New ‘E-commerce Law’ to spur online trade, protect consumers

E-commerce is a vital sector in the economy and a fundamental element in a country’s GDP. In Kuwait, e-commerce activities have been witnessing continuous growth in recent years, said Minister of Commerce and Industry Khalifa Al-Ajeel.

The minister was speaking during an event held last week at the Jaber Al-Ahmad Center (JACC) to discuss the new draft e-commerce law. In his speech Minister Al-Ajeel affirmed that e-commerce was in need of specific legislation, separate from that which currently existed for traditional commerce systems.

The minister indicated that Kuwait was witnessing a huge volume of commercial activities, which needed a system that protects consumers and enabled growth, adding that the draft law for digital commerce was the cornerstone and first step towards building a comprehensive legislative mainframe to bolster the digital economy in Kuwait. The draft law has several goals to organize and enhance development in the digital commerce space, as well as protect the rights of consumers, said the minister, adding that the draft includes provisions for compelling service providers to provide digital payment options approved by the Central Bank of Kuwait (CBK)

He noted that the new law also aimed at building technologies like blockchain, digital contracts, and Artificial Intelligence (AI) to improve the capacity of digital commerce, saying that the Arabic language was an essential part in explaining products, purchase and payment operations, and the process of communication within digital commerce. The law highlights basic terms such as ‘e-commerce’, ‘merchant’, ‘practitioner’, ‘consumer’, and ‘sensitive data’, and clarifies its scope of application. It covers all commercial activities conducted through electronic or digital means for the purpose of displaying or providing products or services.

The law helps regulate registration processes in the commercial register and the register of practitioners to ensure transparency. It requires each trader to register their online store in the commercial register, while a separate ‘Practitioners Register’ is established for those practitioners who are not registered in the commercial register.

Minister Al-Ajeel added that the law would also regulate contact between social media platform influencers and state institutes to ensure transparency and prevent money laundering and fraud. The law would also entail the establishment of digital commercial records providing legal clarity for online shops,

A clear mechanism for managing complaints, swiftly resolving disputes, and protection of consumers in case of delay of delivery or mistakes in digital transactions were also included in the draft law, explained the minister, adding that the law would also help prevent false advertisement of real estate abroad, and counterfeiting of products such as the improper use of logos or trademarks.

The law allows the use of promotions without prior approval, provided that clear conditions are met. However, discount campaigns must receive prior approval from the Ministry of Commerce and Industry, to ensure consumer protection. The law also covers digital documents and digital signatures, setting standards for safe document preservation. Providers of products or services must obtain a license to use a digital signature, ensuring it cannot be modified or forged, and establishes responsibilities in case of misuse.

Regarding protection of the intellectual property, the law emphasizes the prohibition of using any protected content without a license, holding product or service providers responsible for any violations. The law also establishes mechanisms to address complaints related to intellectual property violations, including the imposition of fines and the blocking of offending stores when necessary.

The law addresses cybersecurity by requiring product or service providers to apply sound data protection standards, including the use of encryption, periodic system updates, and reporting security breaches within 72 hours of detection, while taking responsibility for any damages caused by such breaches.

The law specifies the role of the Ministry of Commerce and Industry, in supervising e-commerce and issuing necessary regulations. It also establishes two committees: ‘The Violations Control Committee’ and ‘The Dispute Resolution Committee’ with powers to issue warnings, impose fines, and temporary closure of offending stores.

Minister Al-Ajeel said that the ministry would be receiving feedback and comments until 18 December, and that e-com.moci.gov.kw website was launched to gather feedback from the business community, professionals, and the general public. He added that a second draft would be submitted to the Fatwa and Legislative authority for deliberation with ratification coming around March of 2025.