Removal of obstacles to electronic communications

53. Section 7 is about the admissibility of evidence of signatures and certificates but it does not authorise the use of electronic means if the law currently requires a traditional medium. Section 8, however, contains wide-ranging powers which are intended to enable the Government to modernise the entire Statute Book by amending references to paper signatures, documents, records and formalities generally. It empowers Ministers to use secondary legislation to amend primary or secondary legislation or other instruments made under them for these purposes. The Government chose to proceed by creating a power for secondary legislation permitting the use of electronic alternatives in specific cases rather than to permit electronic communications and records in all situations except for those specifically excluded. It was thought that the latter approach would risk creating uncertainty and confusion in cases where the electronic alternative to a paper process was not obvious. This legislative approach was specifically accepted by the highly influential Delegated Powers and Deregulation Committee of the House of Lords. It was also accepted by both Houses of Parliament.

54. Section 8(2)(c) provides that the amending secondary legislation may be used to facilitate the use of electronic communications in relation to “The doing of anything which . . . is required to be or may be authorised by a person’s signature or seal, or is required to be delivered as a deed or witnessed”. In each case where legislation requires formalities such as a deed or a witness the relevant Government department will have to consider the level of authentication which should be reached in the particular case. This may result, for example, in the removal of requirements for signatures to be witnessed in some instances. A draft Order under section 8 has been published which deals with a number of requirements in the Companies Legislation. One of those requirements, which is in sections 2 and 7 of the Companies Act 1985, is for the attestation by a witness of the signatures of subscribers to the memorandum and articles sent to Companies House on incorporation. The draft Order amends the sections to provide that where the memorandum and articles are signed electronically in accordance with directions of the Registrar then there is no need for attestation.

European Directive on Electronic Signatures (see Appendix 2 for extracts)

55. Article 1 of the Directive states its purpose which is to facilitate the use of electronic signatures and to contribute to their legal recognition. It establishes a legal framework for electronic signatures and certain certification services in order to ensure the proper functioning of the internal market. It is not intended to affect the law relating to the conclusion and validity of contracts or other national or community legal requirements of form nor law governing the use of documents. The Directive must be given effect by 19 July 2001.

56. The Directive covers anything conveyed electronically and linked to or used as a signature. This could range from, for instance, a fax to a coded signal employed over a mobile phone. A large part of the Directive concerns “certification-service-providers” (CSPs) whose function is to link an electronic signature with an identity. They would include a CA as described earlier in these Guidelines.

57. Article 2 of the Directive defines a particular type of signature called an “advanced electronic signature”.

It would include a digital signature of the kind explained in these Guidelines. Article 5.1(a) is aimed at producing equality of treatment of advanced electronic signatures with manuscript signatures. It applies in relation to electronic data (which might be a communication or stored data). It concerns the legal effect of the association of that data with that type of signature. As article 1 says, the Directive does not cover aspects related to the conclusion and validity of contracts or other legal obligations where there are requirements of form. But where electronic data is lawfully used and there is a legal requirement for a signature, an advanced electronic signature must satisfy that legal requirement. This provision is not incorporated into UK law by the Electronic Communications Act 2000, and further legislation will be required. Article 5.1(b) requires Member States to ensure that such signatures are admissible as evidence in legal proceedings. This requirement is met under the Electronic Communications Act.

58. Article 5.2 requires Member States to ensure that electronic signatures are not denied legal effectiveness and admissibility as evidence in legal proceedings solely on the grounds that they are in electronic form or not based upon certificates or secure signature-creation devices. There is no need for any legislation additional to the Electronic Communications Act to implement Article 5.2.

59. Article 6 deals with the liability of certificationservice- providers to those who rely on certificates or who guarantee certificates given by others. Article 6.1 requires member states to ensure that when damage is suffered by someone who has relied on a “qualified certificate” (defined in article 2) the issuer is liable for a number of matters unless he proves that he has not been negligent. 60. Article 6.2 imposes liability for failure to revoke the certificate unless the issuer proves that he has not been negligent. Article 6.3 and 6.4 require Member States to ensure that issuers can include a limit on the use of the certificate and a limit on the value of transactions for which it can be used and that the issuer will not be liable for use outside the limit or for damages exceeding the value limit. As article 6 appears to reverse the burden of proof normal in English law, it may not be appropriate for this provision to be dealt with under the normal procedure for giving effect to European Directives under section 2(2) of the European Communities Act 1972. 61. The European Commission is empowered under Article 3 to establish and publish in the Official Journal the numbers of recognised standards for electronic signature products.

European Directive on Electronic Commerce

62. The Directive is aimed at “information society services”. (They are defined in Directive 98/34/EC, OJL 204, 21.7.1998 p.37). Examples are selling goods or services on-line and these would include on-line services offered by certification service providers. The basic principle is that the providers need only comply with the requirements of their “home” Member State (the place where they are established). The Directive also makes provisions about the information to be provided to recipients of the services, and about the liability of internet intermediaries. It also makes provisions about the conclusion and validity of electronic contracts but it does not displace existing treaties about jurisdiction and applicable law. In addition, it requires Member States to ensure that there are no obstacles to electronic contracting.