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The Electronic Transactions Act 1999
The Code of Conduct, May 2000

The Government's E-commerce Involvements

The Electronic Transactions Act 1999

The Act reflects international standards, including the UNCITRAL Model Law on electronic commerce, working papers of the European Parliament and Council in respect of electronic signatures, the European Union's safe harbour principles for data protection, and “best practice” legislation found in other jurisdictions.

The Act, drafted by international law firm Linklaters & Payne, lays a foundation for the conduct of electronic transactions on a technology-neutral basis that is sufficiently flexible to embrace new technological developments and that contemplates a high degree of self-regulation.

It lays down a basis for electronic documents and signatures to replace their physical equivalents in all applicable legislation.

The Act sets out to promote public confidence in the validity, integrity, and reliability of electronic transactions, and promotes the development of the legal and business infrastructure necessary to implement electronic transactions securely.

The Act creates an ongoing “Electronic Commerce Advisory Board” of business people that will continue to advise Government to ensure that the island’s regulation encourages the growth of digital business through free market forces.

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The Code of Conduct, May 2000

Bermuda adopts a “know your customer” approach to business – an important standard amongst international regulators. The island’s e-commerce legislation emphasizes self-regulation by local providers under a Code of Conduct to encourage the growth of digital business without excessive red tape.

The code therefore is designed to encourage business to observe integrity, protect personal data, avoid abusive usage, advertise truthfully, deal fairly and openly with customers, and settle complaints and disputes quickly.

In essence, the legislation does not regulate customers directly, but tasks ISPs and e-commerce service providers, (such as transaction gateways) to ensure that their customers adhere to the Code. The Ministry of Telecommunications and E-commerce is the final authority regarding enforcement of the Code.

For example, the Code will outline remedial steps if a customer infringes on copyright law, and requires the local providers to report criminal or prohibited acts under Bermuda law. Furthermore, Bermuda-based companies are not allowed to engage in online gaming or adult-content services.

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The Government's E-commerce Involvements

The Government has directly supported the establishment of e-commerce hosting centres by the two long-distance telecommunication companies which operate on the island, Cable and Wireless, and TeleBermuda International.

However, in 2000 the Bermuda Telecommunications Minister announced a new regime for Internet telephony and broad-band services which seemed to favour the local firms: the two major telecoms companies would be permitted to offer Internet services to business (previously they were restricted to offering their services internationally), while the local firms would have access to long-distance networks to offer various types of Internet service, probably including VOIP (Voice Over Internet Protocol).

The Government has also involved itself in the formation of a Bermuda Commercial Digital Certification Authority, which was founded by blue chip international finance and e-commerce company, Quo Vadis Ltd in September 2000. The technology Quo Vadis employs is Public Key Infrastructure (PKI), a solution which addresses the security, authentication, and non-repudiation issues associated with e-commerce.

PKI operates through the provision of digital certificates that act as 'digital passports' and uniquely identify the parties to any on-line transaction. Thus offering a secure standard for offshore e-commerce transactions, whether originating in Bermuda or elsewhere. Such an independent certificate authority will further enhance Bermuda's e-commerce edge over other jursdictions.

The Certification Service Providers (Relevant Criteria and Security Guidelines) Regulations 2002 follow the Electronic Transactions Act (ETA) 1999, and deal with the formation of electronic contracts and the validity of digital signatures. The voluntary CSP scheme allows certificate authorities to apply for Government recognition under the ETA.

The Telecommunications Ministry makes a charge of $10,000 per application for a CSP approval, in order to cover the costs of expert investigation of each applicant.

In 2004, the Bermudian government continued its support for the jurisdiction’s technology capabilities at an international e-commerce seminar in London. Jonathan Koshar, general manager of AT&T Wireless in Bermuda, said: “AT&T Wireless has been able to establish itself and make great progress in a relatively short space of time thanks to the supportive government and business environment in Bermuda.”

“We are among the first three countries in the world to have EDGE data technology, giving the Bermudian business community access to state of the art wireless communications products and services,” noted Mr Koshar.

In September 2004 the Bermudian government aired a television commercial in a bid to boost the number of firms in the jurisdiction electronically filing payroll taxes under the government’s E-Tax Initiative.

Since the launch of the E-Tax Initiative in June 2002, it was reported at the time that a little under 500 firms had opted to pay their payroll taxes online, generating some 1,811 returns and $104 million in revenue out of a total payroll revenue of approximately $200 million. The 2004 adverts were designed to help spell out the simplicity and overall benefits of the E-Tax system and convince a hitherto sceptical business audience.

Following the campaign, there was a significant increase in the number of businesses using the government’s electronic tax filing system. Tax Commissioner Heather Jacobs Matthews reported that the number of firms filing online had risen to 16%, or 884 businesses, up from 9% previously. "If 884 people are filing, that is 884 cheques we don't have to worry about, 884 returns we don't have to file away, 884 receipts we don't have to put into the mail. That is more than a 100% increase of the people who were filing before,” she explained.

In October 2004, certification service provider Quo Vadis announced that it had been retained by the government of Bermuda to provide digital identity services as part of its ongoing e-Government Portal Project. Commenting on the decision, Minister for Telecommunications and E-Commerce, the Hon. Michael Scott stated: “Reflecting the sophistication of the Bermuda marketplace, Government is committed to leveraging the Internet to better serve our users, whether they are local residents seeking to register a vehicle or multinational companies making a regulatory filing.”

He continued: “We have selected Quo Vadis to help provide the identity cornerstone for the next phase of the Portal, ensuring that Government can properly identify users and protect privacy, as well as foster the integrity and accountability of our web services offerings.”

Under the first phase of the e-government project, Bermuda introduced a central portal uniting the informational websites of more than sixty government agencies. Using software from Plumtree, the portal provides a flexible central platform for government’s planned rollout of online transactions.

Under the agreement with Bermuda, Quo Vadis operates a digital certificate authority for the government under the provisions of applicable local laws and regulation. Digital certificates are a form of non-forgeable electronic ID that may be used to identify online users and resources, to create legally binding electronic signatures, and to encrypt data for privacy.

“To ensure its competitiveness as a jurisdiction, Bermuda has consistently been a leader in formulating legislation and updating infrastructure to make e-commerce possible,” observed Roman Brunner, chief executive of the Quo Vadis Group.

“With its rigorous approach to security and identity management in its e-government planning and Portal, the Bermuda Government is reinforcing the island’s reputation for responsibility and trust,” he added.

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