ALIN Legislative News
From Kathmandu University School of Law
Nepal Takes Legislative Initiatives to Regulate E-commerce
Businesses in Nepal
On
16 March 2025, the President of Nepal gave assent to the Electronic Commerce
Bill passed by Nepal’s Federal Parliament with the aim of making legal
provisions for regulating, systematizing and ensuring the credibility of
commercial transactions of goods or services carried out through information
technology. The said Act may be considered as a significant step in the
direction of providing a structured legal framework
for the governance of online businesses, ensuring consumer protection, fair
trade practices, and compliance requirements for carrying out e-commerce
business activities, which had long operated in Nepal in a largely unregulated
environment in a state of regulatory uncertainty.
The Electronic Commerce Act has
entered into force thirty-one days after the date of enactment. The Act applies
to any person within Nepal or any person residing anywhere outside Nepal,
offering goods and services in Nepal through e-commerce platforms. “E-commerce”
has been defined as the process of buying and selling of goods and services
through electronic platforms. However, using an electronic platform to provide
information or promote goods and services has been excluded from the scope of
e-commerce businesses covered under the said Act. The terms “Electronic
Platform” has been defined as a system created for the purpose of transacting
goods or services by collecting, transmitting, or storing information through
means such as websites, applications, software, the internet, intranets, and
social media marketplaces, using computers, mobile phones, or similar
electronic devices. However, it is not clear whether or not the use of simple
electronic means, such as emails or messages, to facilitate a transaction may
also be categorized as e-commerce. Some legal commentators argue that the
emphasis on a “system created for the purpose of transacting” implies that
digitally enabled services without a dedicated platform created for the same
might fall outside the scope of e-commerce regulated under the Act.
Under
the Act, “goods” include the substance produced from a single
good, or a combination of goods, to be consumed or used by a consumer in a way
that does not cause harm, damage, or any kind of negative effect on health, and
also includes raw materials, colors, fragrances, or chemicals used in the
manufacture of such goods. Similarly, “service” includes electricity, drinking
water, telephone, information technology, health, education and consultation,
transportation, tourism, entertainment, conveyance, sewerage, banking,
insurance, or other services of similar nature, and that term also includes
legal, auditing, medical, or engineering services.
As
provided in the said Act, the business persons are required to list their
e-commerce business on the electronic portal created by the Department of
Commerce, Supplies and Consumer Protection (Department). An application needs to be submitted by the concerned
business persons to the Department, along with the documents and business
details prescribed under Section 5 of the Act in order to get it listed on the
portal. E-commerce businesses that are already operating in Nepal prior to the
enactment of this Act are also required to comply with this requirement within
three months from the date of commencement of the Act. Failure to comply with
this requirement would result in a fine ranging from 20,000 to 1,00,000 Nepali
Rupees. The
Department is required to provide a certificate through electronic medium to
the concerned business person whose e-commerce business has been listed on its
portal. Once the business receives such certificate from the Department,
outlets of the e-commerce business or the e-commerce business’s authorized
agents are deemed to have received permission to run the e-commerce business.
Under the Act, the seller is also required to obtain a separate permission for
any special goods or services as mandated by the law. For instance, if a
business person wishes to sell liquor and medicine, then an approval for this
purpose is required to be obtained from Inland Revenue Office and Department of
Drugs Administration respectively.
The
Act requires each and every e-commerce business to establish a separate website
or electronic platform for the convenience of buyers or customers in order to
enable them to take an informed decision at any time. The electronic platform
should include the information of the seller as well as the goods or services
that are placed for transaction. Furthermore, the platform should also specify
the policies on payment, return, refund, exchange and the grievances handling
mechanism. The electronic platform can be maintained by the seller itself or
the intermediary which provides an electronic platform for the seller. The Act
also reinforces the validity of a contract when a business person accepts the
order for the goods or services placed on its electronic platform by a
customer. Such acceptance means that a contract is made between the buyer and
the seller and obligations as per such contract is automatically created.
However; the buyer may cancel the order prior to the delivery of goods or services.
Acknowledging
the threat to data security in e-commerce transaction, the Act emphasizes the
protection of buyers’ data and other confidential information, underpinned in
the Act as “The business entity shall maintain the confidentiality of any personal
information…”. The Act has extra-territorial application in the sense that
provisions of the Act still applies in cases where the goods and services are
provided via electronic platform by a person living outside of Nepal. The
business persons running e-commerce businesses should
not engage in unfair trade practices or business malpractices. E-commerce
platforms are also liable for complaints about goods or services sold, even if
they didn’t directly provide them to the buyers. The offenses under the Act
include operating without listing, failing to disclose product information, and
violating intermediary obligations etc. Depending on the gravity of the offence, fines ranging from
twenty thousand to hundred thousand Nepali Rupees may be imposed by the
inspection officer upon the business persons committing an offence under the
Act. The concerned party who is not satisfied with the fines imposed by the
inspection officer may file an appeal before the Director General of the
Department within seven days from the date of receiving the order. The business
persons committing more serious offences are punished with a fine of fifty
thousand to five hundred thousand Nepali rupees or imprisonment for a term
ranging from six months to three years or both at the discretion of the
Consumer Court considering the gravity of the offence. These offences are first
investigated by an inspection officer and the responsibility to file a case in
the Consumer Court also rests with the inspection officer.
The
Act also provides for a grievance-handling
mechanism. Consumers can file complaints
electronically or in person. Businesses must acknowledge such complaints,
resolve them within 15 days, and provide written explanations if they remain
unresolved. An online system to receive and resolve complaints is also required
by the Act.