Benchmarking of existing national legal e-business practices

Transcription

1 Benchmarking of existing national legal e-business practices DG ENTR/04/68 Country report - LATVIA Ref Country report Latvia Date 19 September 2006 Prepd.

2 Table of Contents Latvia 1 1. General information on the national legal system 1 2. Electronic signatures National legislation and administrative practices Cross border regulatory issues 5 3. General elements of electronic contract Law National legislation and administrative practices Electronic invitation to make an offer and submission of an offer Electronic acceptance Information obligations in relation to electronic contract conclusion Standard terms and unfair clauses Choice of law and forum Cross-border regulatory issues Electronic invoicing, payment and other matters related to execution of electronic contracts National legislation and administrative practice in the fields of electronic invoicing, payment and delivery Electronic invoicing Electronic payment Delivery of the good or provision of services ordered electronically and withdrawal period Non-performance of the obligation to deliver or late delivery Right of withdrawal from the contract in B2B transactions on goods an services Delivery of a good that is not in conformity with the contract Cross Border regulatory issues General assessment Main legal and administrative barriers to e-business Awareness about national authorities in charge of solving legal problems in e-business Legal and administrative best practices in e-business 18 ANNEX: NATIONAL LEGISLATION 19

3 Latvia 1. General information on the national legal system Latvia is a parliamentary republic. It is unitary state with onechamber parliament (Saeima), comprised by 100 members elected in proportional elections. The Cabinet of Ministers represents the executive power; it may adopt provisions according to delegation from Saeima determined in Law. The usual way to implement an EU directive in Latvia, regulating a new legislative field, is to make a specific law or by-laws containing all regulatory provisions. However if a Directive concerns an already regulated field, the directive s provisions are most often transposed through changes in the existing laws. Directive may be transposed in law and/or in provisions issued by Cabinet of Ministers. In usual cases the main issues are transposed by law, but secondary and more technical are transposed by regulations of Cabinet of Ministers. In particular cases a directive also may be transposed in various pieces of national legislation if it is more comfortably. Laws are the main legal source for courts in Latvia. The court decisions are also considered as important source of law, the courts shall follow the judicature of the supreme (cassation) instance- the Senate of the Supreme Court of Latvia. Procedural rules and practices are determined in Law on Judicial Power 1 (adopted by Supreme Council on 15/12/1992, in force from 01/01/1993), as well as in Civil Procedure Law 2 (adopted by Saeima on 14/10/1998, in force from 01/03/1999), Administrative Procedure Law 3 (adopted by Saeima on 25/10/2001, in force from ). There is a two-instance appeal system in Latvia, i.e. decisions of the first instance (District Courts or Regional Courts) may be appealed to the appellation instance courts (Regional Courts (if the first instance was District Courts) or Civil Matters Panel of Supreme court (if the first instance was Regional Court) and cassation for the judgement of appellation may be submitted to the Civil Cases Department of Senate of the Supreme Court. Cases under administrative procedure are heard in Administrative District Court, appellation is heard in Administrative Regional Court and cassation in the Administrative Cases Department of the Senate of the Supreme Court. Civil cases in the first instance are typically dealt with by the district courts for matters with a financial value of LVL 30,000 (about EUR 42,500) or less. For matters with a greater financial value, as well as intellectual 1 Par tiesu varu: law, adopted on 15/12/1992. // Ziņotājs, 14/01/1993. No.1. 2 Civilprocesa likums: law, adopted on 14/10/1998. // Latvijas Vēstnesis 03/11/1998, No.326/ Administratīvā procesa likums: law, adopted on 25/10/2001 // Latvijas Vēstnesis 14/11/2001 No

4 property, real estate or insolvency, the cases are brought to the Regional Court. In civil court cases, there are two basic principles for dealing with evidence: 1) the parties of the dispute choose the evidence they wish to bring before the court, and 2) the court s assessment of the evidence is free in the sense that no evidence have a predetermined effect as would be binding upon the court. The parties of a contract are also free to choose arbitration for settlement of a dispute. Consumers may choose to bring disputes concerning delivery of goods and services, including disputes pertaining to e-commerce, before the Consumer Rights Protection Centre instead of the courts. Most consumer complaints are submitted to the Consumer Rights Protection Centre, as the cost of court proceedings or arbitration is quite high. Though the decisions of the Consumer Rights Protection Centre are binding and enforceable, they had to be followed by the businesses. If one of the sides is not satisfied with the decision of the Consumer Rights Protection Centre, it may appeal it according to the Administrative Procedure Law and Consumers Rights Protection Law to Ministry of Economics, but the decision of Ministry of Economics into Administrative court. Consumer Rights Protection Centre supervises and enforces Consumers Rights Protection Law 4 (adopted by Saeima on 18/03/1999, in force from 15/04/1999), Advertising Law 5 (adopted by Saeima on 20/12/1999, in force from 24/01/2000) and Law On information Society Services 6 (adopted by Saeima on 04/11/2004, in force from 01/12/2004). The Centre is entitled to adopt binding decisions (injunctions) if violation of legislation has occurred; also fine according to Administrative infringements Code of Latvia 7 (adopted by Supreme Council on 07/12/1984, in force from 01/07/1985) may be imposed. 4 Patērētāju tiesību aizsardzības likums: law, adopted on 18/03/1999. // Latvijas Vēstnesis, 01/04/1999. No. 104/ Reklāmas likums: law, adopted on 20/12/1999. // Latvijas Vēstnesis, 10/01/2000., No.7. 6 Informācijas sabiedrības pakalpojumu likums: law, adopted on 04/11/2004. // Latvijas Vēstnesis 17/11/2004., No Latvijas Administratīvo pārkāpumu kodekss: code, adopted on 07/12/1984. // ZIŅOTĀJS 20/12/1984., No.51. 2

