Legal frameworks for data flows and trusted data (UNCITRAL)

Arguments

UNCTRAL is focusing on the interactions and the legal relationships between traders through progressive harmonization and modernization of law of international trade.

Supporting facts:

• UNCTRAL has been developing harmonised texts for over 30 years, which mostly consist of model laws.

• Recent work by UNCTRAL includes a Model Law on the Recognition and Use of Identity Management and Trust Services (2020).

• UNCTRAL is now examining the trading of data, including industrial data and commercially sensitive data.

Topics: international trade, legal affairs, policy-making

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Ancetral is working on developing ELI-ALI principles into an international legal instrument

Supporting facts:

• Ongoing work at Ancetral on picking up themes from the ELI-ALI principles

Topics: Ancetral, ELI-ALI principles, International Legal Instrument

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Report

The United Nations Commission on International Trade Law (UNCITRAL) has been developing harmonized texts for over 30 years, primarily consisting of model laws. These model laws provide guidance to countries seeking to modernize and harmonize their own international trade laws. One of UNCITRAL’s recent accomplishments is the Model Law on the Recognition and Use of Identity Management and Trust Services (2020), which establishes a framework for regulating identity management and trust services in electronic transactions.

UNCITRAL is also examining the trading of data, including industrial and commercially sensitive data. This reflects the organization’s recognition of the growing importance of data in international trade, as well as the legal complexities associated with it. By understanding the nature of data at a commercial level and the rights and obligations of participants in the data market, UNCITRAL aims to create legal frameworks that promote fair and transparent data trading practices.

In addition, UNCITRAL’s work on electronic transactions and traders’ identities complements Geneva’s approach to data and digital trade. UNCITRAL has developed model laws on electronic commerce, electronic signatures, and electronic transferable records, ensuring the legal recognition and enforceability of electronic transactions, signatures, and records.

Furthermore, Ancetral is working to transform the ELI-ALI principles into an international legal instrument. These principles, developed by the European Law Institute and the American Law Institute, aim to harmonize and improve private law systems in Europe and the United States.

Ancetral’s efforts demonstrate their commitment to enhancing legal frameworks and promoting international cooperation in private law. Overall, UNCITRAL’s ongoing work on modernizing and harmonizing international trade law, particularly in relation to identity management, trust services, data trading, and electronic transactions, plays a crucial role in facilitating secure and efficient global trade.

Additionally, Ancetral’s endeavor to establish the ELI-ALI principles as an international legal instrument aligns with the broader objective of strengthening legal frameworks and promoting international legal cooperation.

Arguments

There’s a need for domestic law to understand and grapple with what data is

Supporting facts:

• shift from documents to data

• the legislative frameworks are being put in place

• the mutual recognition of the outcome of these trust services

Topics: data law, offline to online transition, data mapping

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The audience member queries regarding the relationship between the MLIT and Virtual Credentials

Supporting facts:

• Virtual Credential refers to a set of linked credentials that go back to a trusted authority.

Topics: MLIT, Virtual Credentials

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Concern over the potential lack of responsibility of intermediary data handlers in data rights infringement cases

Supporting facts:

• The audience member notes that in cases where an upstream data provider wants to take legal action against a downstream person, the intermediary party may not be held accountable

Topics: data governance, data rights, digital economy

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Question about the drafting process of model laws for MLIT

Supporting facts:

• Pointed out that domestic level law drafting includes lobbying and scientific expertise.

• Questioned the geographical input considered during drafting these laws, especially considering challenges in regions like South Asia

Topics: Model Law on International Trade, Trust Services, Identity Management

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Open debate on the future shape of laws of contracts in the digital economic world

Supporting facts:

• Noted that traditional concepts of contracts and ownership do not cater to new developments in digital economy.

• Asked whether there should be separate laws for different types of contracts or if changes should be incorporated into existing laws

Topics: Digital Economy, Contract Law

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Report

The discussion emphasized the importance of domestic law in understanding and dealing with data. It acknowledged the need for domestic legislation to grapple with and comprehend the nature of data. This recognition arises from the ongoing shift in society from traditional documents to data, making it imperative for legal frameworks to adapt and evolve accordingly.

