Electronic Communications & Transactions Bill: formal deliberations

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29 May 2002
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

29 May 2002


Mr N Kekana (ANC)

Relevant documents

Electronic Communications and Transactions Bill [B8-2002]
Proposed amendments to ECT Bill [B8A-02]
Proposed redraft Chapter 10 of the ECT Bill [prepared by Namespace, Uniforum and ISPA]
Representivity Model of the DNA [prepared by Namespace, Uniforum and ISPA]
Proposed amendments by Versfeld and Nkosi [documents awaited]
Chapter 11 draft (see Appendix)

The morning session concluded formal deliberations on Chapters 8, 9 and 11. Chapter 10 was addressed in the afternoon session. The Committee had to decide between the following approaches on Chapter X: either retaining the current version in the Bill or, under the Proposed Redraft of that chapter, use the existing Section 21 company or establish a new Domain Name Authority (DNA). The ANC proposed that the last option be accepted.

It was questioned whether the DNA could be held accountable to the Minister of Communications even though the State is not its shareholder. The issue of funding of the DNA by the State was discussed, and it was suggested that the approval of the Minister in Clause 62(4)(f) should not be required. The Chair noted the need for the establishment of a public/private relationship in Chapter X to ensure that the objective of universal Internet access is realised.

There was a lengthy discussion as to the actual role of the Domain Name Authority.

The Committee will be meeting on both Thursday afternoon 30/5 and Friday morning 31/5 in order to finalise this Bill.

Chapter VII: Consumer Protection
Clause 43: Scope of application
Ms S Vos (IPF) contended that Clause 43(2)(f) should be amended to include the phrase "including prescription medicines" at the end of that provision, because it is not desirable for people to be trading on-line in Schedule 7 drugs. This amendment is suggested as a compromise, if a new and separate Clause 43(3) is not introduced to deal exclusively with this matter.

Ms M Smuts (DP) stated that Clause 43 deals with the cooling-off period, not with trading in pharmaceuticals.

The Chair suggested that it might be better to amend the Pharmaceutical and Medicines Acts. Mr Otto Kellner, from the Office of the State Law Advisor (SLA), was requested to explain whether Ms Vos' concern properly falls under Clause 43(2).

Mr Kellner replied that it does not fit in there at all.

The Chair agreed with Ms Smuts that Clause 43 is dealing with the cooling-off period, whereas Clause 43(2)(f) deals with medicine. A suitable location for this matter has to be found.

It was noted that in interpreting statutes: where two statutes deal with the same matter, the statute dealing specifically with the matter takes precedence over the more general statute.

The Chair asked that they find out whether there are other Acts which do not have this clause?

With respect to Clause 43(2)(h) Mr Maziya suggested that they include books.

Ms Smuts agreed with this inclusion and also suggested that digital downloads be included in (g).

Mr Maziya (ANC) responded that it depends on the volume of the book.

The Chairperson said that you could get a book, photocopy it and return it. Do they want a cooling off period for books?

Ms Smuts suggested that all computer software be deleted from (g), because it carries licensing, conditions and so forth, inside the plastic wrapping. It is unfair to consumers that they are not able to return software for this reason. She also suggested that digital downloads be added to the list of goods which cannot be returned.

The Chairperson agreed on the matter of computer software that the licence is inside and the programme has to be downloaded from a disk. There are still conditions to accept before one finishes the download. By downloading the programme you are accepting the conditions.

Mr Michaelson (SA Post Office) pointed out that there is a legal debate whether shrink wrap agreements are binding. People argue that they are legal in SA because they draw on the analogy of the ticket case rationale accepted in Clause 11(2). If they are not accepted, it will contradict this rationale.

The Chair asked what they found to be unseemly - the breaking of the plastic? This was difficult because it could be seem to encourage piracy. For instance, someone could download programmes and then return them.

Ms Smuts commented that the implications of Mr Michaelson's argument is that (g) must be removed. This will dispense with the entire shrink wrap argument. She said she found this persuasive. Therefore the phrase "were unsealed by the consumer" should be taken out. The cooling off period will not apply to these cited items.

Mr Pieterse (ANC) said they are trying to relate this situation to the virtual world. All the information on cassettes, for example, is on the outside. As it is wrapped and sealed, the consumer must open the package to get the information and read the agreement. You cannot hold the consumer responsible for breaking the seal and getting the information.

The Chair said that when buying software there is an option of asking for the conditions and so forth. When ordering online, the website specifies the conditions. Why should it be different for software? Once computer software has left the store, it should only be returned unsealed if there is a major defect or it is delivered unsealed. Piracy must not be encouraged. The way (g) stands, it makes sense.