5 Latvian internet Association (LIA) ( is an organization that unites Latvian enterprises working in a diverse internet Suppliers sphere and is interested in development of Latvian internet environment. The members of Latvian internet Association are also companies which are involved in field of e-commerce. Currently there do not exist any voluntary codes of conduct regarding e-commerce issues. 2. Electronic signatures 2.1 National legislation and administrative practices Latvian government had established Secretariat of Special Assignments Minister for Electronic Government Affairs. The main functions of the secretariat of Special Assignments Minister for Electronic Government Affairs are to organize and coordinate the development and implementation of the state policy in the field of electronic government, information Society and IT, facilitating and coordinating the development of state and local government electronic services. The Secretariat is leaded by the Minister for Electronic Government Affairs. Latvia has transposed Directive 1999/93/EC of a Community framework for electronic signatures by the Electronic Documents Law 8 adopted by Saeima on 31/10/2002. The law entered into force as of 01/01/2003. The Electronic Documents Law is supplemented by six regulations of Cabinet of Ministers: No. 514 Provisions for Technical and Organizing Requirements for Qualified Certificates, Trustful Certification Services Supplier, Creating Means of Secure Electronic Signature, as well as the Order of Verification of Secure Electronic Signature 9 adopted on 12/07/2005, No 473 Order of Elaboration, formation, Storing and Circulation of Electronic Documents in State and Municipalities institutions and Order of Circulation of Electronic Documents Between State and Municipalities institutions Or Between These institutions and Natural and Legal Persons 10 adopted on 28/06/2005, No 117 Provisions On Order of Evaluation Kind for Storing of Electronic Documents and Deliver for Storing in States 8 Elektronisko dokumentu likums: Law adopted on 31/10/2002. // Latvijas Vēstnesis 20/11/2002., No Noteikumi par tehniskajām un organizatoriskajām prasībām, kādām atbilst kvalificēts sertifikāts, uzticams sertifikācijas pakalpojumu sniedzējs, droši elektroniskā paraksta radīšanas līdzekļi, kā arī kārtību, kādā veicama droša elektroniskā paraksta verificēšana: Cabinet of Ministers Regulations of 12/07/2005 No Elektronisko dokumentu izstrādāšanas, noformēšanas, glabāšanas un aprites kārtība valsts un pašvaldību iestādēs un kārtība, kādā notiek elektronisko dokumentu aprite starp valsts un pašvaldību iestādēm vai starp šīm iestādēm un fiziskajām un juridiskajām personām: Cabinet of Ministers Regulations of 28/06/2005 No

6 Archive 11 adopted on 02/03/2004., No 267 Provisions On Minimal Sum of Insurance for Civil Liability for Trustful Supplier of Certification Supplier 12 adopted on 19/04/2005., No 357 Provisions On information To Be Provided in Description of Systems for Supply of Certification Services, Devices and Procedure of Security 13 adopted on 01/07/2003., No 358 Order and Terms for Security Control of information Systems, Devices for Supply of Certification Services and Procedure 14 adopted on 01/07/2003. Like the Directive, Latvia has no procedure concerning the contractual relationship between the parties who use digital signatures. The mentioned Latvian Law describes 3 types of signatures: 1) an electronic signature, 2) a secure electronic signature, 3) a secure certified electronic signature. Only secure certified electronic signatures are regulated by the Electronic documents Law. The Electronic Documents Law according to Article 5 of Directive 1999/93/EC determines that the requirement for a document in written form in relation to an electronic document has been fulfilled if the electronic document has an electronic signature and the electronic document conforms to the requirements of other regulatory enactments. Also it is determined that an electronic signature is legal evidence and that the submission of an electronic document as evidence to competent institutions has no restrictions, also based only upon the fact that: 1) the document is in electronic form; or 2) it does not have a secure electronic signature. Secure electronic signature in this case includes also requirements for electronic document not based upon a qualified certificate issued by an accredited certification-service-provider and electronic document not created by a secure signature-creation device. Article 3 of Electronic Documents Law determines that electronic document with secure electronic signature is equal to the signed written document. 11 Noteikumi par elektronisko dokumentu izvērtēšanas veidu saglabāšanas kārtību un nodošanu valsts arhīvam glabāšanā: Cabinet of Ministers Regulations of 02/03/2004 No Noteikumi par uzticama sertifikācijas pakalpojumu sniedzēja civiltiesiskās atbildības minimālo apdrošināšanas summu: Cabinet of Ministers Regulations of 19/04/2005. No Noteikumi par sertifikācijas pakalpojumu sniegšanas informācijas sistēmu, iekārtu un procedūru drošības aprakstā norādāmo informāciju: Cabinet of Ministers Regulations of 01/07/2003. No Sertifikācijas pakalpojumu sniegšanas informācijas sistēmu, iekārtu un procedūru drošības pārbaudes kārtība un termiņi: Cabinet of Ministers Regulations of No