The implementation of high-level policy goals through legislative frameworks was deemed crucial. This involves translating policy objectives into actionable laws at the domestic level. The work of experts like Lucas and Rory McMillan, who utilize model laws in drafting legislation, was cited as examples of how this can be accomplished.

By adopting model laws, countries can effectively align their domestic legal systems with high-level policy goals, such as those outlined in SDG 16: Peace, Justice and Strong Institutions and SDG 17: Partnerships for the Goals. Additionally, the adoption and application of model laws were highlighted as integral to digital transformation, particularly in government operations.

For instance, MLIT being incorporated into laws indicates the significance of model laws in driving the digitization of governmental processes. The increasing need for authenticity, accuracy, and assurance in digital documents further underlines the importance of embracing model laws in the context of digital transformation.

However, the adoption of the Malita model law faced challenges due to the requirement for collective action and a shift from traditional practices. Despite the benefits it offers, such as enhanced efficiency and reduced reliance on paper-based processes, the slow adoption of the Malita model law was attributed to legacy departments being resistant to change and the lack of wider uptake.

These obstacles suggest the need for stakeholder collaboration and a broader transformation to fully integrate the new model law into existing systems. Another concern raised during the discussion was the lack of accountability for intermediary data handlers in cases of data rights infringement.

The audience member expressed worries about the potential negligence on the part of intermediary parties when forwarding data, as they may not bear legal responsibility for any wrongdoing. This criticism reflects the growing need to address accountability issues within the data governance framework, especially when intermediaries are involved.

In terms of contract law, it was acknowledged that traditional concepts of contracts and ownership may no longer be sufficient to accommodate the developments in the digital economy. This has prompted a debate on whether separate laws should be established for different types of contracts or if changes should be incorporated into existing laws.

The need for contract law to evolve to adequately address the emerging concepts within the digital economy was recognized. Additionally, questions were raised about the drafting process of model laws, emphasizing the need for both technical and legal expertise. The audience was curious about the inclusion of scientific expertise and the geographical input considered during the drafting process, particularly regarding challenges faced by regions like South Asia.

These questions highlight the importance of a comprehensive and inclusive approach to model law drafting that takes into account multiple perspectives and considerations. In conclusion, the discussions revolved around the vital role of domestic law in understanding and managing data, and the significance of legislative frameworks in implementing high-level policy goals.

The adoption and application of model laws were emphasized as a means to drive digital transformation, particularly within government operations. However, challenges in the adoption process, the lack of accountability for intermediary data handlers, and the need for an evolved approach to contract law in the digital economy were identified as areas that require further attention.

The inquiries regarding the drafting process of model laws also underscored the importance of incorporating technical and legal expertise, as well as considering diverse geographical perspectives.

Arguments

Luca Castellani highlights a shift in legal understanding of commercial dealings, moving from tangible documents to data represented in documents.

Supporting facts:

• Luca mentions UNCTRAL Model Law on Electronic Transferable Records (MLETR) as a key instrument that allows the use of documents of title in electronic form.

• The pandemic highlighted a significant digitization gap in supply chains, emphasising the importance of electronic handling of commercial documents.

• Luca also refers to the notion that a significant portion of data generated in modern trade is generated by objects, not people.

Topics: data governance, commercial dealings, document digitization

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Trust services provide assurance of data quality in electronic communications and can include a variety of services such as timestamping, archiving, and registered mail.

Supporting facts:

• Trust services operate independently of a legal requirement to sign, unlike handwritten signatures.

• Trust services can link the origin of a data message from an object.

Topics: Trust services, Electronic communication, Data quality

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Reliability of data from trust services can be evaluated ex ante (before the service is used) or ex post (after the service is used).

Supporting facts:

• Ex-ante evaluation is built on a presumption of data quality based on the trust service provider’s reputation and accreditation.

• Ex-post evaluation relies on post-event analysis and is typically favored by common law jurisdictions.

