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Israel: Knesset reviews e-commerce and internet laws

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Yigal Arnon & Co, Jerusalem

There are a number of initiatives pending on the Israeli legislative agenda that, if enacted, will significantly alter the e-commerce landscape in the country.

The Israeli Parliament (the Knesset) recently reviewed two proposed laws. These laws passed the first reading in the Knesset and, if they pass a second and third reading, they will be enacted as law.

The first initiative, the draft Electronic Commerce Law – 2008 (E-Commerce Law), aims to clarify the ambiguous status of online agreements. The proposed law adopts the "functional equivalent" concept embodied in the Uncitral Model Law on Electronic Commerce. Under the proposed law, where an electronic document meets certain criteria set forth in the law (that is, that it is accessible for re-use and can be electronically saved and extracted without altering its content) the electronic document will function as the legal equivalent of a paper document. An electronic document meeting these criteria is sufficient to create a binding contract. Certain activities enumerated in the draft law, such as real estate transactions and agency agreements, will continue to require traditional written agreements.

The E-Commerce Law also proposes limitations on the civil liability of internet service providers for content posted by third parties.

The second initiative to pass a first reading in the Knesset is an internet filtering bill, an amendment to the Telecommunications and Broadcasting Law. The purpose of this bill is to minimize the exposure of minors to inappropriate internet sites – defined in the bill as sites with content consisting primarily of violence, gambling and certain forms of pornography. The bill obligates internet service providers to make a filtering service available to their customers at the time customers subscribe for access or renew their accounts in order to restrict access to such inappropriate sites.

The bill states that an internet service provider may only provide a customer with access to the internet following receipt from the customer of a notice pursuant to which the customer indicates that he or she either wishes to activate the filtering service or declines that service, provided that any election to decline the service may only be made by someone who has attained the age of majority. In the event that such a notice is not provided by an internet service provider's existing customers within the designated time period, the filtering service will automatically be activated. Internet service providers must provide the filtering service at no additional charge to the customer.

As one would expect, the proposed bill is controversial. Opponents argue that internet users, not internet providers, are those best equipped to determine the choice of internet filtering technology, and that the bill represents a new form of censorship that has been advanced due to political considerations related to the composition of Israel's coalition government. It remains to be seen whether the bill will be passed into law, and what, if any, changes will be made to its scope as it winds its way through the legislative process.