7 If electronic document does not have secure electronic signature it is weight by the court, however it may not be rejected without weighting of it as the proof, as not valid only for the reasons that it is electronic document or that it does not have secure electronic signature. Also Civil Procedure Law and Administrative Procedure Law determine admissibility of the electronic documents. At this moment there are no service providers of qualified certificates in Latvia. For this reason electronic signatures is used only if both contractual sided has agreed on it before. As electronic signature is not wide spread, therefore currently it is impossible to define the major uncertainties in this field, However it seems, that problems for court could arise with evaluation of insecure electronic signatures. To extend the use of electronic signature, it is foreseen that identity cards which are planned to issue with a 2007 will have possibility to supplement them with an electronic signature. At this moment there is not any service provider issuing qualified certificates in Latvia. However it is planned that at the end of September this year the State Joint- Stock Company Latvijas Pasts which provides postal services with a technical assistance of the Latvian telecommunication company Lattelecom (partly owned by State) will start to issue qualified certificates in Latvia, according to the agreement with the Republic of Latvia. Electronic Documents Law provides liberal market for providing certification services. However as no one offered these services for the reasons, that it is hard to forecast the market amount and possible income, it was necessary for state to give support to the development of such services. 2.2 Cross border regulatory issues Article 26 of the Electronic Documents Law provides that qualified certificates issued in foreign states shall have the legal status and effect specified in Electronic Documents Law, if the status of the certificate and the electronic signature-verification data associated with the certificate may be verified from territory of Latvia and the qualified certificate conforms to at least one of the following conditions: 1) it conforms to all of the requirements of this Electronic Documents Law and other regulatory enactments; 2) a certification service provider voluntarily accredited to the supervisory institution has submitted it; 3) a certification service provider voluntarily accredited to the supervisory institution has guaranteed it; 4) it is recognised in the Republic of Latvia in accordance with international agreements; or 5) a certification service provider accredited in an EU Member State has issued it or guarantees it. 5

8 Electronic signature may be issued only for natural persons. Foreigners will obtain electronic signature, only if they will be registered in Office of Citizenship and Migration Affairs. As certification service provider had to verify compliance of the person s data with data from Residents register of Republic of Latvia. Electronic Documents Law prescribes that before the issuance of a qualified certificate, the trusted certification service provider shall, in the presence of the signatory, be satisfied regarding the identity of the signatory on the basis of the personal identification document presented by the signatory. According to Regulations of Cabinet of Ministers No. 514 Provisions for technical and organizing requirements for qualified certificates, trustful certification services supplier, creating means of secure electronic signature, as well as the order of verification of secure electronic signature adopted on Qualified certificate had to conform to the following adapted national standards: CWA :2004 Security requirements for trustworthy systems managing certificates for electronic signatures - Part 1: System security requirements, CWA :2004. Cryptographic module for CSP signing operations with backup - Protection profile (MCSOB PP), LVS ISO/IEC information technology - Software life cycle processes. For this reason it is expected that a secure certified electronic signature issued in Latvia will correspond to the wide spread international standards and recommendations, such as standards of ETSI and CEN working groups agreements. Also existing practice shows that there are no problems of interoperability with electronic signatures issued in another Member States which correspond to above mentioned requirements. 3. General elements of electronic contract Law 3.1 National legislation and administrative practices Directive 97/7/EC is transposed by Consumer Rights Protection Law and Cabinet of Ministers Regulations No.207 Regulations Regarding Distance Contracts 15 adopted on May 28, Article 5 of Directive 97/7/EC on distance selling is transposed in above mentioned regulation No 207, and it is almost identical to the Directive. 15 Noteikumi par distances līgumu: Cabinet of Ministers regulation of 28/05/2002. No 207 // Latvijas Vēstnesis 30/05/2002, No 81. 6