• Both approaches can be combined.

Topics: Data reliability, Trust services, Ex-ante evaluation, Ex-post evaluation

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Cross-border recognition of trust services is a significant challenge that needs to be addressed globally.

Supporting facts:

• The European Union has solved the issue of cross-border recognition of trust services due to its level of economic and political integration.

• The solution to this challenge does not exist at a global level yet.

Topics: Cross-border recognition, Trust services, Global challenges

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The identity element in electronic signatures is derived from a foundational identity

Supporting facts:

• The MLIT refers to the existence of technology neutral descriptions of levels of reliability for trust services and levels of assurance for identity management.

Topics: EIDAS, identity management, electronic signatures

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There’s an ongoing global movement towards paperless trade, which will especially benefit geographically disadvantaged countries

Supporting facts:

• Japan will adopt Malita for Bills of Lading by 2025 and Kiribati has included it in their electronic transaction flow.

• This will help reduce transportation costs and possibly mitigate geographic disadvantages.

Topics: paperless trade, geographic disadvantage, transportation costs

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Ancetral, a commission of the UN General Assembly, reflects different legal traditions and includes views from all regions

Supporting facts:

• Ancetral is made up of 70 member states, representing all world regions

Topics: Ancetral, UN General Assembly, Legal Traditions

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MLIT is open to standards that have certain recognition, as there’s no global consensus on applicable standards

Supporting facts:

• MLIT refers to standards but does not explicitly name them

• Standards for identity management could be ETSI or an IST

• Sometimes ISO or ITU standards are relevant, depending on the country

Topics: MLIT, Global Standards, Regional Recognition

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Report

Luca Castellani highlights a shift in legal understanding of commercial dealings, moving from tangible documents to data represented in documents. He points out the significance of the UNCTRAL Model Law on Electronic Transferable Records (MLETR), which allows the use of electronic documents of title in commercial transactions.

Castellani emphasizes the crucial role of electronic signatures in modern digital commerce. These signatures, despite their complexity, are fundamental in ensuring the authenticity and integrity of electronic transactions. Trust services, which operate independently of a legal requirement to sign, play a vital role in verifying the origin and reliability of data messages.

The reliability of data from trust services can be evaluated either ex ante or ex post. Ex-ante evaluation relies on the trust service provider’s reputation and accreditation, while ex-post evaluation involves post-event analysis. Castellani warns against over-reliance on ex-ante evaluation, particularly for developing countries, as it may hinder development and create data silos.

Cross-border recognition of trust services is a significant challenge that needs to be addressed globally. While the European Union has successfully solved this issue due to its economic and political integration, a global solution is yet to be established. The identity element in electronic signatures is derived from foundational identity.

Castellani mentions the existence of technology-neutral descriptions of reliability levels for trust services and assurance levels for identity management, emphasizing the importance of secure and trusted identities in electronic transactions. The ongoing movement towards paperless trade is set to benefit geographically disadvantaged countries by reducing transportation costs and potential barriers.

B2B transitions to electronic transactions also provide substantial cost savings, contributing to more efficient and sustainable business practices. Ancetral, a commission of the UN General Assembly, represents different legal traditions and ensures balanced consideration of legal matters. The MLIT is open to standards with certain recognition, accommodating regional differences in electronic commerce practices.

Overall, Castellani’s arguments highlight the transformation in commercial dealings towards data-driven transactions. Electronic signatures and trust services play essential roles in ensuring the authenticity and reliability of electronic transactions. However, careful consideration should be given to the reliance on ex-ante evaluations to avoid hindering development.

The challenges of cross-border recognition and the importance of secure identities call for global collaboration. The movement towards paperless trade presents cost savings and benefits for geographically disadvantaged countries, while B2B transitions to electronic transactions contribute to more efficient and sustainable business practices.

Ancetral and the MLIT provide platforms for fostering strong institutions and harmonizing electronic commerce practices.

Arguments

Traditional private law concepts and rules don’t fulfill the requirements of the data economy.