Ms Smuts agreed with the argument but thought it implied that "were unsealed by the consumer" should be deleted. There is nothing else about piracy in the Bill and it is a huge subject.

Mr Lekgoro (ANC) said that this was taking it to the extreme. The consumer retains the right to retain goods if he changes his mind.

Mr Maziya said that they wished to withdraw their suggestion that books be included in (g) because books vary. Books should be covered by the cooling off period.

Clause 44: Information to be provided
Clause 44 was agreed to by the Committee.

Clause 45: Cooling-off period
Ms Smuts said that vendors can send you information for their marketing and advertisement purposes and there is nothing stopping them. Downloaded takes long because of this spam.

The Chair said you could introduce a fine but you cannot distinguish spam from other commercial activities.

Mr Pieterse said that it is a terrible risk to impose fines rather than putting in place mechanisms to keep it out.

Mr Gore said that it must be ensured that spam senders do not have access to critical databases.

Ms Smuts said that the opt-in system requires that the consumer exercises a choice.

The Chair suggested including a huge fine for people who send spam even when (a) kicks in.

Ms Smuts asked who has examples of opt-in agreements.

Mr Gore cited the example of the hotmail.com registration, which has two levels of agreements. Firstly, the consumer can choose to receive newsletters or secondly, their information can be supplied to third parties.

Dr P Mulder (FF) said it might be difficult to handle because they specialise in getting these lists.

With respect to whether a fine for sending spam could be included in Clause 46, Ms Smuts asked if it could be put aside and returned to later. Members agreed to this.

Clause 47: Performance
This clause was agreed to.

Clause 48: Applicability of foreign law
Ms Smuts asked what the effect would be if this clause was deleted. If people enter into a legal action, there are all sorts of ramifications.

Mr Kellner explained that if two South Africans agree to make the law of the New York state applicable to their contract, there was no reason why this could not take effect.

The Chair asked if Clause 48 was better in or out of the Bill.

Mr Kellner thought it should be retained.

The Chair suggested that they pass Clause 48 and Members agreed to this.

Clause 49: Non-exclusion
This clause was agreed to.

Clause 50: Complaints to Consumer Affairs Committee
This clause was agreed to.

Chapter VIII
Clause 51: Scope of protection of personal information
Ms Smuts said they were inclined to support this clause because it does make a start - but because it is voluntary, it does not mean much. She said that she has started consulting on privacy laws. They support this clause as a gesture and a temporary, weak measure.

Clause 52: Principles for electronically collecting personal information
Ms Smuts asked if 52(8) could be deleted, because it does not make sense when key privacy laws, which would allow you to check who has what information on you and correct that information, are still not in place.

Mr Kellner said it obliges the data controller to delete obsolete information. It is a factual question whether data is obsolete and it may place an onus on the data controller. He had no objection to deleting the subclause.

The Chair asked what their fear was about the information.

Ms van Wyk (UDM) raised concerns about biographical information.

The Chair said that this should just be a contract between the data controller and the person giving the information.

Dr Mulder said the clause contained principles for collecting electronically but when it came to changing surnames and so forth, how could you control that?

Ms Smuts said the context here was electronic transactions. She suggested that the personal data definition used should be the European Union one. In addition, she suggested that when they do profiles it must be statistical only. The data controller must have your permission to use your information for profiling and if there are difficulties with personal information, you can refuse permission. The data controller is obliged to keep the information for a certain period of time. She said the clause was weak, for instance, it did not deal with cookies yet. However, it would not affect biographical information.

Ms van Wyk agreed to pass the clause.

Ms Smuts said an argument could be made to delete the clause and wait for the South African Law Commission to do privacy legislation properly.

Clauses 51 and 52 were therefore agreed to.

Chapter IX
Clause 53: Scope of critical database protection
Ms Smuts said this chapter was vaguely and badly drafted. It applies to private and public databases and infringes the right to privacy and the right to property. In addition, the Bill conflicted with the Promotion of Access to Information Act, which provided for a right to information held by the government and by private institutions when one was exercising a right.

Ms Smuts pointed out that she had received the draft State Information Technology Agency Amendment Bill, which is the product of a Cabinet decision taken in April. The Department of Communications was not consulted on the Bill nor did it submit comments.

She also pointed out that Chapter IX of the Bill on the protection of critical databases
was not part of the Green Paper process on the Bill. Why would Cabinet pass this chapter if was intending to pass the SITA Bill?

The Chair said that the Interception and Monitoring Bill could be added to this cluster of Bills. Their source is Cabinet. If Bills were before Parliament, the state legal system was hopefully at the centre of it. They need to explain whether these Bills, together, make up a new system.

