On August 10, 2023, the Parliament of Ukraine adopted the Law of Ukraine No. 3321-IX 'On Digital Content and Digital Services" (the 'Law'). On 2 September 2023 the Law was officially published and will become effective on 2 March 2024 after the completion of a 6 month transitional period necessary for businesses and governmental authorities to adapt its provisions.

The Law implements legal regulation of the supply of digital content and/or digital services to consumers. It also brings the national legislation of Ukraine into compliance with Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services which became effective for the country members of EU from January 1, 2022.

The Law provides inter alia definitions of "digital service", "digital content" and "digital environment". It regulates relations between the performer and the consumer regarding supply of digital content and/or digital service and establishes effective legal instrument for the protection of the rights of consumers who are provided with digital content and/or digital services.

Thus, according to the Law, "digital service" means a service that enables the consumer to create, process, store and distribute data in digital form or to access such data, as well as to perform any other actions with data in digital form that was created or uploaded by the consumer or other users of such service. Digital services include, but are not limited to, those that enable the creation, processing, access or storage of data in digital form, including file hosting, word processing or games offered in cloud computing environments and social networks.

"Digital content" means data that is created and provided in a digital form. Digital content includes, but is not limited to, computer programs, applications, video files, audio files, music files, digital games, and e-books.

The Law defines "digital environment" as hardware, software and any network connection used for the purpose of obtaining access to digital content and/or digital service and providing the possibility of their use by the consumer.

What the Law covers

The scope of this new law encompasses three key components:

  1. relations in which the performer provides or undertakes to provide digital content and/or a digital service to the consumer on the basis of the contract, and the consumer provides or undertakes to provide his personal data, except in cases where their provision is necessary exclusively for receiving digital content and /or digital service, without the intention of further use of personal data to achieve any other goals;
  2. relations in which digital content and/or digital services are developed according to the consumer's specification;
  3. relations in which the performer, on the basis of the contract, provides or undertakes to provide digital content on a material carrier used exclusively for the storage of such digital content.

The Law, however, doesn't cover the following:

  • provision of medical services;
  • provision of financial services;
  • provision of services in the sphere of gambling using online systems and based on the individual request of the recipient of such services;
  • supply of digital content to an unlimited number of persons, except for cases of transmission of digital content, which is part of a performance or showing of a certain event, by means of signal broadcasting;
  • supply of digital content by subjects of governmental authority, other managers of public information in accordance with the Law of Ukraine "On Access to Public Information" etc.

According to the Law, the performer is responsible for any violation of the obligation to provide digital content and/or digital service in accordance with this Law. If the contract provides for one-time or multiple provision of digital content and/or digital service, the performer is responsible for any non-compliance with the requirements provided by the Law, which existed at the time of the provision of digital content and/or digital service and was discovered within two years from the moment of provision of digital content and/or digital service. If the contract provides for the continuous provision of digital content and/or digital service during the term established by the contract, the performer is responsible for any non-compliance with the requirements of the Law, which existed and/or was discovered during such term. The burden of proving the provision of digital content and/or digital service in accordance with the Law rests with the performer.

The Law established the following responsibilities for violation of consumers rights:

Sanctions in the form of a fine are applied to business entities for violating the requirements of the Law in the event of:

  1. violation of consumer rights provided for by the Law related to the provision of digital content and/or digital service - in the amount of ten times per the value of digital content and/or digital service based on the prices in force at the time of purchase of such digital content and/or digital service services, but not less than five tax-free minimum incomes of citizens;
  2. violation of consumer rights provided by the Law related to the compliance of digital content and/or digital service - in the amount of 300 percent of the value of the provided digital content and/or digital service in violation of the requirements of this Law regarding the compliance of digital content and/or digital service, but not less than twenty-five non-taxable minimum incomes of citizens.

As the provisions of the draft law are aimed at protecting the rights of consumers when purchasing and using digital content or services, the Law also stipulates that the central executive body, which implements state policy in the field of state supervision (control) of compliance with the legislation on the protection of consumer rights, is obliged to ensure an adequate level of protection for consumers of digital content and digital services.

In conclusion, the adoption of this new Law marks a significant milestone for Ukraine in the realm of legal regulation for the supply of digital content and services to consumers. The comprehensive nature of the law, defining key terms such as "digital service," "digital content," and "digital environment," establishes a robust framework to govern relationships between performers and consumers in the digital sphere. By outlining responsibilities and sanctions for violations, the law seeks to ensure accountability and protection for consumer rights. As Ukraine embraces this legal framework, it not only safeguards consumers but also positions itself within the global landscape of digital commerce and services.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.