Supporting facts:

• Concept of ownership doesn’t work well for a resource that can be used by multiple parties at the same time without exhaustion.

• Data transactions often involve the interest of third parties who hold rights with respect to data.

Topics: Data Economy, Private Law

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Principles for data economy addresses data contracts, third party aspects and data rights.

Supporting facts:

• The project was a joint venture of the American Law Institute and the European Law Institute.

• First project between both institutions, aiming at achieving significant harmonization across different legal traditions.

Topics: Data Economy, Data Contracts, Third Party Aspects, Data Rights

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The principles have defined five different types of contracts with default rules for data transactions.

Supporting facts:

• Contracts for the transfer of data, simple access to a data source, exploitation of a data source, authorization to access and data pooling contracts are the defined types.

• These contracts consider both selling existing data and granting access to a data source generating data in real-time.

Topics: Data Contracts, Data Transactions, Data Economy

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Principles propose protections for third parties in the context of onward supply of data.

Supporting facts:

• The principles suggest that recipients of data have to pass on usage limitations to downstream recipients.

• Initial suppliers have direct action against downstream recipients in case of violations.

Topics: Data Economy, Third Party Protection

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The principles for data transactions represent a novel approach inspired by trade secrets law.

Supporting facts:

• The principles aim to provide balanced protection to the interests of both third parties and downstream recipients similar to traditional transactions laws.

• The principles are compared to the protection offered to buyers, who believe that the person who sells them goods is the real owner, but are also protected by law and they get ownership even if they buy from someone who is not the real owner.

Topics: Trade Secrets Law, Data Transactions, European Law

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The middle person in any transactions are not free of liability if they violate the initial contract

Supporting facts:

• Initial supplier can put in limitations in the first contract

• The first recipient must comply with the limits and restrictions set in the contract

• If the first recipient does not comply, they are not free from any liability

Topics: Contract Law, Data Security, Liability

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Principals envision a harmonization that goes across borders, no need for new contract types in all jurisdiction

Supporting facts:

• They just need to agree upon default terms and guidelines that fill the gaps

Topics: Contract Law, Jurisdiction, International Law

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Report

The analysis explores the complexities of the data economy and its interaction with private law. It argues that traditional private law concepts and rules fail to meet the requirements of the data economy. This is because the concept of ownership is not suitable for a resource that can be used by multiple parties simultaneously without depletion.

Furthermore, data transactions often involve third parties with rights to the data. To address these challenges, principles for the data economy have been proposed. These principles cover data contracts, third party aspects, and data rights. They aim to achieve significant harmonization across different legal traditions through a joint venture of the American Law Institute and the European Law Institute.

The principles define five types of contracts for data transactions, including the transfer of data, simple access to a data source, exploitation of a data source, authorization to access, and data pooling. These contracts encompass both the sale of existing data and granting access to data sources that generate real-time data.

An important aspect of the principles is the protection they provide for third parties in the onward supply of data. Recipients of data are required to pass on usage limitations to subsequent recipients, and initial suppliers have the right to take action against downstream recipients in case of violations.

Inspired by trade secrets law, the principles aim to provide balanced protection to the interests of both third parties and downstream recipients. They apply traditional transaction concepts to data transactions with necessary modifications, ensuring legal certainty and effective operation. The principles emphasize the significance of initial contracts and their restrictions in protecting the interests of the first supplier.

They allow the initial supplier to set limitations and restrictions in the first contract, ensuring downstream recipients are aware of and bound by these terms. Notably, middle persons involved in data transactions are not exempt from liability if they violate the initial contract.

This highlights the importance of contractual compliance and accountability throughout the data transaction process. The principles envision a harmonized approach that transcends borders, eliminating the need for new contract types in different jurisdictions. By establishing default terms and guidelines, they facilitate smoother data transactions across various legal systems.

Overall, the analysis provides a comprehensive examination of the complexities surrounding the data economy and its relationship with private law. The proposed principles offer a solid foundation for addressing the unique challenges of data transactions, ensuring legal certainty and protection for all parties involved.