Understanding The Legal Framework for Cross-Border E-Commerce

Uzone.id – The global market continues to expand every time. Based on a report released by Facts & Factors, the global cross-border B2C e-commerce market is estimated to reach USD 7938.01 billion by 2030.  

Cross-border e-commerce refers to the purchase and sale of goods or services via the Internet with the help of digital media on a global scale, including B2B, C2C, and B2C trade. 

This industry involves fund transfers, mobile commerce, internet marketing, and supply chain management.

Different rules and regulations between countries can pose challenges, as each country has different intellectual property laws, tax regulations, and consumer protection laws.

For this reason, companies and businesspeople who want to transact globally need to understand and comply with export and import laws and taxation from target markets so they do not have to deal with fines and laws.

Jurisdiction Clause

As companies expand their operating businesses and engage with international partners, the complexity of legal agreements increases, especially regarding jurisdictional issues.

In international treaty contracts, jurisdictional clauses play an essential role. 

This clause provides legal certainty and predictability, which will help all parties understand the legal environment they will face and reduce the complexity of international litigation.

This clause will determine which state courts are authorized to adjudicate in the event of a contract dispute and provide substantial benefits in court.

By understanding how jurisdictional clauses work in cross-border agreements, companies have taken a step to protect their business from legal risks and protect their interests in the international business market.

United Nations Convention on Contracts for the International Sale of Goods (CISG)

CISG regulates international agreements that contain legal provisions on sales and purchase contracts between business actors.

The CISG includes the formation of a sales contract, the rights and obligations of the parties, and the right to perform those who do not meet the requirements.

For this reason, the CISG can be a relevant legal umbrella for cross-border e-commerce, especially for physical goods transactions such as raw materials, machinery, and manufactured products.

Countries with large economic turnovers, such as the United States, China, and Germany, have approved and ratified the implementation of CISG in their international trade transaction systems. As of December 2023, 97 countries had ratified the CISG.

Until now, the CISG is still relevant as a legal umbrella for cross-border e-commerce, especially when regulating substantial aspects of contracts for selling and purchasing goods. However, more specific complements and regulations are needed to meet the needs of digital commerce and modern technology.

Because the CISG does not cover aspects related to new technologies such as blockchain, smart contracts, and AI, with the right approach, it can continue to be an essential legal foundation in today’s era of globalization. 

Here are the umbrellas that can be complementary to the CISG:

EU Directive on Digital Content and Services

The EU Directive on Digital Content and Services is a regulation issued by the European Union to regulate the provision of digital content and services in the European single market.

This regulation is closely related to the legal framework that governs cross-border e-commerce and helps to create harmonization across EU member states.

In addition, the EU Directive on Digital Content and Services establishes various obligations for online service providers, including providing clear information to consumers and removing illegal content to create a fair, transparent, and safe environment for them to operate in the digital space.

The EU Directive on Digital Content and Services is important in creating a strong legal framework for cross-border e-commerce in the European Union. This directive helps the European Union maintain its position as a leader in the digital economy.

ASEAN Framework on Digital Economy (DEFA) 

DEFA is a comprehensive initiative from ASEAN member states to accelerate economic growth in the region. Its ambitious goal is to double the value of ASEAN’s digital economy to US$2 trillion by 2030.

DEFA is designed to create regulatory harmonization between ASEAN countries regarding e-commerce, reducing complexity for business people who want to conduct cross-border transactions.

The presence of DEFA also aims to facilitate cross-border digital trade by reducing bureaucratic barriers and increasing the efficiency of transaction processes that can encourage the growth of e-commerce in the ASEAN region.  

Disclaimer: All information in this article is general, so it is necessary to consult a legal expert for your professional business needs.