9 The main part of Directive 2000/31/EC is transposed into the Law On information Society Services, however Article 9 of Directive 2000/31/EC is implemented by Electronic Documents Law. Article 3 of which prescribes that provision of Electronic Documents Law are not applicable to the: 1) contracts that create or transfer rights in real estate, except for rental rights; 2) contracts, which according to the requirements of law are not valid without testing in order prescribed by the law; 3) guarantee contracts if the guarantee grants, and security for pledges if such is provided by persons who engage in purposes, which are not related to the trade of such person, entrepreneurial activity or occupation; 4) contracts governed by family law or by the law of succession. This means that electronic signature may not be applied to the above mentioned contracts Electronic invitation to make an offer and submission of an offer According to Civil Law 16 (adopted by Cabinet of Ministers on 28/01/1937) transaction is concluded when a coherent intent is expressed by all parties. According to Civil Law valid and binding offer contains core elements of the contract and the will to conclude contract. However offer may be recalled before acceptance is made. In such a case if a person to whom the offer was made and who accepted the offer without knowing that it is already recalled suffers losses, the offerer had to compensate them. Civil Law does not contain more detailed regulation regarding the offer. In the doctrine 17 there is a opinion that offer to the indefinite number of persons had to be regarded as public offer which is an initial invitation to make purchase and on the grounds of which customer comes with his own offer, to which supplier may give an acceptance. There does not exist more detailed opinions regarding consumer contracts especially distance agreements. It seems that if invitation of purchase falls under the regulation of Directive 97/7/EC it had to be deemed as binding offer and acceptation from the side of consumer establishes the agreement. As Directive 97/7/EC concerns only to consumers, in this case in B2B relations the offer from the supplier will be not binding, as it will be only initial or public offer. Therefore offer will be made only from the side of purchaser, to whom supplier will give an acceptance. According to the doctrine advertising by electronic means also is regarded as public offer and for this reason is not binding as it is not possibly for supplier to foresee possible demand. 16 Civillikums: law, adopted on 28/01/1937. // Ziņotājs 30.01/1992 No Torgāns K., Latvijas Republikas Civillikuma komentāri: Ceturtā daļa. Saistību tiesības (Coments of Civil Law of Republic of Latvia: Fourth Part Obligations Law. Author collective in grneral scientific redaction of prof.k.torgāns. Rīga: Mans īpašums, 1998, p.93, coment to the Article and Broka B., Par jauniem līgumiem mūsu, patērētāju, tiesībās (About new contracts in our, consumers, contracts), Latvijas Vēstnesis. Jurista vārds No 37 (190). 7

10 Such opinion however is disputable if advertising contains price indication and precise terms of offer, in such a case advertising possibly may be regarded as binding offer. It also depends from how the Annex I of Directive 2005/29/EC will be transposed in legislation of Latvia, taking into account that Directive by itself does not affect contract law of Member States. From above mentioned it is possible to infer that the electronic invitation to make purchase made for indefinite number of persons may be regarded as invitation to make an offer, if it does not fall under Directive 97/7/EC Electronic acceptance Article 1537 of Civil Law prescribes that if a contract is entered into between absent parties, it shall be regarded as finally entered into from the moment the party to whom the offer was made informs the offerer of its acceptance, even though the offerer might not yet have received the notification. If the acceptance is not unconditional, and the offer called for further negotiations, the contract shall be regarded as finally entered into from the moment one of the parties declares its final unconditional consent. Valid acceptance had to be given in the term determined by offerer or without delay. If offer is sent to the indefinite number of persons, agreement is concluded when supplier at last sends his acceptance to the purchaser. However if agreement falls in the scope of Directive 97/7/EC invitation to make a purchase from the side of vendor constitutes an offer and consumer gives an accept both together establishing the agreement. According to Article 6 of Law On information Society Services if a service recipient places an order, the service provider shall confirm the acceptance thereof through electronic communication means. An order and the confirmation of the acceptance thereof shall be regarded as received when they become available to the service recipient. It is the duty of a service provider to ensure that the service recipient has the possibility to detect and correct information input errors prior to the placing of an order, however this requirement do not need to be applied if the service recipient is not a consumer. Above mentioned requirements do not apply to those orders, which are placed via electronic mail or any other means of electronic communication. Directive 1993/13/EC is transposed in Consumer Rights Protection Law adopted by Saeima on 18/03/1999 and in force from 15/04/1999, Directive 1998/6/EC is transposed in Consumer Rights Protection Law and in Cabinet of Ministers regulation No 178 of 8

11 18/05/1999 Order for Displaying Prices of Products and Services 18. Directive 2005/29/EC at this moment is still not transposed. There is not specific regulation in above mentioned legislative acts for electronic contracts. Also there is not case law related to electronic contract conclusion. Electronic contracts are valid under national law. As according to Electronic Documents Law electronic document with electronic signature is equal to the written document (contract) these contracts need to contain all requisites usually used in ordinary written contracts. If the electronic contract does not have secure signatures or there is not before concluded written agreement or electronic contract with secure electronic signatures on the signing of contracts electronically, the validity of this contract may be doubted Information obligations in relation to electronic contract conclusion The legal requirements of Latvia regarding the information, that has to be given to the consumer before and after the order is placed, in relation to electronic contract conclusion correspond to those laid down in Article 5 of Directive 2000/31/EC on electronic commerce, 19 Articles 4 and 5 of Directive 97/7/EC on distance contracts, 20 and Articles 3, 4 and 5 of Directive 2002/65/EC on distance marketing of consumer financial services. 21 Consumer Rights Protection Centre states, that there is no problems in relation to the companies compliance with the legal requirements regarding the obligation to provide information Standard terms and unfair clauses Regulation in Consumer Right Protection Law of unfair contract terms that includes provision about standard terms protects only consumers. It provides that standard contract terms always had to be deemed as not negotiated and it is due of seller or service provider to prove that these contract terms are negotiated with consumer. At this moment there still is not sufficient practise regarding the standard terms in usual contracts. As recently there was only the first judgement of Superior court regarding unfair contract term in contract with consumer. It seems that if consumer or businesses had received standard terms with electronic order confirmation or standard terms are available to the buyer on the homepage it will be not bounded for consumer or 18 Kārtība, kādā norādāmas preču un pakalpojumu cenas: Cabinet of Ministers regulation of No 178 // Latvijas Vēstnesis , No. 167/ Informācijas sabiedrības pakalpojumu likums: law, adopted on 01/12/2004 // Latvijas Vēstnesis 17/11/2004 No Noteikumi par distances līgumu: Cabinet of Ministers regulation of 28/05/2002. No 207 // Latvijas Vēstnesis 30/05/2002, No Noteikumi par distances līgumu par finanšu pakalpojumu sniegšanu: Cabinet of Ministers regulation of No 1037 // Latvijas Vēstnesis , No

