The growth of e-commerce in the past few decades has been driven primarily by new technological developments that have necessitated the enactment of laws to direct electronic payment and e-contracts. In Kuwait, Law No. 20 of 2014 concerning electronic transactions governs e-commerce and its various aspects, including electronic records, messages, transactions, documents, and signatures. The law legalizes the use of electronic payment for e-commerce purposes, protects the collection, use, and dissemination of personal data, and gives e-contracts the same legality as contracts signed on paper. Kuwait has a stringent law that facilitates e-commerce, protects consumers’ personal information, and punishes individuals who contravene the Central Bank’s instructions regarding e-commerce.
E-Contracts: Formation and Legality
E-contracts refer to the various types of agreements formed during the course of conducting commerce through electronic means and correspondence. This takes place between two or more individuals, one of which is an electronic agent, or between two electronic agents such as software systems that are programmed to recognize the legality of contracts (Agreement in E-Contracts, 2020). An e-contract comprises two main parties, namely an originator and the addressee; the originator refers to the person who develops and sends an electronic message while the addressee is the recipient of the message (Ezeigbo, 2017). In 2018, Kuwait’s Central Bank developed a set of rules to regulate electronic payments in the country under Resolution No. 44/430. The legislation offers guidance regarding the legal way of conducting e-commerce, as well as the dos and don’ts. The legality of an e-contract is based on the fulfillment of the Central bank’s requirements and the presence of a verifiable e-signature (Ezeigbo, 2017). Moreover, a legal contract should meet the basic requirements, including an offer, acceptance, lawful consideration, lawful object, and the presence of competent parties to the contract, free consent, and certainty of terms.
The Law and Consumer Protection in E-Contracts
In every country, there are specific laws that govern e-commerce transactions and provide consumer protection in e-contracts. The law outlines the provisions that are needed for an e-contract to be legal. An agreement between two individuals is legal if there is evidence of an offer, acceptance, and lawful consideration (Kathuria et al., 2020). In Kuwait, consumers are protected by Law No. 20 of 2014 concerning electronic transactions. The law is clear with regard to e-contracts. Article 3 states that e-contracts have a similar legal effect to written contracts, while Article (4) states that consent is required for an individual to engage in an electronic transaction (CAIT, 10). Every step of entering into an e-contract is governed by law, and therefore, any form of violation is punishable in a court of law. For example, article 9 outlines the requirements that should be fulfilled for an electronic document to be legal. The document should be saved in the same form it was created, the information should be easily retrievable, the creator and the sender should be identified, and the document should be saved in an electronic form (CAIT, 12). Moreover, article 18 postulates that an e-signature has the same legal effect as a written signature and article 19 outlines the requirements that should be fulfilled in order for an e-signature to be legal.
Personal Data and its Protection in Kuwait
Personal data is an important aspect of any electronic transaction because an e-contract cannot be formed without the identity and consent of the originator and the addressee. Kuwait does not define what constitutes personal data in its laws. However, under Law No. 20 (the E-Commerce Law), any information regarding a client’s health status, positional affairs, financial information, and personal status should be kept private and confidential. Article 32 illegalizes the disclosure of such information without the consent of the owner or without the issuance of a court order. The law also prohibits the collection, processing, and transfer of personal information in an illegal manner without the owner’s permission or that of their representative (Agreement in E-Contracts, 2020). In case a government body, agency, company, a public institution or non-governmental body wants to collect personal data, it should inform the owner and state the purpose for which it will be used. Only government security bodies are allowed to collect personal information for security reasons only (Kathuria et al., 2020). Article 34 gives people the freedom to ask for personal information that is registered in their electronic processing systems. The recipient of the request could deny the request. However, they should inform the individual about the rejection decision.
Article 35 protects personal information in two main ways. First, it forbids the collection of a person’s data or information without their consent or through the use of illegal methods (CAIT, 22). Second, it bars the collecting body from using the information in any other way other than the one given during the collection process (CAIT, 22). On their part, collecting parties are required to verify the validity of the information given and ensure that they update it regularly. Moreover, they are expected to take the necessary steps to ensure that the data is safe from damage, loss, unauthorized access or disclosure, or the addition of false information. Individuals can request the bodies holding their information to delete or make changes to their personal data in cases where it is invalid or misleading (CAIT, 22). Personal information is well protected in Kuwait, and violations are punishable either by a prison sentence or a fine. Moreover, the law allows for the confiscation of any tool or device that is used to disclose personal information illegally.
