement of a transferable document or instrument
Under the new section 16K, a rule of law that requires an indorsement of a transferable document or instrument or provides for certain consequences if a transferable document or instrument is not indorsed would be satisfied with respect to an electronic transferable record if:
- the information required for the indorsement is included in the electronic transferable record; and
- such information is in compliance with the requirement for writing and signature in the new sections 16F and 16G respectively.
Amendment of a transferable document or instrument
Under the new section 16L, a rule of law that requires an amendment of a transferable document or instrument or provides for certain consequences if a transferable document or instrument is not amended would be satisfied with respect to an electronic transferable record if a reliable method is used for the amendment of information in the electronic transferable record.
Change of medium
The new sections 16M and 16N are parallel provisions which, amongst other things, provide for a change of medium from a transferable document or instrument to an electronic transferable record, and vice versa, if a reliable method for the change of medium is used. Such a change of medium would be effective only if all the information contained in the original medium is accurately reproduced, and a statement indicating a change of medium is inserted in the final replaced medium.
Notably, section 16N(3) clarifies that in the case where the electronic transferable record is changed to a transferable document or instrument, the requirement that all information be accurately reproduced would not be affected by any additional information that may be contained in the electronic transferable record due to its electronic nature - such additional information would not need to be included in the transferable document or instrument for the change of medium to take effect.
General reliability standards
The new section 16O(1) sets out a general standard on the assessment of the “reliable method” mentioned in the new sections 16G, 16H, 16I, 16J, 16L, 16M and 16N. The assessment of whether a method is reliable would be viewed in light of the function specially pursued by the use of that method, including the following non-exhaustive relevant circumstances:
- any operational rules that are relevant to the assessment of reliability;
- the assurance of data integrity;
- the ability to prevent unauthorised access to and use of the system;
- the security of the hardware and software;
- the regularity and extent of audit by an independent body;
- the existence of a declaration by a supervisory body, an accreditation body or a voluntary scheme, regarding the reliability of the method; or
- any applicable industry standard.
Alternatively, a method would be reliable if it is proven in fact to have fulfilled the function by itself or together with any further evidence.
Deletion of item 2 of the First Schedule
In conjunction with the adoption of the Model Law, item 2 of the First Schedule to the ETA will be deleted. This means that Part II of the ETA which contains provisions supporting the legal enforceability of electronic records and signatures would apply to negotiable instruments, documents of title, 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. Currently, certain kinds of documents and transactions such as wills, indentures, trusts and powers of attorney, negotiable instruments and other transferable documents or instruments, contracts for immovable property and conveyance of immovable property (as listed in the First Schedule to the ETA) are excluded from the scope of operation of Part II of the ETA.
Additionally, the Bill amends, among other things, section 13 of the ETA with respect to time and place of despatch and receipt. The existing section 13(4) provides that an electronic communication is presumed to be capable of being retrieved by the addressee when it reaches the electronic address of the addressee for the purposes of section 13(3). Section 13(3) provides the rule for determining the time of receipt of an electronic communication at an electronic address in a case where the electronic address has not been designated by the addressee. However, in accordance with Article 10 of the ECC, the presumption should also apply in determining the time of receipt of an electronic communication at an electronic address in a case where the electronic address has been designated by the addressee, which is the subject of section 13(2). Section 13(4) will be amended to be consistent with Article 10 of the ECC.
The Bill also makes consequential and related amendments to the Bills of Lading Act and the Contracts (Rights of Third Parties) Act.