12 businesses, as they were not aware of these terms at the moment when they ordered the good or service. If standard terms are accepted by a point-and-click clause, it is considered that consumer or business agreed on these terms and therefore is bound by the concluded contract. However the Consumer Rights Protection Centre on consumers initiative may exclude unfair contract terms. All the circumstances under which the contract was entered into are taking into consideration, it is expected that in such cases benchmark to recognise a contract terms as unfair may be lower, as consumer in reality do not read these contract terms very carefully. According to Consumer Rights Protection Law the unfair terms included in a contract shall be declared, upon the request of the consumer, null and void, but the contract shall remain effective if it may continue functioning also after exclusion of the unfair provisions. Unfair contract terms may also be excluded by courts. In B2B relations there are not such regulation as both sided are more or less equal and free to enter into contractual relations. For this reason the purchaser is free to choose the most appropriate supplier. Consumer Rights Protection Centre decisions are enforceable. Business however may appeal for the decision in the Ministry of Economics and then into Administrative court. The most spread unfair contract terms contains arbitration clauses, terms that allows to seller or service provider unilaterally to amend provisions of the contract as well as provisions that provides penalty for not fulfilling the contract for consumers. It seems that regarding electronically concluded contracts any imbalance between sellers or service providers and consumers rights may lead to acknowledgement that these terms are unfair, because mostly these will be standard terms and it will be impossible for seller or service provider to prove that these terms were negotiated. For this reason seller or service provider had to be very cautious in elaboration of standard terms Choice of law and forum The Convention on the law applicable to contractual obligations (Rome, 1980) is ratified by the law On the Convention on the Accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic to the Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980, and to the First and Second Protocols on its interpretation by the Court of Justice of the European 10

13 Communities. The mentioned law was passed in 8/12/2005, entered into force in 30/12/ Besides, the Council Regulation Council Regulation (EC) No.44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters is directly applicable in Latvia. The Latvia reserves the rights not to apply the provisions of the Article 7, Para 1 of the mentioned Rome Convention. A consumer can waive the right to require national law and local forum. However, if the consumer will do so, and the seller will have not sufficient prove that the rights and alternatives have been clearly and completely discussed and clarified to the consumer, such waiver of national law and forum may be considered as contradicting several principles of legal equality of contracting parties set by the Consumer Rights Protection Law. The Article 5, Para 2, Clauses 3-5 of the mentioned law provides that the contract provisions stipulating (i) privileges to the enterprise, and restrictions to the consumer, or (ii) stipulate that the consumer is waiving his lawful rights; or (iii) putting the consumer in a disadvantageous position and are contrary to the good faith, shall be deemed as contradiction with the principle of legal equality. The Latvian law does not directly provide that the contractual disputes with a consumer shall be settled according to lex loci principle (consumer s national law). The Article 1(4) of directive 2000/31/EC is based on a country of origin principle, providing that information society services are only required to comply with the requirements of the Member State in which the service provider is located. The same follows from the Article 3 of the information Society Services Law foreseeing that a service provider registered in any of the EEA Member States and complies with the requirements of laws of the co-ordinated field of the relevant country is entitled to provide information society services in the co-ordinated field in Latvia without restraints. Besides, the Article 19 of the Civil Law of Latvia provides that if there was no agreement between the contracting parties on the governing law, than it shall be presumed, that the parties have made their obligation subject to the laws of that state where the obligation is to be performed. 22 Par Konvenciju par Čehijas Republikas, Igaunijas Republikas, Kipras Republikas, Latvijas Republikas, Lietuvas Republikas, Ungārijas Republikas, Maltas Republikas, Polijas Republikas, Slovēnijas Republikas un Slovākijas Republikas pievienošanos Konvencijai par tiesību aktiem, kas piemērojami līgumsaistībām, kura atvērta parakstīšanai Romā 1980.gada 19.jūnijā, un Pirmajam un Otrajam protokolam par tās interpretāciju, ko veic Eiropas Kopienu Tiesa: law, adopted on 08/12/2005 // Latvijas Vēstnesis 29/12/2005 No