Mr Kellner explained that government bills emerge from Cabinet and thereafter the state law advisors also examine similar bills in the system. Few Bills leave Parliament looking exactly the same. Parliament must also look at harmonising these Bills.

The Chair asked what kind of links there are between the state law advisors and SITA and what sort of co-ordination was there on these Bills?

Mr Kellner said he could not say whether they are harmonised completely. There may be one or two areas where there is conflict. He also asked that Members indicate which sections they were concerned about.

Ms Smuts said she also wished to have political answers.

The Director General, Mr Andile Ngcaba, wished to respond to these issues but Mr Kekana said he would have a chance to due so in due course.

Chapter X
Domain Name Authority and Administration
The Chair asked if they could peruse the document they had requested from Namespace. This chapter was flagged until the document could be distributed.

Chapter XI
Limitation of Liability of Service Providers
Ms Smuts pointed out that liability of service providers in South Africa is limited because service providers cannot be held liable for connections provided for information coming through. It is not strictly logical to make liability dependent on representative bodies and codes of conduct.

Clause 74: Definition
The Clause was agreed to.

Clause 75: Recognition of Representative Body and 76: Conditions for Eligibility
Ms Smuts moved for the deletion of Clauses 75 and 76.

Mr Kellner said that each representative body will have a code of conduct. The Chair said that internet service providers are currently working on their own code of conduct.

Mr Gore said the company will not be able to get protection under law unless approved by the Minister.

The Chair said that if Clause 75 is deleted, it is suggesting that it should just be important to have a code of conduct.

Ms Smuts said that in Europe there is no prior authorisation.

The Chair said that these clauses simply say that there must be responsibility and a code of conduct.

Ms Smuts asked him to note Clause 74, the definition is far broader than simply internet service providers.

Mr Magashule (ANC) said that Clauses 75 and 76 have nothing to do with international law.

The Chair said that even industry people are alarmed at the approach which the DP is taking.

Mr Maziya suggested that it would be appropriate to hear from the Director General at this point.
The Chair then asked the Director General to respond to the allegation that SITA and this Chapter X clashes.

Mr Ngcaba said there is no turf battle between the Departments of Public Service and Administration, Communications and SITA. Personally, he served on the board of SITA and was therefore partly responsible for looking into the SITA Amendment Bill. They also worked together on joint committees. He assured Members that there was no conflict between the Bills. The previous week a meeting between government, IT officers, which are part of Public Service and Administration, was convened. In addition, Minister Moleketi was the sole shareholder of SITA. SITA representatives were present at workshops to prepare for hearings on this Bill. He assured them there was no conflict with the Access to Information Act: there was in fact complimentarity between the three pieces of legislation.

The Chair asked if Ms Smuts was satisfied with this response.

Ms Smuts said she would still like to understand why critical databases were not part of the policy process.

Mr Ngcaba said this matter had been extensively discussed since late 1998. The issue of selling different databases from one country to another brought up this issues of databases. The issue was important for business, citizens and so forth.

[Discussion of the manner of conducting the meeting ensued after a heated exchange between the Chair and Ms. Smuts (DP), precipitated by his criticism of her Europeanism in the wake of her noting how the subject matter of Clause 74 had been dealt with by the EU.

Ms. Smuts proceeded to remark on the duty of all parliamentarians, regardless of party affiliation, in Section 55 of the Constitution, to hold the executive branch to account, and to exercise legislative oversight. She asserted that she would continue to ask difficult questions, whether or not they led to further political attacks. Responding to the Chair's comment that, for the duration of the session, procedure would be followed more strictly, Ms Smuts observed that "procedure is incredibly loose here."

Mr. Lekgoro (ANC) observed that the ANC members had been restrained in objecting to the wide latitude given by the Chair throughout the deliberations to Ms. Smuts, and that they would continue to be guided by the Chair in his conduct of proceedings.

Another ANC member objected to Ms Smuts' reminder of legislators' duties as unnecessary, and criticised her behaviour as provocative. and smacking of apartheid's attitude, the last comment drawing an objection from Mr. Gore (DP), and a retort from Ms. Smuts that, "It's too much work to behave like I do."

The Chair then noted that reference to international legislation is fine, but reiterated that Ms Smuts' repeated references to them were inappropriate as the SA context is distinct, which the Bill must reflect. As for procedure, he stated that amendments would be considered and voted on, and that the Committee's work would proceed accordingly. ]

Chapter XI, Limitation of Liability of Service Providers
The clauses were dealt with as follows:
Clause 75, Recognition of Representative Body, and Clause 76, Conditions for Eligibility
Ms. Smuts (DP) moved that these Clauses be deleted. These amendments were defeated, and the Clauses were adopted w/o change.

Clause 77, Mere Conduit, and Clause 78 Catching
Adopted without change.

