Second draft for E-commerce law

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With the issuance of a new draft for comments just few days ago, China seems to move closer to the approval of long-awaited e-commerce law. A first draft had been already published in February 2017.

According to the new draft, the law will apply to all e-commerce activities within the Chinese territory  – there is no more reference to activities engaged by domestic e-commerce entities or consumers, and there is no more specific chapter reserved to cross border e-commerce.

First things first, this draft provides for more accurate definition of the subjects involved in the activities that will be regulated under this law:

  • E-commerce operators are “natural persons, legal persons or unincorporated organizations that sell goods or provide service through internet and other information network, including the ecommerce operators operating in their self-built websites, e-commerce platform operators and e-commerce operators on platform”.
  • E-commerce platform operators is defined as “legal persons or other unincorporated organizations that provide cyber space, virtual business premises, transaction rules, transaction matching, information distribution and other services to two or more parties to an e-commerce transaction so that the parties may engage in independent transactions”.
  • E-commerce operators on platform are the e-commerce operators that sell goods or provide services through an e-commerce platform.

Online businesses will be required to register with “industrial and commercial administrative departments” as well as the tax bureau. Exceptions will be granted to sellers of self-produced agricultural products, to the sale of cottage craft, labor services of individuals using their skills that require no license or not subject to industrial and commercial registration as provided by law.

The new draft stresses the focus on IPR infringements, unfair competition, electronic contracts, electronic payment, and dispute resolution mechanism of e-commerce. Compare with the previous draft, a large section of provisions covering logistics, personal data treatment and consumer protection has been eliminated.

Although the draft law still concerns personal information and consumer protection, many detailed articles on these issues were replaced by references to the Cybersecurity Law and other relevant laws and regulations and to the Consumer Rights and Interests Protection Law.

In order to ensure security and stable operation on the e-commerce platform, the e-commerce operators are requested to develop a contingency plan to be launched in case of security event in order to take remedial measures and to report this event to the relevant authorities.

Moreover, the new draft partially regulates service agreements and transaction rules in a more accurate way: when the operators intend to amend it, it shall solicit public opinion at a conspicuous position of its homepage; operators are restricted to take advantage from imposing unreasonable restrictions or transaction conditions on the transactions or the price of such transactions or collecting unreasonable fees against operators on platform; operators shall timely make announcements if they take such measure as warning, suspension of business or termination of service against operators on platform.

The draft will also bans false or misleading advertising, sales data, user comments and awards. Specifically, paid search results must be labeled as advertisements.

About IPR, e-commerce platform shall establish their protection rules. Particularly, articles from 36 to 38 provide for a procedure that the platform shall activate upon the receiving of a notice from an IPR holder. Where an e-commerce platform operator knows or should have known any IPR infringement shall take necessary measures and shall assume joint and several liabilities with the infringers if it fails to take such measures.

One significant change from the first draft is the establishment of some rules about the delivery of goods and the time of delivery with distinction between the delivery of goods, service and digital products.

Lastly, this draft further clarifies legal liabilities of e-commerce operators and platform and punishment distinguishing, inter alia, between the case in which the operator fails to publicize its business license or the information about termination of service or about the consumers’ data managing, the case regarding the non-fulfillment of the obligation to verify the identity of the operators by the platform and the cases concerning violation of IP rights.

Of course we shall therefore have to see how the text of the law will be defined and enter into force (and then how it will be implemented) but it seems that we are on the right track.


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