14 Therefore, the Latvian court shall follow the country of origin principle, unless the Articles of the Council Regulation (EC) No.44/2001 shall apply. Besides, as mentioned above in the present Section , the agreement on foreign law/forum upon certain circumstances may be recognized as contradicting the principle of legal equality. The choice-of-law and forum selection has not been considered as a specific barrier for e-business in B2B transactions in Latvia. Regarding B2C transactions, if an agreement constitutes the foreign governing law or the foreign forum, for the enterprise there is always a risk, that the consumer afterwards may argue such choice-oflaw/forum as contradicting the principle of legal equality 3.2 Cross-border regulatory issues The main cross - border regulatory barriers might create divergent provisions between Member States regarding invitation make offer, submission of an offer and acceptance of an offer as well as different understanding of unfair contract terms. As at this moment it is not possible to use secure certified electronic signature, there had to be before concluded written agreement on signing contracts with electronic signature. 12

15 4. Electronic invoicing, payment and other matters related to execution of electronic contracts 4.1 National legislation and administrative practice in the fields of electronic invoicing, payment and delivery Electronic invoicing The Directive 2001/115/EC has been transposed by several pieces of the legislation (with the reformulation method of transposition). The notified transposing measure is law On the Value Added tax. 23 Besides, the Cabinet of Ministers Regulations No.339 On the Strict Accounting invoices 24 as of 25/06/2003 includes the informative reference to the Directive. However the mentioned Law and Regulations does not transpose those norms of the directive which relates to the electronic invoicing. Actually the Directive has been transposed by law On the Accounting 25 (particularly Article 7), adopted by Supreme Council on 10/14/1992, in force as of 01/01/1993 (amended for nine times). From Article 7 of the mentioned Law follows that if the source documents are prepared by a computer then the signatures of the persons in charge may be replaced with the electronic authorization. The procedure of the authorization within the company shall be determined by the head of the company. The authorisation of external documents may be used only upon mutual agreement of the contractual parties on the procedure of the exchange of the source documents and authorization. It means that the signature in the invoices is not required. The invoices may be sent solely in an electronic way. The parties of a transaction shall agree on the form of invoice exchange. For example, a company from another EU Member State having unique authorization number can send electronic invoice directly to a Latvian company without written authorization in Latvia Electronic payment Article 8 of Directives 97/7/EC and 2002/65/EC are transposed in Article of Consumer Rights Protection Law, amended on 27/10/2005. Till this issue was generally regulated by Civil Law. 23 The law On the Value Added tax (adopted by Saeima in 09/03/1995) does not include the reference to the directive 2001/115/EC as required by Article 5 of the directive, but only to the basic directive. This is due to the previous practice in Latvia, when laws have informative references only to the initial directives, and not to their amendments (the 2001/115/EC is amendment of directive 77/388/EEC). 24 Noteikumi par stingrās uzskaites preču pavadzīmēm-rēķiniem: Cabinet of Ministers regulation of No. 339 // Latvijas Vēstnesis No Par grāmatvedību : law, adopted on 10/14/1992 // Ziņotājs 11/12/1992 No

16 As Directives does not determine particular activities that Member States had to introduce, it was difficult for Latvia to choose appropriate instruments for its implementation. Article of Consumer Rights Protection Law gives to consumer rights if his payment card is fraudulently used to cancel the relevant payment or to repay fraudulently debited sum. It is presumed that consumer was acting with a payment card if transaction was confirmed with a right identification mean and it is up to the credit institution to prove that the payment was approved by identification code or similar proof of identification or that consumer acted imprudently or with malicious intent. This regulation concerns to any fraudulent use of payment cards, not only in relation with distance contracts. However other electronic payment systems are not covered by states regulation. It seems that it is necessary to expand this regulation also to other electronic payment systems to promote consumers confidence, as well regulation would be necessary for B2B relations. Other electronic payments are regulated by Decision of Bank of Latvia No 89/9 of 13/09/2001 On Recommendations To Transactions By Electronic Payment instruments 26, with which Commission Recommendation 97/489/EC of 30 /07/1997 concerning transactions by electronic payment instruments and in particular the relationship between issuer and holder is transposed. However the status of this decision is not very clear, as according to Administrative Procedure Law it is not external legislative act and for this reason it may not be regarded as binding Delivery of the good or provision of services ordered electronically and withdrawal period Delivery of the good or provision of services ordered electronically is regulated the same as by other distance selling means. Consumer Rights Protection Centre is entitled to adopt enforceable decision requiring to fulfil the contract as well as it may impose fine according to Administrative infringements Law of Latvia, which provides fine for violation of provisions for distance contracts. Consumer my apply for help at European Consumers Help-Net in Latvia which is structural unit of Consumer Rights Protection Centre and will coordinate the solving of cross border consumers complaints. For B2B relations there is not specific regulation and for this reason they may protect their right only in court. There is not specific regulation regarding transactions with a low financial value Non-performance of the obligation to deliver or late delivery According to Consumer Rights Protection Law Distance contract had to be fulfilled during the 30 days from the moment when seller or 26 Par "Rekomendāciju darījumu veikšanai ar elektroniskajiem maksāšanas līdzekļiem" apstiprināšanu: Decision of Bank of Latvia No 89/9 adopted on 13/09/2001 // Latvijas Vēstnesis No