Clause 79, Hosting, and Clause 80, Information Location Tools
Mr. Gore (DP) moved that the "for damages" limitation on service provider exculpation be deleted, which would have the effect of insulating service providers from both civil and criminal liability.

Ms. Vos (IFP) observed that her proposed amendment to Clause 83 would cover this issue, but Ms. Smuts stated that the drafter had confirmed that inclusion of the limitation had been in error, and that the exculpations in Clauses 79 and 80 were to have tracked the broader scope provided for in Clauses 77 and 78.

The proposed amendments to Clauses 79 and 80 were defeated, and the clauses were adopted without change.

Clause 81, Take-down Notification
Ms. Vos asked for the deletion of Clause 81(i), calling for indemnification by a complainant, saying it would discourage non-affluent people from exercising the right to issue a take-down notification, which the state law advisor concurred with. Instead, she proposed the addition of Clause 83(d), recognising common law and Constitutional rights.

As an alternative, Ms. Smuts (DP) suggested addition of Clause 83(2) and (3) in order to protect service providers, and the state law advisor agreed that these additions would afford better protection than Clause 79(1)(c).

After reflection, Messrs. Lekgoro and Pieterse (ANC) noted their concurrence, and the Clause was adopted without deletion of (i), and the renumbering of the remaining text as (1) in the wake of the addition of (2 and (3).

A later suggested amendment by Ms. Smuts (DP) that Clause 81(1)(c) be clarified to include the language "...intellectual property or other right..." was defeated.

Clause 82, No General Obligation to Monitor
Adopted without change.

Clause 83, Savings
Adopted without addition of (d), as proposed by Ms. Vos (IFP).

The Chair then consulted the Committee on the further schedule for deliberations, and it was agreed that the Committee would adjourn for lunch and the afternoon National Assembly session, and reconvene from 4:30 -6:30 PM, continuing all day on May 30, and on the morning of May 31, if necessary to complete consideration of the Bill.

Late Afternoon session:
The Chair informed Members that he has spoken to the Chairperson of the Justice and Constitutional Development Portfolio Committee, Adv J De Lange, regarding the extent to which their Interception and Monitoring Bill [B50-2001] possibly overlaps with the Electronic Communications and Transactions Bill. Adv De Lange stated that their bill only deals with the issues of decryption, and in this regard he does not foresee a clash between the two bills. He said that the chapter dealing with cyber crime follows fairly standard drafting procedure as far as the powers of the cyber inspectors, the warrant and search and seizure procedure are concerned. This Committee must therefore proceed with the Bill and tailor it to suit the specific needs to be addressed via the Bill.

Chapter X Domain Name Authority and Administration
It was decided that this chapter be address as Mr Mike Lawrie, the .ZA Administrator, would only be present during this sitting, and it is this chapter in which the role of the administrator is addressed. The relevant industry players had been requested to compile a document containing the proposed redraft of Chapter X and they made this document available to Members.

It was noted by the Chair that this document is substantially similar to the current version of Chapter X, but there are however a few glaring differences, which the Committee would have to evaluate. It had to be remembered that a body is needed here that ensures the following three principles: representivity, accountability and openness or transparency. These are the key principles which, when put together, ensure that the domain name of South Africa is accessible to the country as a whole, including those citizens who do not yet have Internet access. This body thus also has to facilitate the growth of the Internet in the whole of South Africa.

Chapter X: Domain Name Authority and Administration
Clause 60: Establishment of Authority
Ms S Vos (IFP) inquired as to the precise manner in which both the redraft and the original version of Clause 60 affects the status of the existing Domain Name Authority (DNA).

Mr Lawrie stated that the proposed amendment in the redraft calls for the existing company that provides this service, Namespace ZA, to be recognized as well, whereas the current Clause 60 in the Bill only provides for the establishment of a new DNA.

The Chair suggested that the redraft provides two options in Clause 60: the Minister of Communications could either recognize the existing DNA, Namespace, or she could establish a new company to provide this service. The redraft also provides that should the existing DNA be preferred, it would continue to provide this service, whereas the new company would assume responsibility for provision of this service from the existing DNA (Namespace).

Mr Neil Dundas, Legal Officer for Uniforum SA, added that the Memorandum to the Bill recognizes the existing body.

The Chair replied that the Committee is aware of this, and requested Mr Otto Kellner, from the Office of the State Law Advisor (the SLA), to clarify this matter.

