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. Last Updated: 07/27/2016

Duma Sets Guidelines For Internet Commerce

ST. PETERSBURG — The State Duma’s Economics Committee has drafted a number of guidelines to form the basis for a law intended to define and regulate legal aspects of e-commerce in Russia.

According to the guidelines, however, the new law will do more than just establish legal norms for e-commerce: It will also give the state automatic access to all documents generated in all cyber transactions, as well as the right to use these documents in court.

The committee chairman and coauthor of the draft law, Sergei Glaziyev, said last week that the Duma will vote on the law by the end of the year. The law will include sections on e-commerce, e-signatures, e-payments, e-trading and insurance for online deals, Glaziyev said.

Ilya Gorbunov, the general director of Infocon, a St. Petersburg-based company that develops e-commerce software, said a number of banks, including Guta Bank, Tavrichesky Bank, City Invest Bank and Sberbank, are already using various systems for online transactions. "If the law passes, then companies will not have to back up all electronic agreements with paper documents as they do now," Gorbunov said.

Companies that want electronic documents to be legally recognized will be required to use software authorized by the Federal Communication and Information Regulatory Agency, or FAPSI, and will be required to register their electronic signatures with the agency.

Pavel Medvedev, another Duma deputy working on the project, said last week that the process by which agreements bearing these signatures will become certified has yet to be determined.

"It may simply be the case that, upon the exchange of electronic signatures by two companies, the document would automatically become official," Medvedev said. "But it is also possible that it may be necessary for the companies to submit these documents to FAPSI for verification before they can be considered legally authentic."

"[The law] will give a legally legitimate status to e-business," Gorbunov said. "But it will mean that contracts signed electronically will become more transparent. It’s easy to see that some companies wishing to avoid the tax police will either not use the system at all, or will use technical methods that already exist in Russia to avoid the system’s scrutiny."

"Of course, passing this new law is a step in the right direction, but there are still many obstacles to e-commerce in Russia and I’m sure there will be difficulties," Dan Dougan, director of operations at Jensen Technologies, an offshore programming company operating in St. Petersburg, said in an e-mail interview.

"We have thought about investing in e-commerce in Russia, but we are holding off because of the many challenges facing the Russian Internet," Dougan said. "There are four main problems: a low computer penetration rate; low consumer spending; little credit card usage and unreliable parcel logistics systems. The biggest problem is that there is such a low penetration rate for computer usage in Russia. I have heard estimates of 1 [million] to 3 million users in Russia — about 2 percent of the population at best."

"The reason for the focus on the business-to-business sector is simple. Organizations are just more likely to use computers and credit cards," Gorbunov said.