17 service supplier received order from the consumer if contract do not provides other term. If seller or service supplier fails during the 30 days to supply the ordered goods, seller had to repay all payments done by consumer. Consumer is entitled to submit a claim against the seller or service supplier into Consumer Rights Protection Centre which may adopt enforceable decisions to solve the dispute. Such protection do not concerns to B2B relations, in which purchaser may make claim in court for damages caused for late delivery or not delivery of the goods, according to the Article 1779 of Civil Law Right of withdrawal from the contract in B2B transactions on goods an services The right of withdrawal for contracts governed by Directive 97/7/EC on the protection of consumers in respect of distance contracts and Directive 2002/65/EC, for contracts concerning financial services is 14 calendar days Delivery of a good that is not in conformity with the contract In accordance with the Consumer Rights Protection Law in which the Directive 1999/44/EC is transposed, the seller must deliver goods to the consumer which is in conformity with the contract of sale. in the lack of conformity the consumer shall (by his choice) be entitled to either have the goods brought into conformity free of charge, have the goods replaced (delivery of substitute goods), have an appropriate reduction made in the price or have the contract rescinded and repaid the price of the good. The consumer s rights as described above must be asserted within a 2-year period. Consumer Rights Protection Centre deals with complaints from private consumers concerning goods, or services provided by businesses. It is also possible for consumer to make a complaint directly in the court. However as hearing of the case in Consumer Rights Protection Centre is less expensive, most consumers choose to submit their complaints in Consumer Rights Protection Centre. If the seller or service provider does not admit his fault, the expertise has to be done to determine the goods or services conformity to the contract. Cost of expertise is covered by the party which statement was found untrue. The decision of Consumer Rights Protection Centre is an administrative act which may be appealed in Ministry of Economics and then into Administrative court. As the situation when dispute regarding civil rights is heard within administrative process, is not appropriate, seeking for the better solutions for solving disputes in these matters is still continuing. 15

18 There are introduced more strengthen measures in Consumer Rights Protection Law as in Directive 1999/44/EC. The Consumer Rights Protection Law does not determine that at first consumer shall require the seller to repair the goods or he may require the seller to replace them and only if it is not possibly to require an appropriate reduction of the price or have the contract rescinded. For this reason it is more favourable for consumer to already initially request to revoke the contract. 4.2 Cross Border regulatory issues Directive 2001/115/EC is actually not transposed in legislation of Latvia. It may be considered that for cross border electronic payment general requirements of Electronic Documents Law may be applied, however such situation may not lead to the business confidence as it is not quite clear whether the States Revenue Service will admit electronic invoice as source document. The work for detailed transposition of Directive 2001/115/EC will start as soon as electronic signature will be practically available and legislation in this area will become more stable. There are no court rulings on electronic invoicing or payment related to execution of cross-border electronic contracts It is difficult to make an assessment of the awareness in Latvia regarding the possibilities regarding the regulation pursuant to Regulation No 2560/2001. It must be noted that transfers with the Latvian currency (LVL) are not covered by the regulation. This means that a money transfer from a Latvian bank account in Latvian currency without initial converting to Euro to a bank account in another membership country does not benefit from the principle of equal charges for a cross-border transactions and a strictly domestic transaction within the European Union. Banks of Latvia are aware of the requirements of this regulation and obey to it. Also business use to keep separate accounts in Banks for transactions in Euro, as well as if account is in Latvian currency (LVL) it is possible before transaction to choose in which currency to make transaction. It had to be admitted that prices for transaction in Euro decreased after Regulation 2560/2000 entered into force. Latvia do not plan to relate provisions of the Regulation 2560/2001 to its currency according to the Article 9 of Regulation 2560/2000 as Latvia soon plans to join to the Euro zone and as well it is not wide spread to make transfers in Latvian currency (LVL) to Euro zone. Transition to the use of IBAN was successfully finished on and it seems that all customers are also aware of the use of IBAN codes. 16

19 5. General assessment 5.1 Main legal and administrative barriers to e-business 1. Legal uncertainty of legal effectiveness and recognition of e- business documents in national trade relations For enterprises in Latvia it is now more comfortably and habitually to used agreements in writing for this reason it is hard to start to conclude electronic contracts. The reason for this is also that at this moment there is no case law in this area. For this reason it is hard to foresee the courts attitude to them. It is hard to foresee the attitude of States Revenue Service to electronic invoices as the requirements of Directive 2001/115/EC is not still directly transposed. SMEs are cautious in front of electronic transactions as they do not feel themselves protected, if good is not confirming the requirements of the contract and there was not given guarantee as well as they do not have other protection available for consumer, for example, cooling of period of distance contracts. 2. Unawareness of requirements of legislation for e-commerce activities. Enterprises often do not know all requirements prescribed by law for specific information society services, conditions for distribution of commercial communications, personal data protection. Online shops do not provide information as it is prescribed by Directive 2000/31/EC and Directive 97/7/EC, they do not inform consumers on their withdrawal rights from the distance contract. Consumer Rights Protection Centre for the reasons of insufficient capacity may not provide overall market surveillance of distance selling and may react only to individual consumers claim. The reason that consumers do not feel themselves protected and are not aware of their rights also impedes the development of e-business. 5.2 Awareness about national authorities in charge of solving legal problems in e-business The Consumer Rights Protection Centre 27 is the established contact point in Latvia according to Article 19 (4) of Directive 2000/31/EC however in due to insufficient administrative capacity and financial resources Consumer Rights Protection Centre are not providing activities and is weakly recognizable as contact point to whom refer for relevant questions. The Consumer Rights Protection Centre is the competent authority and a single liaison office responsible for the application of the 27 Patērētāju tiesību aizsardzības centrs: 17

