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Lord Sainsbury of Turville: The noble Lord is simply reiterating the point, which is that in different circumstances there are very detailed regulations in our English law which cover exactly these issues. The question of when a document or message is said to have been delivered to a person is something that is laid down in great detail in legislation, and that is for very good reasons. Rather than simply saying that we should abandon all that legislation, we believe it is appropriate to take it subject by subject and look at the particular circumstances of each case so that these can be redefined in terms of electronic signatures. He referred to all the points that will have to be addressed as we go through the legislation outlining what we mean for delivery of this document in these particular circumstances; whether it is exchanging a house or whatever. These are precisely what need to be

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considered in detail and it seems impossible to produce a blanket situation to cover all those different circumstances.

The second issue is the whole nature of cryptographic services. Taking this as a process, there are three aspects to the question of electronic signatures. The first is to establish that those involved are who they say they are--a process that will have to take place in the certification procedure. The person providing the cryptographic services will then confirm their identity and provide a method of establishing that through a process of certification. The second process is to ensure that only that specific person logs into the machine--that is, someone else has not got hold of that electronic signature. The third process--and the purpose of cryptography--is to make certain that the signature in is not tampered with until it comes out at the other end.

This Bill is about the precise nature of cryptographic services and certification. It aims to ensure that the chain, from the originator establishing his or her identity through to the receiver of the electronic communication being able to check that identity by the use of the cryptographic keys and the certification provided by the cryptographic service is not broken. Assurance can thus be given that the person is indeed who he claims to be.

Clause 7, as amended, agreed to.

Lord Lucas moved Amendment No. 23:


After Clause 7, insert the following new clause--
POWER TO ACCEPT ELECTRONIC SIGNATURE
(" .--(1) Any person may make an irrevocable declaration in writing to accept an electronic signature in all circumstances, or any class of circumstances, where legislation requires such signature to be in another form.
(2) A declaration under subsection (1) shall be valid for all purposes in the circumstances set out in the declaration.").

The noble Lord said: This amendment is not intended to be taken seriously as an addition to the text of the Bill, but offers an opportunity to discuss how we are to deal with what will be a long sequence of detailed and different provisions for the acceptance of electronic signatures in many thousands of different statutorily defined cases. It will be extremely difficult for the ordinary man in the street--or indeed the ordinary organisation--to know exactly where they are at any particular point in time, as to what statutory provisions have or have not been made with regard to the acceptance of electronic signatures.

I am here suggesting that an organisation--a county council or some switched-on city council--might say that it will accept anything in electronic form; that whatever the statute says it will accept an electronic signature. That way, it can run its business efficiently without worrying whether the specific regulations in a specific area have been complied with. It may decide that electronic signatures are good enough and that it will allow individuals to make the same decision so far as their own lives are concerned. It may give statutory force to such a decision, which may not be a sensible approach.

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I should like to understand from the Minister how, as a matter of practicality, we are to deal with this fast and continuously changing scene and know where we are if we do not have something like this in the Bill. I beg to move.

The Earl of Erroll: That sounds like a sensible proposal. If we are not to have a system whereby electronic signatures are legally admissible as an alternative to written ones, for two parties physically to sign a piece of paper to confirm their agreement to accept each other's electronic signatures and for that to be binding sounds a very simple way to proceed in the interim. It may in fact speed things up and render a great deal of work by civil servants behind the scenes, trying to bring statute law into line, totally redundant because we will just get on with life as normal.

4.30 p.m.

Lord Sainsbury of Turville: I am very grateful to the noble Lord, Lord Lucas, for notifying me of his intention to pursue the point which he made on Second Reading. What he said follows on from his general approach to these issues. Perhaps I may clarify the complex legal picture surrounding requirements for signatures, and I hope that in the light of this, I shall be able to persuade him to withdraw his amendment.

First, I remind the Committee of a general principle of English law. The parties to any transaction should, in general, be able to decide how to carry out the transaction. Clearly both parties need to agree the terms, and there is the danger that one party might be in a position to impose his terms on the weaker party. Hence there are many exceptions to this principle, where specific requirements of form are specified in legislation or other instruments made under legislation. Updating such requirements for the electronic age is the subject of Clause 8, which we shall discuss next.

There are other transactions, generally where government are not a party, and when there is no specific piece of legislation specifying the form. In such cases, including, for example, the vast majority of contracts under English law, the parties to the transaction are free to decide how to carry it out. If they subsequently have a dispute and take it to court, the court will weigh the evidence presented to it. Clause 7, which deals with admissibility of electronic signatures, will give people much greater confidence in using electronic signatures in these cases. As is stated in paragraph 43 of the Explanatory Notes:


"Some businesses have contracted with each other about how they are to treat each other's electronic communications. Clause 7 does not cast any doubt on such arrangements."

So people already have the freedom to choose to accept electronic signatures, or indeed unsigned electronic messages, from people they trust in specified circumstances. Many lawyers would argue that in the current absence of Clause 7, it is sensible to underpin such an understanding with a paper contract. The amendment would broaden this freedom by allowing a person to choose to make something akin to such a contract, but an open-ended one with the world at

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large or that part of the world satisfying a class of circumstances. I am not sure how many people would want to do this, but in any case the amendment would create other problems.

The amendment is limited to the ability to accept electronic signatures where there is a legislative requirement for the signature to be in another form. It would effectively allow parties to contract out of such a legislative requirement and would undoubtedly bring about great uncertainty. Furthermore, in many cases the barrier to accepting electronic means will be something else. Existing law has grown up over hundreds of years, mainly before e-mail, etc., was thought of. So there are many "accidental" barriers to doing things electronically--the need for a "document"; for something to be "posted"; or, in the case we were talking about, something to be "delivered". The Government intend to update those matters on a case-by-case basis, by using Clause 8. Providing the ability to accept electronic signatures across the board may not get us as far as the noble Lord, Lord Lucas, intends. However, broadening his amendment to cover other barriers to electronic means would cause the problems that we will come on to discuss in the debate on Clause 8 and what has become known as "carve-out".

The amendment may also have the effect of weakening the protection of citizens where existing legislation calls for paper-based signatures. It could have the effect of putting a person in a position to accept any type of electronic signatures whereas a subsequent Clause 8 order to allow electronic signatures to be used may well satisfy requirements that must be met with regard to the trust and security of the signatures which are used.

I hope that my assurances that people are free to choose to contract using electronic signatures in most cases and my preview of the other barriers to transacting electronically is enough to persuade the noble Lord, Lord Lucas, to withdraw his amendment.

Lord Lucas: I am grateful for the Minister's explanation, and of course I shall withdraw my amendment. But I would be grateful if the Minister could say, under the circumstances where we shall be faced with this progression of orders, how long the Government think it will take to get to the end of this process. There are many ministries and pieces of legislation to be looked at, and will entail a great deal of effort on behalf of the Civil Service. Is that something that is already timetabled into the current three-year plan, or is it something which is seen to extend beyond that?


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