ECT Act: Awaiting a precedent

Johannesburg, 07 Apr 2003

The Electronic Communications and Transactions (ECT) Act bears a number of legal implications for companies in terms of document management and storage, as it is no longer simply paper files that are considered to be legal documents.

"A business agreement that is committed to via e-mail, SMS or even recorded voice is considered to be a legal document," says Reinhardt Buys, of Buys Inc Attorneys, who specialises in the legalities of the digital communications field.

SA is still waiting for a big case to come up that will set a legal precedent for future cases affected by this Act.
Still to come

"In terms of the legalities, it is important that companies make sure that a record is kept of any business commitment made, whatever format it is made in," says Buys, who was discussing document and record compliance at a Metrofile seminar in Sandton on the subject.

Buys says that years ago, the biggest threats to a company`s existence were natural disasters, but today the largest threat comes from viruses and hackers.

"In terms of these threats, it is more often the people who work behind the company`s firewall who can prove to be most dangerous to an organisation - either through malicious intent or pure carelessness.

"The best anti-virus technology is still only as good as the laziest employee. It is imperative that companies educate their staff on the dangers of opening e-mails that may contain viruses and worms, otherwise important information can be irretrievably lost."

He says a legal precedent has yet to be set in terms of the electronic transmission of viruses.

"An example of this would be if an employee of a big corporation forwards a virus to another organisation that destroys its system. Can the corporate then be sued for damages by the affected company?"

Legal obligation

There are two sets of laws that govern document management. There are general laws, such as the Income Tax Act, and there are laws that are industry-specific, such as those that govern the mining or healthcare industries.

"An organisation is obliged to keep records of its business relationships and transactions for up to five years after the fact, and in labour terms, is required to keep a copy of an employee`s letter of employment and related information for up to four years after they have left your employ.

"The penalty for not following this procedure can be a fine of up to R10 million or 15 years in jail," he warns.

Buys says that in terms of the ECT Act, paper documents can be transferred to electronic format, provided this is done in compliance with the conditions of the Act, as set down in sections 14, 15 and 16.

"A paper document can be stored in electronic format provided it is easily accessible, in other words, stored on a modern technology platform; its integrity can still be proved, in other words, it has not been altered in any way; and the place and manner in which it is stored is reliable and safe."

It must also have all relevant metadata - such as where and when it was scanned, who did the scanning and so forth - attached to it for verification purposes.

He says there are two types of documents that cannot be stored in electronic format. "Documents stamped in terms of the Stamp Duties Act and legal wills are not allowed to be stored in this format."

Constitutional right

Advocate Willem Heath, who discussed good document management practices at the seminar, says the constitution states that it is a fundamental human right to have access to information and documents that are in your interest.

"Apart from documents that are excepted in cases of state security, everyone has a legal right to information which is in their interest - such as documents which can help prove an individual`s point in a court of law," says Heath.

"It is for this reason that it is imperative that companies implement good document management systems, as there is no point in having this right entrenched in the constitution if you cannot find the necessary documents due to poor corporate processes."

Buys says the important thing to remember is that nothing in the Act has actually been tested in a court of law, so there are no examples or models for either lawyers or judges to follow as of yet."

"SA is still waiting for a big case to come up that will set a legal precedent for future cases affected by this Act."

In the meanwhile, all that companies can do in terms of complying with the ECT Act is to make sure they have a clear document management policy, a legal e-mail disclaimer notice, a sound IT security policy and a complete document management checklist.