The E-Commerce Act 2081: A Legal Milestone or a Maze of Confusion?
The Government of Nepal has enacted specific legislation to govern e-commerce businesses within the nation. With the promulgation of the Electronic Commerce (E-Commerce) Act 2025, the government intends to establish regulations for the rapidly expanding digital commerce sector.
Recognising the increasing number of businesses and consumers transitioning to online platforms, the government has been developing this Act for a significant period to bring digital transactions under formal legal authority. However, despite the Act’s objective to streamline and regulate the e-commerce environment, it has also generated substantial ambiguity concerning its scope, definitions and practical implementation.
The Act stipulates that any business involved in the buying or selling of goods and services through electronic channels must register on an e-commerce portal managed by the Department of Commerce, Supplies and Consumer Protection (the Department). While this requirement may appear uncomplicated, the challenge emerges when examining the Act’s extensive definitions.
Broad Definitions with Unclear Boundaries
The Act defines ‘E-commerce’ as the act of commercial buying or selling of goods and services through electronic means. However, it excludes activities purely aimed at information sharing or advertising. Further, the Act creates a wide net in defining the term ‘services’. It includes essential utilities like electricity and water supply, as well as professional services such as legal advice, medical consultations, audits, banking and engineering. Now as per the given definition,
Will an act of a lawyer be regarded as e-commerce where they provide legal advice to a client via email or offer consultation through video conferencing?
Will mobile banking or wallet services that we are using through an app be required to get listed under this new regime? What has to be noted is that these financial institutions are licensed and regulated by Nepal Rastra Bank.
This raises a serious concern about whether all these service providers now need to undergo additional compliance requirements and further list their platforms in the designated government portal.
Validity of Electronic Contracts
One of the positive takeaways from the Act would be the formal recognition of contracts concluded through digital means. Online agreements, including those accepted by clicking ‘I Agree’, now carry legal validity. Moreover, the recognition of digital signatures has been expanded. Unlike the Electronic Transactions Act 2063, which limited validity to signatures issued by certified authorities, the E-Commerce Act 2081 opens the door for broader acceptance of various forms of digital authentication. This is a progressive step that aligns Nepal’s legal infrastructure with international digital practices.
Cross-Border Purchases: Where Do They Stand?
Perhaps the most concerning aspect of the Act lies in its treatment of global service providers and digital platforms. The Act mandates any person selling their services and/or products through the internet in Nepal, to get listed in the designated government portal. The aim would be to potentially bring within its scope many foreign companies offering digital goods and services to Nepali consumers.
Considering the prevalence of everyday digital services such as Gmail storage, Amazon Web Services (AWS), Adobe Creative Cloud, and YouTube/Spotify Premium – all electronically accessed and paid for by consumers in Nepal – along with subscriptions for tools like Microsoft 365, design software, or even virtual private servers acquired from international providers, does this imply that all these foreign service providers are now mandated to register under Nepal’s e-commerce portal?
Well, the answer is yes, if we interpret the Act strictly, as all of these services involve the buying of digital goods or services via an electronic platform and therefore qualify as e-commerce under the law. However, enforcing such provisions against companies with no physical or legal presence in Nepal poses significant jurisdictional challenges.
The situation becomes even more difficult when considering in-app purchases, such as buying digital currency or features within mobile games like PUBG or Free Fire. These transactions, though often minor in individual value, occur frequently and collectively account for millions of rupees in digital commerce. Going through the letter of the Act, these too are subject to the Act, potentially requiring them to register and comply even if their only connection to Nepal is a single user’s smartphone.
Applicability of the Act to Free Marketplace Intermediaries
Under the same premise, the Act’s approach to digital platforms such as Facebook Marketplace, Hamro Bazar, and burgeoning ‘super apps’ – which integrate diverse functionalities spanning messaging and payments to ride-hailing and e-commerce within a unified application – presents a similar concern. Taking into account the current language of the Act, any platform facilitating the buying and selling of goods or services, even without charging a fee, could be considered an e-commerce intermediary and therefore subject to the Act.
This interpretation requires platforms like Hamro Bazar, which do not act as vendors but merely provide space for users to post their items, register under the Act, and take responsibility for compliance. This contradicts widely accepted international norms, including the OECD Guide to Measuring the Information Society (2011), which recommends excluding such unpaid intermediaries from e-commerce legislation. If the Act is extended to such platforms, they will need to verify every user, enforce consumer protection norms, and disclose product expiry dates for listings by individual users amongst others.
Consumer Protection and Practical Hurdles
Moreover, while the Act underscores the prohibition of unfair commercial practices – a provision also addressed in the Consumer Protection Act – this new legislation lacks a clear definition of what constitutes an ‘unfair practice’ specifically within the e-commerce domain. Consequently, forthcoming regulations must delineate which actions are considered ‘unfair practices’ in the e-commerce context.
Furthermore, practical difficulties emerge from certain compliance mandates. For example, concerning consumer protection, the Act mandates the disclosure of manufacturing and expiry dates, seemingly aimed at safeguarding consumers from expired goods. However, its enforcement could prove complex given that businesses often maintain inventory from diverse production batches, potentially leading to discrepancies between the displayed production date and the date of the delivered product. Instead, the provision might have intended to ensure a minimum expiry period upon delivery, contingent on the nature of the product’s consumption.
Way Forward
Notwithstanding its lack of clarity, the E-Commerce Act 2081 has already been enacted and is in effect. While the government anticipates adherence, numerous institutions face uncertainty regarding the necessity of registering under the Act and subsequently fulfilling all its stipulations. Therefore, to facilitate constructive progress, the government must promptly issue regulations pursuant to the Act that resolve these ambiguities.