20 Regulation (EC) No 2006/2004. However, as the Regulation prescribes that certain provisions of it will be applied only from There were not provided any activity for increasing recognizability of Consumer Rights Protection Centre as the competent authority and a single liaison office. 5.3 Legal and administrative best practices in e-business Secretariat of Special Assignments Minister for Electronic Government Affairs Latvian government had established Secretariat of Special Assignments Minister for Electronic Government Affairs 28. The main functions of the secretariat of Special Assignments Minister for Electronic Government Affairs are to organize and coordinate the development and implementation of the state policy in the field of electronic government, information Society and IT, facilitating and coordinating the development of state and local municipalities electronic services. The Secretariat is leaded by the Minister for Electronic Government Affairs. Information Society National Council Information Society National Council is established in Its main targets are to facilitate the development of the information society in Latvia, to coordinate the inclusion of the country in the global and European knowledge economy development process. Information Society National Council is chaired by the Prime Minister of the state. for implementation of e-government there is established Council of the coordination of the Latvian Electronic Government, in which most of the ministries and Association of Large Municipalities and States Revenue Service are represent. The contract between companies Latvijas Pasts and Lattelecom will provide certification-service-provider for Latvia. State and municipality institutions already offer some electronic services however the number of available services will increase after secure certified electronic signature will be possible to obtain. Possibility to receive services from state and municipality institutions in internet will increase confidence to internet environment and will prepare customers for concluding electronic contracts. 28 Īpašu uzdevumu ministrijas elektroniskās pārvaldes lietās sekretariāts: 18

21 ANNEX: NATIONAL LEGISLATION 1. Civil Law 29 :Law, adopted by Cabinet of Ministers on 28/01/1937, in force from 01/03/1993); 2. Law On Judicial Power 30 : adopted by Supreme Council on 15/12/1992, in force from 01/01/1993); 3. Civil Procedure Law 31 : adopted by Saeima on 14/10/1998, in force from 01/03/1999); 4. Administrative Procedure Law 32 : adopted by Saeima on 25/10/2001, in force from ; 5. Consumers Rights Protection Law 33 : adopted by Saeima on 18/03/1999, in force from 15/04/1999; 6. Advertising Law 34 : adopted by Saeima on 20/12/1999, in force from 24/01/2000; 7. Law On information Society Services 35 : adopted by Saeima on 04/11/2004, in force from 01/12/2004); 8. Administrative infringements Code of Latvia 36 : adopted by Supreme Council on 07/12/1984, in force from 01/07/1985; 9. Law On the Convention on the Accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic to the Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980, and to the First and Second Protocols on its interpretation by the Court of Justice of the European Communities 37 : adopted by Saeima on 8/12/2005, in force from 30/12/2005; 29 Civillikums: law, adopted on 28/01/1937. // Ziņotājs 30.01/1992 No.4. Translation available on: 30 Par tiesu varu: law, adopted on 15/12/1992. // Ziņotājs, 14/01/1993. No.1. Translation available on: 31 Civilprocesa likums: law, adopted on 14/10/1998. // Latvijas Vēstnesis 03/11/1998, No.326/330. Translation available on: 32 Administratīvā procesa likums: law, adopted on 25/10/2001 // Latvijas Vēstnesis 14/11/2001 No.164. Translation available on: 33 Patērētāju tiesību aizsardzības likums: law, adopted on 18/03/1999. // Latvijas Vēstnesis, 01/04/1999. No. 104/105. Translation available on: 34 Reklāmas likums: law, adopted on 20/12/1999. // Latvijas Vēstnesis, 10/01/2000., No.7. Translation available on: 35 Informācijas sabiedrības pakalpojumu likums: law, adopted on 04/11/2004. // Latvijas Vēstnesis 17/11/2004., No Latvijas Administratīvo pārkāpumu kodekss: code, adopted on 07/12/1984. // ZIŅOTĀJS 20/12/1984., No Par Konvenciju par Čehijas Republikas, Igaunijas Republikas, Kipras Republikas, Latvijas Republikas, Lietuvas Republikas, Ungārijas Republikas, Maltas Republikas, Polijas Republikas, Slovēnijas Republikas un Slovākijas Republikas pievienošanos Konvencijai par tiesību aktiem, kas piemērojami līgumsaistībām, kura atvērta parakstīšanai Romā 1980.gada 19.jūnijā, un Pirmajam un Otrajam protokolam par tās interpretāciju, ko veic Eiropas Kopienu Tiesa: law, adopted on 08/12/2005 // Latvijas Vēstnesis 29/12/2005 No