An Instant Analysis of Chinese Electronic Commerce Law

By Prof. Dr. Hong Xue*

In China’s New Normal Economy, the Internet and e-commerce are the new
powerhouse of economic development. A sound legal and regulatory environment is essential for sustainable development of e-commerce. On August 31, 2018, the National People’s Congress officially approved and enacted the Electronic Commerce Law of the People’s Republic of China (hereafter “E-Commerce Law”) after 5-year intensive lawmaking process, 4 reviews at the National People’s Congress Standing Committee and 3 public consultations.

The Law has 89 provisions and 7 chapters, i.e.

• — General Provisions,
• — E-Commerce Operators,
• — Formation and Performance of E-Commerce Contracts,
• — Settlement of E-Commerce Disputes,
• — Promotion of E-Commerce,
• — Legal Liability, and
• — Supplementary Provisions.

The E-Commerce Law is an important milestone in the Chinese legal system and lays down the legal foundation for the growth of digital economy. It is outstanding and unique in a couple of aspects.

Firstly, it is considerably comprehensive, covering a variety of legal subjects and legal issues relevant to e-commerce. Unlike many countries’ e-commerce law, the Law does not limit to legalize electronic transactions, per se, but creates an enabling legal environment for e-commerce through regulating a couple of related critical legal issues, such as e-payment, logistics and express delivery, market competition, consumer protection, online dispute resolution, cross-border e-commerce, intellectual property and governmental supervision and regulation. The comprehensive E-Commerce Law does not constrain to any specific legal subjects but contains the relevant legal norms from both civil and commercial law and administrative, financial and other laws. The comprehensiveness of the Law aims to meet the need of complicated legal demands of e-commerce. The comprehensive structure will become a unique existence in China legal system.

Secondly, the E-Commerce Law creates a coherent, robust and vibrant legal eco-system. Despite its comprehensiveness, the Law does not attempt to be a lengthy collection of a cluster of laws. Instead, the Law sets out the clear and fundamental legal principles to enable the further legal developments, particularly in those essential areas, e.g. e-payment, logistics and express delivery and online dispute resolution, where no specific law is currently available. Meanwhile, the Law effectively coordinates with the preexisting laws, such as Contract Law, Electronic Signature Law, General Rules of the Civil Law, Consumer Protection Law and intellectual property laws. Through creating enabling legal soil for future lawmaking and interoperable interface with the existing laws, the Law will organically fit into the Chinese legal system.

Thirdly, the E-Commerce Law provides many innovative legal norms to reflect the needs of e-commerce. Its innovation reflects in three types of norms: a) complementary norms to fill in legal gaps among the existing laws; b) reformative norms to update the existing laws; and, c) creative norms to enable brand new laws, for example, the Law legalizes the automated online transactions and legal status, responsibilities and liabilities of e-commerce platforms.

Last but not the least, the E-Commerce Law recognizes that e-commerce be an essential part of international trade. It’s noteworthy that the international legal experts from the United Nations Commission on International Trade Law (UNCITRAL), United States, European Union, Germany, Singapore, Japan, etc., were invited to comment on the structure and substance of the Law at the two international seminars held in Beijing and Shanghai in November 2014 and June 2016 respectively.

Although the Law will be applied to the e-commerce activities within the territory of China, it may have international impact, particularly in the following circumstances: a) the Law will apply to the e-commerce activities of an establishment of an e-commerce operator in China, regardless of whether it is a foreign investment enterprise or not; b) the Law will apply to an e-commerce operator not established in China but offering of goods or services or providing e-commerce platform services to consumers in China; c) the Law will apply to an e-commerce operator not established in China but in a place where Chinese law applies by virtue of public international law such as multilateral or bilateral agreement. The Law may also be applied to other cross-border e-commerce based on the transactional rules provided by the e-commerce platforms or choices of the transactional parties.

The E-Commerce Law set outs a comprehensive and fundamental legal framework for e-commerce under the principles of stimulation of development, protection of the legitimate rights and interests, regulation of market acts and safeguard of market order. The Law that contains comprehensive, robust, innovative and internationalized legal norms will ensure a new era of development of Chinese e-commerce.

* Prof. Dr. Hong Xue is the Director of Beijing Normal University (BNU) Institute for Internet Policy & Law, the Co-Director of United Nations Commission on International Trade Law (UNCITRAL) and BNU Joint Certificate Program on International E-Commerce Law, the National E-Commerce Expert appointed by the Chinese Ministry of Commerce, the Chief Expert Advisor to the Chinese National People’s Congress on the E-Commerce Law, the Member of the Advisory Committee of the United Nations Network of Experts for Paperless Trade and Transport in Asia and the Pacific (UNNExT) and the Chair of Legal Panel of UNNExT.