Mr Kellner responded that the redraft does not only imply that the Bill should recognise the existing DNA, but rather requests that the Minister either establish a new DNA or recognise the existing one. The Committee is thus faced with three distinct choices here:
- it could choose to adopt the current version of Clause 60 in the Bill, in terms of which a new DNA would then be established to assume responsibility from Namespace;
- the first option proposed by the redraft could be followed, and here the Minister could choose to either recognise the existing DNA or,
- the second option in the redraft could be adopted in which case she could decide to establish a new DNA.
It is therefore a question of policy as to which option is chosen by Members and, whichever choice is made, the rest of the Bill would be tailored accordingly.

Mr V Gore (DP) stated that the Internet has such far-reaching implications and is growing so rapidly that it is difficult for government to become involved or even keep up here. It is thus suggested that co- or self-regulation is the preferred approach and the Australian model should be followed in this regard, as it allows the industry to regulate itself. Should this system not succeed in the South African context, state involvement could be explored.

The Chair replied that this assertion does not assist matters, because it does not indicate how this proposal would allow the DNA to sufficiently address the three key principles outlined earlier. Members now have to evaluate the three options, as stated by the SLA, and decide on the option that best addresses these principles.

Mr E Magashule (ANC) recommended the second option as stated by the SLA.

Ms M Smuts (DP) stated that it would be difficult to change the structure of the existing Section 21 company by including government representation on its board. The alternative would be the creation of the new juristic person consisting of the current members of the existing DNA or their successors, government representatives and any other class of persons so appointed. It would be easier, as far as possible time constraints is concerned, to alter the membership of an existing company.

Ms Vos contended that this is precisely the reason for the first question she had posed regarding the public/private partnership.

Mr J Dowry (NNP) suggested that the version of Clause 60 as contained in the redraft should be inserted in the Bill.

Mr A Maziya (ANC) stated that this matter needs to be discussed further. Ms Smuts' motivation for her proposal is based on the belief that the second option would waste time, but it has to be understood that the creation of a new DNA would not result in the existing structure simply being disbanded. The second option would thus not be a time-wasting exercise, but is more inclusive than the other two options, and it is believed, accommodates the interests of all.

The Chair suggested that if the second option were to be accepted, its effect and implications for the rest of the Bill has to be considered.

Mr Magashule agreed, but contended that in any event if new stakeholders are introduced, it will be argued that a "new animal" is being created.

The Chair requested the ANC to take the Committee through the new structure of the DNA, so that all Members may better understand the reasons for its proposal that the second option be accepted.

Mr M Lekgoro (ANC) stated that the only way forward would be to establish a middle road which, in this case, is the establishment of a new Section 21 company. This is the essence of Option 2. It is the preferred option because it includes the interests of all, even NamespaceZA, because its members would still form part of the new company's structure. All that remains is for an internal structure to be built in to ensure transparency, accountability and representivity, and this will come to pass. It is further suggested that Clause 71 in the Bill be retained, along with Clause 63(5)(a) and (b).

Mr Phadagi (ANC) expressed his confusion at the arguments being raised regarding Chapter X, as this Committee requested NamespaceZA, the Internet Service Provider Association (ISPA) and Uniforum SA to compile a consultative redraft of Chapter X, which they have now provided to Members. Thus all that now has to be done is for Members to decide whether their proposal is acceptable or not.

Ms Smuts suggested that, as a matter of meeting procedure, the provisions in the Bill be discussed "point by point", and in this regard the redraft should form the basis of the deliberations on Chapter X because it reduces the number of points and difficulties that have to be considered here. Furthermore, the Bill diverges from the Companies Act in its Clause 61, as pointed out in the submission received from the Department of Trade and Industry.

The Chair stated that the procedure to be followed would be as follows: the Bill will form the basis, and there are no problems with the current version of Clause 61 in the Bill.

Mr Maziya expressed his disapproval of Clause 61 in the Bill, because the Minister and not the State should be the only shareholder of the DNA. Furthermore, it should not be funded by the government.

Ms Smuts contended that it was not her understanding that the government would fund the DNA.

Mr Magashule inquired whether it would be legally possible to hold the body accountable to the Minister if the State is not its shareholder. If the answer were in the affirmative, the provision would be acceptable.

Mr Kellner inquired whether Mr Magashule is referring to the Minister or Parliament.

The Chair contended that if a Section 21 company is established, with its own board of directors, the following two matters have to be addressed: firstly, does it even need a shareholder and secondly, how would it be held accountable to the Minister, if at all? The question thus revolves around the structure of governance of this body.

Mr Kellner stated that it would be governed by its board of directors.

The Chair then inquired as to the shareholding of this body.

Mr Kellner responded that he was not certain.

Mr Calvin Browne, from Uniforum SA, informed Members that he is himself a director of a Section 21 company, and the Companies Act requires it to consist of at least seven members for the company to become incorporated. The members are not allowed to receive any dividends or payments for their services, and this sort of company is usually incorporated by a certain group of people to promote a specific objective or interest of that group. It does therefore not have a shareholder, in fact there can be no shareholders, only members.

Mr Magashule inquired whether the board of directors could be made accountable to the Minister and, if so, this would be the route to take.

Mr Kellner suggested that the provision could be amended to read: despite any provision to the contrary in the Companies Act, the board of directors must be accountable to the Minister.

Mr Maziya stated that the board of directors should be held accountable to the Bill, because it is the custodian of the Minister, which then requires the board to submit annual reports to both the Minister and Parliament. The board would thus regularly consult with the Minister in executing its mandate. This means that the board is accountable to both the Minister and Parliament because it is not an independent Section 21 company, but is rather a Section 21 company governed by e-commerce legislation.

The Chair stated that since the board can be held accountable to both the Minister and Parliament without creating a shareholding, the question then arises as to whether Clauses 61(2) and (3) as contained in the Bill is necessary?

Members agreed that those sub clauses are not necessary.

Ms Smuts reiterated that those sub clauses "do not belong here", but urged Members to remember that the Bill is problematic because many matters do not comply with the Companies Act, such as the reference to the Public Finance Management Act in Clause 70(9) of the Bill.

Mr R Pieterse (ANC) suggested that the Committee should "stick to the structure".

The Chair agreed, and contended that Clause 70(9) in the Bill merely provides that the DNA would be funded by the State only till such time as it becomes self-sufficient, and at this point the State would no longer provide funding. It does therefore not provide that the State will always be funding the DNA.

Furthermore, Clause 62 in the Bill is identical to Clause 64 in the redraft, except for two areas.

Mr Maziya agreed with the Chair.

The Chair informed Members that Clause 62 in the Bill and Clause 64 in the redraft will now be compared, and requested the SLA to explain the implications of replacing the former with the latter.

Mr Kellner responded that the retention of Clause 62 of the Bill creates the problem that it conflicts with the Companies Act. It should thus be removed from the Bill, unless the Committee prefers its retention, in which case all the references to the Companies Act in the rest of the Bill would have to be deleted.

Mr Lawrie stated that the process behind the Namespace is that it is self-sustaining, and thus has nothing to do with fees or state funding. Furthermore, various forms of accountability are relevant here, including financial, policy and reliability accountability.

The Chair urged Members to decide on an option.

Mr Magashule said he was under the impression that it had already been decided that Clauses 61 and 62 in the Bill would be deleted.

The Chair stated that the implications for the rest of the Bill have to be evaluated, as this Committee cannot agree here if it disrupts everything else in the Bill.

Mr Kellner replied that Clause 62(2) in the Bill grants the Minister the power to veto any amendments made to the company's Memorandum of Association and Articles of Association.

Mr Browne contended that it is possible to compel the Section 21 company to do something in the Bill in addition to the Companies Act.

Mr Dundas stated that the Section 21 company, like all other companies, is governed by its Memorandum and Articles of Association, the only difference in the Bill is that it prescribes the contents of the Memorandum and Articles of Association. It also provides that these cannot be challenged without the consent of the Minister.

Mr Kellner suggested that a possible solution could be found in amending Clause 64(1) in the redraft to include the phrase ", unless this Act provides to the contrary," between the words "Chapter" and "and".

The Chair approved of this proposed amendment, as it still allows for exceptions to be made to the Companies Act. It also means that Clause 62(3) of the Bill can remain as is.

Clause 62(3) in the Bill differs from Clause 67(a) and (b) in the redraft, because the former requires a fee to be paid upon registration. The only other difference is found in Clause 62(4)(f) of the Bill, which deals with the approval of the Minister.

Ms Smuts contended that the requirement in Clause 62(4)(f) of the Bill that the Minister has to approve the business plan of the DNA should be removed, because the business plan deals with the technical functions and activities of the DNA, which it complies efficiently. It is therefore not necessary that the Minister's approval be required here, because she "has enough work to do", and these are very technical matters which the DNA would be best acquainted with.

Mr Lawrie stated that the financing of the DNA is not received from its membership because it is funded independently from government, and it is thus not necessary to account to the Minister regarding the financial aspect of the body, but the DNA has to account regarding the political and cultural issues. Ms Smuts is correct in stating that the business plan deals with highly technical issues, and the DNA needs a certain degree of flexibility to execute its mandate. If it has to go through the whole bureaucratic process of acquiring the approval of the Minister for every function and activity, however routine, it would not be able to service the Internet at all.

Mr Pieterse contended that it will be revealed, upon a proper reading of Clause 62(4)(f) of the Bill, that it refers to an annual report, and the approval would thus not be required for everyday functions, only once a year in the annual report.

The Chair suggested that clarity is needed on a policy level here, because it seems that this Committee differs with Mr Lawrie on the exact nature of this body. Mr Lawrie seems to think it is a small body, whereas the Chair views it as an important body with a huge mandate and responsibility, because it will be responsible for expanding the Internet throughout South Africa. Whichever form it takes, the DNA created by this Bill must be able to handle its workload and cope with the expansion of the Internet. The financial aspect has to be included here.

Mr Andile Ncgaba, the Director-General of the Department, reminded Members that during the early 1990s the Department and this Committee were faced with the challenge of ensuring universal telephony services. The current challenge relates to the provision of universal Internet access, and in this regard NamespaceZA has an important role to play. It has to be recognised that while there are those South Africans who can afford on-line access, the bulk of the population does not, and therefore needs resources to gain access. This sort of funding has to be contextualised, and it has to be acknowledged that spending these funds to provide universal Internet access does not amount to wasting of the taxpayers' money. Government should also contribute its resources to this initiative, because not everyone is able to provide the sort of support the State can.

Mr Gore stated that this statement by the DG has left him confused because, while he recognises the need to provide universal Internet access, he was under the impression that the Universal Service Agency (USA) was responsible for doing just this. It does therefore not seem logical to require the DNA, whose primary role is to register and administer domain names, to now be responsible for ensuring universal access to Internet services as well. In this regard, Mr Gore respectfully disagreed with the DG. Perhaps Mr Lawrie should be invited to explain just what it is he does, as this might clarify matters.

The Chair contended that a relationship has to be established between the DNA board and the Department so that the provision of universal Internet access may be properly addressed. Indeed, the Internet Corporation for Assigned names and Numbers (ICANN) came under the same sort of pressure and realised that it had to change, and did so by establishing a public/private relationship. The same has to be done in the Bill, as proposed earlier by Ms Vos, perhaps not in Clause 62(2)(h) on the Bill alone, but generally throughout the Bill. This partnership is crucial in Chapter X.

Mr Browne informed Members that at the moment any South African can register his/her name with the DNA at no cost whatsoever.

The Chair replied that he has been using the Internet for some time now, and he did not even know of these facilities. It is the role of the DNA to actively go out and tell the South African people about this facility, because providing universal access is not about just waiting in one's office for someone to approach you, but a proactive approach is needed to spread the word.

There were no further questions or comments and the meeting was adjourned.





74. In this Chapter, "service provider" means any person providing information system services.
Recognition of representative body

75. (1) The Minister shall, on application by an industry representative body for service providers by notice in the Gazette, recognise such body for purposes of section 76.

(2) The Minister shall only recognise a representative

body referred to in subsection (1) if the Minister is satisfied that-

(a) its members are subject to a code of conduct

(b) membership is subject to adequate criteria;

(c) the code of conduct requires continued adherence to adequate standards of conduct; and

(d) the representative body is capable of monitoring and enforcing its code of conduct adequately.

Motivation: Adequate criteria exist in 75(2) to evaluate the representative body. If the body meets the criteria IN 75(2) it must be recognised.

Conditions for eligibility
76. The limitations on liability established by this Chapter apply to a service provider only if-
(a) the service provider is a member of representative body referred to in section 75; and
(b) the service provider has adopted and implemented the official code of conduct of that representative body.

Motivation: Section 75 deals with the recognition of a representative body but there is nothing in this section which limits the Minister to recognising only one such body. It is possible (quite likely even) that more than one organisation may wish to apply for recognition. and meet all of the listed criteria. The recognition of one such representative body should not preclude another body which also meets the criteria from recognition. The minor change to Section 76 suggested above is to take this possibility into account.

Mere conduit

77. (1) A service provider is not liable for providing access to or for operating facilities for information systems or transmitting, routing or storage of data messages via an information system under its control, as long as the service provider-
(a) does not initiate the transmission;
(b) does not select the addressee;
(c) performs the functions in an automatic, technical manner without selection of the data; and
(d) does not modify the data contained in the transmission.

(2) The acts of transmission, routing and of provision of access referred to in subsection (1) include the automatic, intermediate and transient storage of the information transmitted in so far as this takes place-
(a) for the sole purpose of carrying out the transmission in the information system;
(b) in a manner that makes it ordinarily inaccessible to anyone other than anticipated recipients; and
(C) for a 'period no longer than is reasonably necessary for the transmission.
(3) Notwithstanding this section, a competent court may order a service provider to terminate or prevent unlawful activity in terms of any other law.

78. (1) A service provider that transmits data provided by a recipient of the service via an information system under its control is not liable for the automatic, intermediate and temporary storage of that data, where the purpose of storing such data is to make the onward transmission of the data more efficient to other recipients of the service upon their request, as long as the service provider
(a) does not modify the data;
(b) complies with conditions on access to the data;
(C) complies with rules regarding the updating of the data, specified in a manner widely recognised and used by industry;
(d) does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain information on the use of the data; and
(e) removes or disables access to the data it has stored upon receiving a take-down notice referred to in section 81.
(2) Notwithstanding this section, a competent court may order a service provider to terminate or prevent unlawful activity in terms of any other law.


79 (1) A service provider that provides a service that consists of the storage of data provided by a recipient of the service, is not liable for data stored at the request of the recipient of the
service, as long as the service provider-
(a) does not have actual knowledge that the data message or an activity relating to the data message is infringing the rights of a third party or
(b) is not aware of facts or circumstances from which infringing activity or the infringing nature of the data message is apparent; and
(c) upon receipt of a take down notification referred to in section 81, acts expeditiously to remove or to disable access to the data.
(2) The limitations on liability established by this section do not apply to a service provider unless it has designated a mechanism (whether directly or indirectly and whether personally, through an agent or otherwise) to receive notifications of infringement and has provided through its services, including on its web site{s1 in locations accessible to the public, the name, address, phone number and e-mail address through which it will receive such notifications
(3) Notwithstanding this section, a competent court may order a service provider to terminate or prevent unlawful activity in terms of any other law.
(4) Subsection (1) does not apply when the recipient of the service is acting under the authority or the control of the service provider.
Motivation: The intention of Chapter Xl is to limit service providers from liability when they are providing a mere conduit service, a hosting service, and when they are running a caching system or an information location tool. While the text in the 'mere conduit' and 'caching' section limits the general liability of ISPs, the phrasing in the other two sections only limits ISPs liability in respect of civil liability. For consistency and to ensure that the Chapter achieves its goals, it is suggested that sections 79 and 80 be modified to match sections #7 and 78.

In addition, there is no iustifiable reason why a service provider must make use of an agent for the purpose of receiving notifications, hence the amendments to this section.

Information location tools
80. A service provider is not liable for damages incurred by a parson a web page containing an infringing data message or infringing activity if the service provider refers or links users to a web page Containing an infringing data message or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hyperlink, where the service provider
(a) does not have actual knowledge that the data message or an activity relating to the data message is infringing the rights of that person;
(b) is not aware of facts or circumstances from which the infringing activity or the infringing nature of the data message is apparent;
(c) does not receive a financial benefit directly attributable to the infringing activity; and
(d) removes, or disables access to, the reference or link to the data message or activity upon receiving a take-down notice referred to in section 81

As above.
Sub-section (d) simplified and brought into coherence with the previous
sections, as there is no cogent reason for it to differ with Sections 78 and 79.

Take-down notification

81. (1) For the purposes of this Chapter, a notification of unlawful activity must be in writing and be addressed to the service provider or its designated agent and must include-
(a) the full names and address of the complainant;
(b) the written or electronic signature of the complainant;
(c) identification of the right that has allegedly been infringed;
(d) identification of the material or activity that is claimed to be the subject of unlawful activity;
(e) the remedial action required to be taken by the service provider in respect of the complaint;
(9 telephonic and electronic contact details, if any, of the complainant;
(g) a statement that the complainant is acting in good faith;
(hi) a statement by the complainant that the information in the take-down notification is to his or her knowledge true and correct; and
(2) A service provider shall not be liable for damages incurred or any other conseguence, as a result of remedial action taken by it in complying with the notification.

Point Ci) moved to sub-clause (2) and edited to provide blanket indemnity to a service provider following the procedure.

As per the discussion during the deliberations on Friday, 24 May, the provision requires the complaint! to indemnify the service provider is insufficient protection for the service provider. A "straw man" situation could result in significant consequential damages to the service provider simply as a result of following the mandated take-down procedure. The suggested rephrasing provides a more general limitation of liability.

No general obligation to monitor
82. (1) When providing the services contemplated in this Chapter there is no a general obligation on a service provider to-
(a) monitor the data which it transmits or stores; or
(b) actively seek facts or circumstances indicating an unlawful activity.
(2) The Minister may subject to section 14 of the Constitution, prescribe procedures for service providers to
(a) inform the competent public authorities of alleged illegal activities undertaken or information provided by recipients of their service; and
(b) to communicate to the competent authorities, at their request, information enabling the identification of recipients of their service.


83. This Chapter does not affect-(a) any obligation founded on an agreement;
(b) the obligation of a service provider as such under a licensing or other regulatory regime established by or under any law; or
(C) any obligation imposed by law or by a court to remove, block or deny access to any data message.




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