Legal Issues Posed by Mobile Commerce (M-Commerce)

By Rami Olwan
Al Tamimi & Company Advocates and Legal Consultants

E-commerce, which is conducted by personal computers (PC’s), is expanding due to the

widespread use of mobiles and personal digital assistants (PDA’s), and other handheld
devices used for Internet purchasing.

New type of e-commerce is emerging and it is called M-Commerce. In this type of

commerce, known as mobile e-commerce or M-Commerce, the user uses an Internet
connection to access the World Wide Web (“web”) from different locations and can
engage in purchasing and trading from virtually anywhere.

Mobile commerce involves a party using his/ her mobile or PDA to conduct purchasing
transactions. Mobile commerce is a unique form of electronic commerce in that
electronic transactions are conducted by wireless mobiles instead of ordinary PC’s.

Mobile commerce is becoming increasingly popular in countries like Japan where people
use mobiles and i-mode services, as part of their normal daily routine, to check email,
browse the web, chat, shop, make airline reservations, search and conduct purchasing and
banking transactions etc.

In order to access the Internet and conduct purchasing transactions the cellular device or
PDA must support such capability i.e wireless application protocol (WAP) or other
competing protocol such as general packet radio service (GPRS) using wireless mark up
language/ WML and WML Script to make the interface between the mobile and the
Internet.

Businesses wishing to conduct sale and purchase transactions through mobile must create
WAP or i-mode portals that allow them to adapt webpages for individual mobile and
optimise them so they fit the mobile screen which is relatively small compared to the
screen of an ordinary PC’s.

Mobile commerce raises legal challenges and various issues, which will be explained
using practical examples that show the difficulty in applying traditional laws and
principles to the use of those new technologies.

When a person uses his/ her mobile or PDA to submit or confirm a purchase order or
when a seller sells goods and services through portals allocated to receive requests from
wireless devices via specific network providers, the resulting interrelationship between
the various parties poses many legal questions which concern the nature of the
relationships and how, ideally, they should be regulated, and by whom.

Among the legal issues, which need to be considered, are the various forms of m-
commerce contracts, identifying the contracting parties and their legal capacity to

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contract, when the contract will be formed and how they can be proved and other
traditional issues of e-commerce contracts, which are beyond the scope of this article.

Another legal challenge is determining the ideal method of payment. What is the
acceptable method of payment for purchases made through one’s mobile? Will payment
be processed by Internet credit card, which is already widely used in e-commerce, or by
another method specifically devised for mobile commerce?

An important question is, of course, applicable law and the courts having jurisdiction in
disputes arising from the use of mobile to transact business and conclude m-commerce
contracts. Now if an Emarati customer residing in Lebanon uses his/ her mobile while
traveling to Syria to purchase software from a German firm whose server is located in the
USA, what law would apply? Is it the law of the country of citizenship of the customer,
the law of his/ her domicile, the law of the jurisdiction in which he/ she purchased the
software, the law of the jurisdiction in which the seller is located, the law of the
jurisdiction in which the server on which the seller receives requests is located or the law
of another jurisdiction? Which courts have jurisdiction in a dispute arising between a
buyer and seller, the courts of the seller’s country, the courts of the buyer’s country or the
courts agreed by the parties?

A mobile user can use a digital camera installed on a wireless device to take photos,
exchange with other users and sending them over the Internet. This may, if done without
authorisation, result in an infringement of intellectual property rights, including, among
others, copyright. But then who would be liable for the infringement? Is it the person who
exchanged the photos and images or the network operators who facilitated the exchange?
Is it possible to identify particular infringers? And how can they be followed and brought
to justice?

A slightly different, but no less important issue, is privacy. The new generation of
mobiles and other technology conveys a lot of information about the user to the network
operator who is able to pinpoint the user’s whereabouts and track his/ her comings and
goings. Companies can purchase such information, which may lead to a larger scale
breach of privacy, as presently witnessed with PCs and even more.

Do effective measures exist in the form of legal and technical protection to counter those
threats? Will privacy laws be revised, domestically and internationally, to reflect the
latest developments in the field of wireless communications?

The last issue is crime. Wireless networks carry a high crime risk. Hackers can steal and
erase information and data from mobiles and disrupt wireless network traffic by
overloading the network with information and phone messages. Viruses often infect
mobiles causing them to switch off randomly or erasing all addresses and information
stored within. The key question is whether existing criminal laws will be amended to
incorporate penalties for these new types of crime and how will those penalties be
enforced

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Wireless communication will clearly have a greater impact on our daily lives but with
technology changing so rapidly and the inability to forecast its future direction, it is
impossible at this time to identify what challenges and difficulties will come from the use
of mobiles for commercial transactions. This article highlighted some of the legal
questions raised by m-commerce which are somewhat similar to the legal challenges
facing e-commerce but different in other respect due to the sophistication and the
distinguished characteristics of the new technologies.

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