6 January 2005
The commercial laws of The Russian Federation. Part 13. Electronic Commerce

Electronic Commerce

a. General Overview

The Civil Code establishes a basic framework for electronic transactions. For a legally binding contract to be formed by exchanging documents(messages) via electronic means (electronic documents) two conditions must be met. Firstly, it is required that the parties use technique which makes it possible to establish with a sufficient degree of certainty that the document emanates from the certain person. Modern digital signatures based on asymmetric encryption algorithms, as well as simpler authentication methods like a password, pin-code, or transmission journal/receipt may qualify as such technique. Secondly, prior to engaging in an electronic transaction the parties must specifically agree (in a traditional form) that such technique is acceptable as a sign of approval. This type of regulation means, in essence, that e-commerce transactions between unrelated parties are practically unfeasible, since the parties have first to make a written document acknowledging that they recognize e-documents certified by a certain type of authentification technique as a valid and binding.

A solution of this deadlock was suggested by the Federal Law “On Electronic Digital Signature” of 10 January 2002 No. 1-FZ. This law provides that an electronic digital signature (based on asymmetric cryptographic algorithms) in an electronic document has the same effect as an autograph signature on a hard-copy document without a need of prior agreement to this effect. There are important limitations to the scope of this law. It only applies in situations where both private and public keys are issued by a third party – certification authority. It also provides that only a natural person (as opposed to a corporation) can be the owner of a digital signature.

It is required by the Russian legislation that certification authorities, i.e. organization(s) that (1) produce the information technology product used to sign the document, (2) distribute and operate such information technology product and (3) are called upon to assure that a certain document has actually been signed by the owner of a signature, i.e. to confirm the authenticity of an electronic digital signature in an electronic document, shall have the appropriate government licenses and certificates for this type of activity.

federal law On Accounting of 6 August 1993 No. 5605-1 allows to keep books of the company in electronic form. Also, under Tax Code the tax reporting may be submitted in electronic form. However, the law still requires to keep original primary documents (receipts, invoices) in hard copy, which is quite burdensome, since a paper trail is required for each electronic transaction.

b. Cryptographic Technologies

The use of cryptographic technologies plays an essential role in e-commerce. The Russian legislation regulates the questions of export/import and licensing of activities related to the cryptography.

Under provisions of the Federal Law On Licensing of Certain Kinds of Activity distribution, servicing, rendering of services, manufacturing and development of cryptographic means are subject to obligatory licensing (Art. 17). (For general review of license procedure see Chapter 2 (c).) In order to obtain a license, an applicant shall comply with the following conditions: (1) it has to acquire necessary equipment and premises satisfying the requirements provided by the law; (2) an applicant must have managing and technical staff with higher education degree or special training in information security.

A License shall also be obtained in order to export or import means of encryption. Licenses are issued by the Ministry of Industry and Trade of Russian Federation.

Cryptographic means (with certain exceptions) are subject to export control (for general review of export control in Russia see Chapter 3(b)(ii)). The full list of cryptographic means subject to export control is provided for in the President Decree No. 580 of 05 May 2004 On Approval of the List of Dually-Used Goods and Technologies …. Subject to Export Control. Since the Russian Federation is a party to the Wassenaar Arrangements the list is practically similar to that adopted under it.