Panama: Panama´s New E-Commerce Law:

The First One in the Region
Last Updated: 21 December 2001
Article by Juan Francisco Pardini B.

According to renowned "E-Readiness Report" presented earlier this year by the prestigious McConnell International - "in every country, a relationship of trust, accountability and predictability between public and private sectors is essential. For nations with a market-oriented economy where the government does not itself dominate the economy or the provision of communications services, staying out of the way of market forces – except to protect consumers – is the first priority".

Panama took a step in the right direction when the new e-commerce bill was signed into Law 43 by Panama's President, Mireya Moscoso on July 31, 2001. Believed to be the first of its kind to be implemented in Central America, the new law is expected to provide a much needed boost to Panama's e-commerce industry. This Law represents an advance for the legal recognition of electronic documents and signatures, which are elements necessary to increase the confidence in transactions conducted electronically. Its provisions on electronic documents are loosely based on the United Nations Commission on International Trade Law (UNCITRAL) Draft E-commerce Law.

The bill establishes a certification procedure and penalizes the non compliance of contracts. It also envisions the creation of an e-commerce directorate at the Ministry of Commerce and Industry, which will be responsible for authorizing certification entities.

Activities regulated under this law are subject to the following principles:

  1. Freedom to provide services: to maintain the right of service providers to continue their legal trading activities without prohibition from the government;
  2. Open market: to ensure the absence of monopolistic practices and to remain impartial to the provider of any specific type of technology;
  3. Technological neutrality: by eliminating the elements in an earlier draft of the bill that favored encrypted technologies;
  4. International compatibility: by using international criteria to supervise certification authorities and acknowledge certificates
  5. Legal recognition of electronic data messages: by granting electronic documents full value as evidence; and
  6. Functional equivalence of e-commerce to traditional commerce: acknowledging as valid in electronic documents the same elements of traditional agreements, such as offer, acceptance and others.

Legal Requirements for a valid electronic document

Under traditional civil regulations, an agreement is executed by the granting of offer and acceptance. Most agreements required to be drafted in writing and executed through the written signature of the parties. In cases of agreements above a certain monetary amount, notarization and even recordation with a public entity are required to ensure the enforceability.

Law 43 does away with the written document requirement, which was an obstacle to enforceability of e-commerce agreements. When the current law requires that a document be in writing, data messages are granted the same validity, as long as

  1. The information in the document is available for later consultation;
  2. The data message is conserved in the original format in which it was generated, sent or received or with some format that is shown to reproduce exactly said information;
  3. That it conserve, if any, all data that allows to determine the origin and destination of the message, date and time when it was sent or received;

Data messages are defined as all information generated in optical, electronic or similar form, such as electronic data interchange (EDI), internet, e-mail, telegram, telex or telefax. A form of data message are electronic documents defined as any electronic representation that bears witness to a fact, image or idea. In the case of agreements, the consent of the parties is contained as a signature. Electronic signatures (understood as any electronic sound, symbol or process linked to or logically associated to a message and granted or adopted by a person with the intention of signing a message that allows the receiver to identify the issuer) are granted the same value as written ones, when signatures are required under legislation. Electronic signatures by notaries and other authorities are also granted the same validity as their written counterparts, when required.

Law 43 allows businesses to maintain as data messages their correspondence, invoices, ledgers, corporate books and other records previously required by the Code of Commerce and Tax Code. They must be kept under the conditions required for electronic documents, for the period required by said Codes (7 to 15 years, depending on the nature of the documents). If a change in configuration of a data message creates a material risk that a consumer may not access it, the provider of said record keeping service must provide notice of said change and allow an early termination of a contract.

Regulation of certificates authorities and other security features

Among the forms of electronic signatures, the law defines as secure electronic signature that which may be verified with a security system or procedure under internationally accepted authentication standards. Entities known as certification authorities (CAs) issue electronic records known as certificates, which serve to verify the authenticity and legitimacy of electronic signatures and the integrity of a message. Law 43 presumes that a user has accepted a certificate when it is posted in a repository or data base by the CA upon request of the user, or if it has been sent to one or more other users.

In a manner analogous to a Personal Identification Number or a corporate seal, the Law provides that upon acceptance of a certificate, the user guarantees all persons of good faith, free of liability, that the certified electronic signature is under control of the user, that no other person has accessed the procedure for its generation and that the information contained in the certificate is true and matches that provided to the CA.

The newly created Directorate of Electronic Commerce, part of the Ministry of Commerce and Industries, supervises the activities of CA. The Directorate will maintain a voluntary register of CAs, which will be optional for CAs active in Panama. The Directorate will also ensure that CAs operating in Panama, whether local or foreign, maintain adequate financial and technical standards. However, repositories or the databases where certificates are stored, must be registered with the Directorate. Registered repositories must store their databases in an integral manner, as well maintain a registry of expired certificates. Certificates from foreign CAs are valid in Panama like those from local CAs when said certificates are accepted:

1) by a CA registered in Panama;

2) under international agreements; or

3) under approval from other foreign CA registrar similar to the Directorate.

Conclusion

The use of the U.S. Dollar as currency and the current low tax environment, under which income taxes are applied to foreign source income, are expected to attract e-commerce operations into Panama. Panama is now better prepared to become a Hub for E-Commerce, and as stated in our previous article entitled "The Panama Canal Silicon Valley".

B2B, e-banking, web hosting, applications outsourcing, broadband content and exchange traffic providers that serve clients outside of Panama or that are set up in the International TechnoPark of Panama or any of the Private Hi-Tech Parks already offering services from Panama currently can benefit from many government incentives not found in other offshore e-commerce centres such as Singapore or Bermuda.

Now Law 43 will provide the additional security that investors in these businesses need to enforce documents in electronic form.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions