E-commerce and Information Technology in Egypt-Youssry Saleh Law Firm

E-commerce and Information Technology in Egypt

Maha Ibrahim   24 Apr 2019   170 Views

The International statistics confirm the growth and expansion of the Internet usage on a global basis, where the growth volume of such usage in the duration between 2000 and 2019 reached 1,104%. The Egyptian share of such growth is 10,840%. Where the internet users in Egypt represent 48.7 % of the total populations which is equal to 101,168,745[1].

Such growth in the internet usage is not confined to the regular use of the internet explorers and social media platforms, it was expanded to be involved in all daily transactions including different types of goods and services contracts. This opens the scope for the electronic commerce field to be developed and expanded. According to The Statistics Portal, the worldwide retail e-commerce sales in 2017, amounted to 2.3 trillion US dollars and the e-retail revenues are projecting to grow to 4.88 trillion US dollars in 2021[2].

All these facts required a development in the legislative foundation, since the primary legislations dealt with the transactions as a situation that requires the existence of both of the parties in the same domain to conclude the contractual relation through exchanging their consent and will, while the electronic transactions mainly concluded between remote parties, often in different regions and countries, which required  essential amendments in the legislations to include this new type of contracts with all its accompanying changes and  successive developments.

Most of the countries had amended its laws and regulations to cope with the new situation or in other cases issued specialized laws and regulations to govern that type of transactions. However, since this type of transaction is developing continuously, some of the previous amendments or legislations did not cope with the worldwide changes which necessitate greater efforts.

Initially, we have to understand the comprehensive definition, scope and types of the electronic transactions.

The Electronic Commerce

Electronic Commerce is that type of commerce that is carried out through electronic means whether inside or outside the political boundaries of the State, regardless of the type of trade or the law to which it will be subject, and which uses electronic means in contracting and payment phases.

E-commerce can be divided into three types, considering the position of the two parties:

Type 1:  Business to Consumers (B2C)

They are made between the producer or the distributor and the final consumer of the goods and the payment, in this type, will be made through credit cards or digital accounts.

Type 2: Business-to-Business (B2B)

The deal in this type will be between two companies from the business sector and the payment will be made through direct transfer or digital accounts or electronic banks.

Type 3:  Intra Business

This type made also between companies but is characterized by the limitation of the parties, since the company outside a specific domain is not permitted to enter or review the details of transactions.

E-Commerce Regulations in Arab Republic of Egypt

The Egyptian legislations had regulated the electronic contracts and the electronic signature in 2004 by virtue of the Electronic Signature Law No. 15 of the year 2004 and its Executive Regulation No. 109 of the year 2005.

The aforementioned law indicated the establishment of Information Technology Industry Development Agency “ITIDA” to have the competence with all the matters related to the electronic contractual relations in Egypt including:

– Issuing and renewing of licenses required for operating e-signature services and other activities of e-transactions and IT industry fields in accordance with the laws and regulations regulating thereof.

– Setting out the e-signature standards/ criteria to control e-signature technical specifications.

– Receipt of complaints related to e-signature, e-transactions and IT activities; taking necessary actions in this regard.

This Law, generally, provided on applying the same rules of the material documents and signatures on the electronic forms of such documents and signatures, since it stipulated, in Article 14, that “Within the scope of civil, commercial and administrative transactions, e-signatures shall have the same determinative effect that signatures have under the provisions of the Evidence Law in the civil and commercial articles …”. The same was stipulated in Article 15 regarding the electronic writing and electronically written messages shall have the same determinative effect that writing, official, and unofficial messages, taking into consideration that the Law and its Executive Regulation determined the requirements that shall be fulfilled in the e-signatures, e-writing, and electronically written messages to have the determinative effect for evidence as follows:

According to Article 18 the e-signatures, e-writing, and electronically written messages shall comply with the following:

  1. The e-signature is for the signer solely
  2. The signer has sole control over the electronic medium
  3. Possible discovery of any modification or replacement of the data of electronically written message or e-signature.

In addition to that, the following technical controls shall be fulfilled, as per Article 8 of the Executive Regulation:

a)  Determining the time and date of creating the electronic writing or the official or non-official electronic documents shall be technically available. Such availability shall take place through an independent electronic save system, which is not subject to control by the creator of that writing or these documents or by the party concerned with them.

b) Determining the source of creating the electronic writing or the official or non-official electronic documents, and the degree of their creator’s control on that source and on the media used in creating them shall be technically available.

c) In case of creating and issuing the electronic writing or official or non-official electronic documents without human intervention, partially or wholly, their conclusiveness shall be established once it is possible to ascertain the time and date of their creation, and if such writing or documents have not been tampered with.

However, although the existence of the Electronic Signature Law and its Executive Regulation, there is a legislative deficiency regarding the practical aspects of the electronic transactions, its conclusion, the liability of each party, burden of proof and methods of evidence, data protection and some other specifications that needs to be legally regulated.  This required the issuance of new law to regulate such aspects which had been discussed and examined since 2018 as disclosed by the Minister of Communications and Information Technology and the Chairman of the Telecommunication Central Department. The discussed law will require the cooperation of all the authorities including Ministry of Trade and Industry, Ministry of Finance, Customs, Consumer Protection agency, The Central Bank, National Postal Organization Syndicate, the Commercial Banks …etc.

Till now, there is no final draft published for the expected law. However, as per the news and publications, the new law is expected to define the electronic contracts as ‘a contract which expresses the will of one or two parties, or to be negotiated, or to exchange its documents partially or completely through electronic media’[3]. Also, the aforementioned draft established the jurisdiction of such contracts to the law of the state where the common domicile of the two contracting parties is, and if both are of different domiciles, then the law of the state where the contract was concluded (in this regard, the contract will be considered as concluded as soon as receipt is acknowledged) will be applicable, unless the parties agreed otherwise[4].

In addition to that, the new law shall regulate the legal obligations that will be imposed on the persons/ entities working in the electronic commerce, especially the tax liability since Egypt  does not have a specific policy or treatment of taxation on e-commerce[5]. The Egyptian Government is studying the options to adopt simplified online mechanism for the collection of income taxes and value added taxes related to e-commerce activities as well as using the Information and Communications Technology “ICT” in different aspects and fields.

Information & Communication Technology in Arab Republic of Egypt

Although there is no single, universal definition of Information and Communications Technology (ICT), the term is generally accepted to mean all devices, networking components, applications and systems that combined allow people and organizations (i.e., businesses, nonprofit agencies, governments and criminal enterprises) to interact in the digital world[6].

 In 1999, a Ministry of Communications and Information Technology “MCIT” has been established in Egypt in order to develop the national ICT sector. As per the Egyptian ICT 2030 Strategy, the sustainable development has three dimensions including the economic dimension, the social dimension and the environmental dimension. 2030 strategy also supports the development of the communications sector both regionally and internationally by designing new initiatives such as the electronics design and manufacturing and capacity building to maximize ICT contributions to the economic growth of the country[7].

In March, 2019, Egypt participated in the “Going Digital” Summit hosted by the Organization for Economic Cooperation and Development (OECD) in its headquarter in Paris and also participated in the Committee on Digital Economy Policy (CDEP), 78th session, on Artificial Intelligence at OECD headquarter in Paris[8].

In addition to that, Egypt adopted the Egyptian Government Cloud (EG – Cloud) since the public sector’s ICT infrastructure has grown over several decades to meet the increasing demand for the automation of government processes, storage and management of government data, and provision of some online services to citizens. Such cloud computing model provides an opportunity for the Egyptian government to deliver efficient, cost-effective public services as well as for the private sector[9]. This had been applied also in the General Authority for Investment and Free Zones (GAFI) regarding the incorporation of the companies electronically, in addition to other services provided by the Investor Service Center.

All the aforementioned are serious attempts proceeded by the Egyptian government in order to develop the enforcement of ICT in many aspects in Egypt, such as; health, education, commerce … etc. The last of these attempts was cooperating with the Russian ICT sector due to its vast experience and immense potentials. In these regards, the Minister of Communications and Information Technology Mr. Amr Talaat and the Russian Minister of Digital Development, Communications and Mass Media Mr. Konstantin Noskov have chaired a forum to enhance cooperation and explore partnership opportunities between Russian and Egyptian ICT companies, at the headquarters of the Ministry of Communications and Information Technology (MCIT) in Smart Village (SV). Such forum included a number of companies operating in ICT fields, such as cybersecurity, communications network security solutions, smart city management solutions, communications infrastructure, fiber optic cables, digital ID, and control and monitoring systems[10].

This was not the only participation of Egypt in ICT community, Egypt also engaged actively in a number of international organizations and initiatives working, either directly or indirectly in, ICT-related fields. Egypt’s role in this regard has developed over the years as the country has gained growing influence in the international ICT community, such as; the Internet Governance Forum (IGF), the International Telecommunication Union (ITU) and the World Summit on the Information Society (WSIS).

Moreover, regarding the cybersecurity, and as a result of Russian-Egyptian cooperation, the legislation authority in Egypt is working on issuing a new law “Cybersecurity Law”. That Law defines the obligations of those controlling data and information and establishes rules to ensure they secure their information space as well as the data, systems, programs and networks contained therein.

It also establishes a system to manage the operation of information resources, and means of securing information operation sites and accessing information and networks. Additionally, the law aims to combat crime related to information systems and networks in order to help maintain national security, preserve the rights of legitimate users of computers and information networks, and protect the public interest[11].

It is well known that all the aforementioned strategies and developments in the field of information and communication technology will improve the business and investments field in Egypt to keep pace with the global developments which will affect positively on Egypt’s score in the World Bank Rank. It is also definitely known that such developments and technics require to be legally constituted and regulated in order to preserve rights and obligations of all involved parties which indicates on the important role of legal community in the forthcoming period.

[1] Internet Usage and World Population Statistics estimated on March 31, 2019 https://www.internetworldstats.com/stats1.htm

[2] Statista, The Statistics Portal https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

[3] E-commerce in the Modern World-Electronic Transactions and Some Challenges and Perspectives: Comparative Analysis of UK, Egypt and South African Legislation, by Yulia V. Akinfieva, pg. 25 https://youssrysaleh.com/wp-content/uploads/2019/02/E-Commerce-Challenges_Final-Version_LLM_Thesis_Yulia-Akinfieva.pdf

[4] E-commerce in the Modern World-Electronic Transactions and Some Challenges and Perspectives: Comparative Analysis of UK, Egypt and South African Legislation, by Yulia V. Akinfieva, pg. 25 & 26  https://youssrysaleh.com/wp-content/uploads/2019/02/E-Commerce-Challenges_Final-Version_LLM_Thesis_Yulia-Akinfieva.pdf

[5] E-commerce strategy for Egypt – 2018  http://www.mcit.gov.eg/Upcont/Documents/Publications_1532018000_ar_e-Commerce-Strategy-March2018.pdf

[6]  https://searchcio.techtarget.com/definition/ICT-information-and-communications-technology-or-technologies

[7] Egyptian Ministry of Communications and Information Technology – 2030 strategy http://www.mcit.gov.eg/ICT_Strategy

[8] Egyptian Ministry of Communications and Information Technology http://www.mcit.gov.eg/Media_Center/Latest_News/News/31149

[9] Egyptian Ministry of Communications and Information Technology – EG-Cloud Strategy http://www.mcit.gov.eg/Upcont/Documents/Publications_2552015000_EG_Cloud_Strategy_5_1_2015.pdf

[10] http://www.mcit.gov.eg/Project_Updates/245/International_Relations/Bilateral_Cooperation/Egyptian_Europian

[11] Ministry of Communication and Information Security – Cybersecurity draft law http://www.mcit.gov.eg/Project_Updates/442/TeleCommunications/Cyber_Security

Maha Ibrahim- Youssry Saleh Law Firm

Maha Ibrahim