JURISDICTION ISSUES IN E-COMMERCE

JURISDICTION ISSUES IN E-COMMERCE

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“E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform”[1]

Introduction

In general, E-commerce can be defined as a digital commercial transaction between individuals and organizations. These transactions have occurred with the help of digital technology such as transactions over the internet and the web. It includes the exchange of money between organizations or btw organization or individual in return of product or services. With the advent of ecommerce, now the consumer has a variety of options and offers and they can choose the most suitable for them.

Development of E-commerce

The concept of ecommerce was first introduced in the USA in 1970. With the invention of the very old notion” sell and buy”, the concept of e-commerce was developed. Only in 1991 when the Internet was open for commercial use, Ecommerce was possible. After 1991, thousands of business were set up on websites. large no. Of companies from the US and Western Europe were set up on World wide web uring 2000. Amazon.com is one of the most famous e-commerce company which was founded in 1994. It was the first American company to sell products with the help of internet.

Meaning and Relevance of E-commerce

In simple terms, E commerce consists of buying and selling of products or services over the Internet. According to the OECD [2] Economic outlook, ” Ecommerce can be referred as a business over the internet, selling goods and services which are delivered offline as well as products which can be “digitalized” and delivered online, such as a computer software”. In business management and information technology, the era of Electronic commerce is new and still developing. There are six types of E-commerce in general, which are as follows:

  • E-commerce conducted between companies.
  • E-commerce conducted between business and final consumers.
  • E-commerce conducted between consumers.
  • E-commerce conducted between consumer to business.
  • E-commerce conducted between companies and public administration
  • E-commerce conducted between consumers and public administrations.

E-commerce allows a business to reach a global market with minimal financial investment agreement. Limits of e-commerce are not defined geographically which allows consumers to have a variety of choices. It allows direct interaction between consumers and business which results in a decrease of the distribution chain. E-commerce led to an increase in competitiveness and productivity since companies are closer to their consumers. Reduction of cost is the major advantage of e-commerce.

Indian laws for E-commerce

The IT Act of 2000 establishes the validity of Electronic transactions. Such eCommerce transactions must be made with proper offer and acceptance. In 2008, the IT Act was amended to increase security in case of E-commerce transactions.  The said act also deals with Protection of personal data in the process of e-commerce.[3] When an E-commerce company completely fails to protect personal data then they are held liable to pay damages by means of monetary compensation.

Jurisdiction Issues

One of the primary steps by a court in any issue is to determine it’s jurisdiction. The court must have both territorial and subject matter jurisdiction. Increased use of E-commerce led to complications in determining the jurisdiction. In the virtual world of the internet, there are no such boundaries or territories as compared to the physical world. As per the traditional rules, countries usually have jurisdiction over individuals who are in the country or on transactions that are held within the national borders. [4] Therefore in e-commerce transactions, if a business derives customers from a particular country as a result of their website, it may be required to defend

any litigation that may result in that country. Section 75[5] was inserted after the 2008 amendment in order to resolve such cross border issues. Section 75 provides for punishment where the offence is committed by a person outside India irrespective of his nationality. However, in order to invoke sec 75, the computer system included in the act must be located in India.

However, apart from this due to the nature of eCommerce, it is difficult to check the age of anyone who is transacting online. As per Section 2,10 and 11 of the Indian Contract Act, the parties must be competent to enter into a contract.  Delhi High Court in many cases determined the jurisdictional of any dispute in virtual World such as in WWE vs M/S Reshma Collections[6], it was held that the issue of jurisdiction is both questions of fact and the question of law.  There are some instances wherein the courts had assumed jurisdiction in preliminary stages such as in SMC. Pneumatics (India) Pvt. Ltd. v. Jogesh Kwatra[7], jurisdiction was assumed where a corporate’s reputation was being defamed through e-mails.

Sources:

[1] FDI Policy

[2] Organization for Economic Corporation and Development

[3] Section 43A

[4] Paras Diwan and Piyush Diwan ” Private International Law’ 4th review, deep&deep publications

[5] Information and Technology Act 2000

[6] FAO(OS) No. 506 of 2013

[7] Suit no. 1279/2001

This blog is written by Riddhi Chadha, Fairfield Institute of Management & Technology.

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