by Dzhusupov Akylbek
Embracing digital contracts can streamline business processes, reduce transaction costs, and attract foreign investment, thereby contributing to economic prosperity. Therefore, it is vital to choose the model law which will facilitate the Kyrgyz Republic's economic integration into the global market. In recent years, the Kyrgyz Republic has experienced notable progress in technology and digital infrastructure. The widespread accessibility of internet services and the increasing adoption of digital technologies have established a favorable environment conducive to the implementation of digital contracts.
This article describes the provisions of the Kyrgyz legislation regarding contracts, it explores the landscape of digital contracting, focusing on the suitability of European Union legal frameworks. We start off from the phenomenon that EU law is often considered comprehensive, well-developed, and grounded in principles of democracy, human rights, and consumer protection and that it provides a robust framework for various legal aspects, including trade, environmental protection, and consumer rights. Ultimately, adopting EU law as a model for development could facilitate the growth of digital contracting and align with global standards, positioning the Kyrgyz Republic for enhanced integration into the global economy.
1. Legal analysis of regulations in digital contracting
- EU framework on digital contracting
In the EU regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market repealed Directive 1999/93/EC[1] (“eIDAS Regulation”). This establishes a framework for electronic identification and trust services for electronic transactions in the internal market. As per the eIDAS Regulation, the aim was to strengthen trust in electronic transactions within the internal market, establishing a common foundation for secure electronic interactions among individuals, businesses, and governmental bodies. This regulation does not alter national or Union laws concerning the conclusion and validity of contracts or other legal or procedural requirements related to their form. The eIDAS certification delineates standards and criteria for various electronic signature types, qualified certificates, and online trust services. Furthermore, it governs electronic transactions and their management[2].
- Kyrgyz Republic’s legislation on digital contracting
A contract in a written form may be drawn up by a single document signed by the parties and by exchanging letters, telegrams, teletypes, telephoned telegrams, through fax, electronic or other communications, or by other means which allow to establish authentically that the document derives from the contracting parties (The Civil Code, Art. 395 (2))[3]. Through these provisions, the legislators of the Kyrgyz Republic have granted permission for both legal entities and individuals to utilize not only traditional paper-based written contracts but also to create a single electronic document that can be signed by both parties. The crucial aspect is ensuring clarity regarding the identity of the signatories to the contract.
The electronic signature plays a crucial role in digital contracting as it is essential for finalizing contracts using remote acknowledgment tools. Just as handwritten signatures are commonly used in paper-based contracts, electronic signatures serve the same purpose in digital contracts. According to the Law of the Kyrgyz Republic on Electronic Signature № 128 as of July 19, 2017 (Law on Electronic Signature) this law governs the use of digital signatures when making civil transactions, rendering state and municipal services, executing state and municipal functions, and when making legally significant actions.
As per the Electronic Signature Law, individuals are authorized to utilize the basic Electronic Signature (ES), as it can be represented in the form of codes or encryption, thereby holding the same legal weight as signing a document by hand. Conversely, the advanced ES holds equivalent legal validity to handwritten signatures coupled with official stamps, making it more appropriate for use by legal entities.
2. Recommendations for the development of the Kyrgyz legal system
There is overlap between Kyrgyz legislation and EU legislation in a few areas, there are many similarities in the legal frameworks of the Kyrgyz Republic and the European Union. For example, they both recognize electronic means of contracting, e-commerce is legally permitted on their territory, electronic signatures are available to both natural and legal persons, and personal data is an essential part of digital contracting.
However, while there are similarities, there are also differences between the two legal frameworks, in respect of which the amendment of the Kyrgyz legal system along the lines of EU legislation should be considered. First, contrary to the European Union, the electronic seal and electronic timestamp are not introduced as separate business tools in the national legislation of the Kyrgyz Republic. However, the use of enhanced electronic signatures in the Kyrgyz Republic is considered as using a legal entity's seal. Since national legislation obliges the use of stamps for all legal persons in every contract relationship, introducing the electronic seal and timestamp would be another significant step towards digital development. Second, the national legislation of the Kyrgyz Republic does not provide standardized contracts for digital relationships. However, EU law has specific provisions for digital content and services as well as for digital sales of goods. These kinds of ready-made contracts would help business participants become more involved in commercial digital relationships, especially SMEs, which constitute many players in the Kyrgyz Republic’s economy. Third, a Data Protection Officer is not obligatory for every data controller or processor. Although there are necessary rules on personal information, there is a lack of controlling measures. A Data Protection Officer can be an important internal structure to organize necessary procedures to meet minimum requirements for personal information. Fourth, the national legislation recognizes the electronic identification of natural persons but not legal persons. The e-IDAS regulation allows the identification of legal persons through the natural persons representing them. In the Kyrgyz Republic, electronic identification for individuals is popular and well-regulated, so similar opportunities should be available for legal persons. Current regulations only permit identifying legal persons if they share the same electronic signature with contracting companies, which is rare. Therefore, the Kyrgyz Republic should adopt provisions from the e-IDAS regulation to enable electronic identification of legal persons.
3. Conclusion
The EU framework provides for a balanced legal environment, and has similarities with Central Asian law. Therefore, the best way for the Kyrgyz Republic to integrate into the global market is to adopt the model laws of the EU and incorporate them into national law. The Kyrgyz Republic's central location within the Eurasian continent, situated between the Western and Eastern economic zones, offers another advantage. This positioning can enhance its potential as a global integration hub by fostering a conducive legal environment for digitalization. These perspectives further support the notion of considering EU law as a model for the Kyrgyz Republic, because, as previously noted, there are already many similarities between Kyrgyz and EU law in digital contracts, but there are also differences, where the incorporation of EU law into domestic law is recommended, as it could serve the country's economic development and accelerate its global integration.
[1] Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC. OJ L 257, 28.8.2014, p. 73–114.
[2] Private company eID on “eIDAS: The Digital Identification Regulation for Europe”, https://www.electronicid.eu/en/blog/post/eidas-regulation-electronic-signature/en.
[3] The original version of the Civil code of the Kyrgyz Republic is available on website http://cbd.minjust.gov.kg/act/view/ru-ru/4/730?cl=ky-kg&mode=tekst.