The Regulation of the Electronic Signature in Kuwait
The electronic signature is regulated primarily through articles 19 -25 of Law No. 20 of 2014 that pertains to electronic transactions in Kuwait. The issuance of the Ministerial Resolution No. 48 of 2014 rendered the law effective. The Electronic Transactions Law does not regulate a specific financial or electronic system. Rather, it outlines the various provisions that guide the use of electronic communication in the country. According to the law, electronic commerce is similar to paper transactions because the requirements of both are similar (Agreement in E-Contracts, 2020). Moreover, an electronic signature has a similar legal effect as a manual signature appended to paper transactions. The electronic signature is regulated by the law through a succinct definition and the requirements that should be fulfilled for its legality.
An e-signature is defined as any electronic symbol or process that is linked to a record, which an individual uses to sign the record and enter into an agreement or contract. In that regard, e-signatures could include certain clicks, names, and encrypted digital signatures (Agreement in E-Contracts, 2020). They can be classified into two groups: digitized handwritten signatures and public-key-infrastructure-based digital signatures. Under Article 19 of the Electronic Transactions Law, an electronic signature is legal if the identity of the signatory can be determined, if it can be connected to the signatory only, and if its execution is controlled by the website only during a transaction (CAIT, 16). Moreover, the law requires the creation of a means for detecting any changes in the information regarding an electronic signature. The issuance of authentication certificates is carried out by a licensed service provider.
The use of an electronic signature and electronic authentication services are also regulated. Article 20 requires individuals who have protected electronic signatures to provide electronic authentication certificates as a way of validating their signatures (CAIT, 16). Moreover, the individuals are required to provide proof of the validity of their certificates and signatures. Article 21 requires the signatory to ensure that their signatures are not used for illegal transactions, notify the authority regarding any unlawful use of their signature, and ensure that their electronic authentication certificate is accurate (CAIT, 17). Article 22 requires a competent authority to regulate electronic authentication and signature services in order to ensure that they are not used in illegal ways (CAIT, 17). In that regard, Article 23 requires the Public Authority for Civil Information is required to oversee the creation and management of electronic authentication and signature services in Kuwait.
The Regulation of Electronic Payment in Kuwait
In Kuwait, electronic payment is regulated through the provisions of articles 28-31 of the Electronic Transactions Law. Article 28 legalizes the use of money transfers through electronic means for purposes of commerce. Every service provider is required by law to register on the Central Bank of Kuwait’s electronic payment system (Fattahova, 2018). Moreover, they are required to obtain a license of operation from the government agency. Article 29 outlines two requirements that organizations or businesses engaged in electronic payment should adhere to. First, they should obey the provisions of Law No. 23 of 1969 and law No. 106 of 2013 Anti-Money Laundering and Counter-terrorism Financing (CAIT, 20). Second, they should implement the measures necessary for the provision of safe services and the maintenance of banking secrecy (CAIT, 20). Article 30 requires customers to be responsible for any usage of their accounts for electronic payments (CAIT, 20). Moreover, it is illegal to make any changes to an electronic document once it has been sent. The Central Bank is responsible for providing instructions for the conduction of electronic payments (Fattahova, 2018). Any violation of the instructions is punishable by law, according to the provisions of Article 85 of Law No. 32 of 1968 (CAIT, 21).
The exchange of information through electronic means has become important of conducting commerce in the contemporary world. The use of the Internet in executing financial transactions has become widely adopted, thus revolutionizing the industry through e-commerce. E-contracts refer to business agreements arrived at through electronic means, and they are binding according to law if certain requirements are met. E-commerce is growing rapidly in Kuwait, and the enactment of the Electronic Transaction Law served as an important step toward successful implementation. The law has several articles that outline the provisions that govern various aspects of e-commerce, such as electronic signature, electronic payment, penalties, and privacy and data protection, among others. E-commerce payment is conducted under strict monitoring by the responsible government agencies. Various groups have been given the legal mandate to oversee various functions such as electronic payment, electronic signature verification, and e-contracts.
‘Agreement in E-Contracts’ (2020) [PowerPoint presentation].
The Central Agency for Information Technology (CAIT) (no date) Law No. 20 of 2014 concerning electronic transactions. Web.
DLA Piper (2022) Data protection laws of the world: Kuwait. Web.
Ezeigbo, B (2017) E-contracts: essentials, variety and legal issues. GRIN Verlag.
Fattahova, N (2018) ‘CBK clarifies on guidelines for e-payment transactions’, Kuwait Times, Web.
Kathuria, S. et al. (2020) Unleashing e-commerce for South Asian integration. World Bank. Publications.