New e-commerce law in Nepal: here are 9 key provisions

With globalization, the world has experienced rapid development of electronic commerce. Nepal cannot remain isolated from this phenomenon. As a result, the Nepalese market has seen a recovery of e-commerce businesses.

Meanwhile, information technology is booming mainly due to the internet penetration in the Nepalese market which reached 77.91% of the total population as of mid-October 2020.

The recovery was further amplified by the spread of the coronavirus which forced people to lock themselves inside the house. In this commercial world, e-commerce is the market of the future. But, it is teeming with regulatory complexities regarding issues such as data privacy, delivery time, consumer protection, digital payment method among a few.

The e-commerce market is developing in Nepal. However, it does not have clear legal provisions and guidelines that have caused inconvenience to entrepreneurs when starting and operating the business. On the other hand, consumers are not able to trust e-commerce businesses because there are no such laws and fully designated state agencies to regulate e-commerce.

Recently, the Ministry of Industry, Trade and Supply drafted an Electronic Commerce Bill with the aim of creating, regulating and facilitating online commerce in Nepal. The bill is currently being examined by the relevant ministry which will be adopted by the parliament and will be implemented after approval by the president. This will be the first law dedicated to e-commerce in Nepal.

The bill aims to address most of the issues customers are currently facing in the industry. In short, here are nine key provisions proposed in the bill:

1. Order to be considered as a contract

Section 7, subsection 1: If the seller accepts the order placed by the customer, it will be considered contractual and contractual obligations will be created.

2. Right of withdrawal

Section 7, subsection 3: The customer can cancel his order until the product is shipped or the service is provided.

3. No charge in case of cancellation

Section 7, subsection 4: A canceled order in accordance with section 7, subsection 3 will not be charged and if the amount of the product or service is prepaid, the full amount will be refunded to the customer.

4. Various payment methods

Section 8, subsection 2: The customer can pay using any payment method; this can be cash, debit / credit cards, internet / mobile banking, or check.

5. Fixed place and time of delivery

Article 9: The seller will deliver the goods at a specific place and time which are mentioned when placing the order.

6. Prohibition of modification

Article 11 (a): The goods and services mentioned on the website are delivered to customers.

7. Replacement provision and reimbursement

Article 11 (b): If the delivered goods prove to be defective, the seller will replace the goods or refund the amount.

8. Non-compliant sellers to reserve

Article 18, sub-article 2: If the seller commits something against the act, he will be liable to a fine of up to Rs 200,000.

9. Complaints response mechanism

Article 20: If it is not possible to deliver the goods within the time specified, the customer can file the complaint with the relevant district administrative office.

Article 23: The seller must designate an employee to hear customer complaints. The employee’s name, phone number and address must be posted on the website.

Existing arrangement

For now, due to the lack of designated laws to regulate and incorporate e-commerce activity, companies are incorporated in accordance with Companies Law 2063 after registration at the company registry office.

After establishing the company in accordance with the Company Law, it must obtain the approval of the Ministry of Commerce or the Ministry of Industry depending on the nature of the business. For example, if the nature of the business is related to trade in goods, it must obtain the approval of the Ministry of Commerce, and if the trading house is incorporated for the purpose of producing goods and materials, the Ministry of Industry must give approval.

Again, there is no clear procedure and criteria for the application and issuance of licenses.


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