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Lord Lucas: As the Minister is doubtless aware, one prominent American but London-based merchant bank has already taken steps to transfer its entire

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central data operation from London to Switzerland. It has put in place steps so that no authorisations or key disclosures can be actioned from any address in the United Kingdom. Therefore no employee served with that sort of notice in the UK can get at any of its keys because they are all in Switzerland and he cannot have them.

Given the quality of the people who have taken this action, I would expect this to be followed fairly quickly by other businesses taking preventive measures. The sort of action that follows from this is that, once you begin to establish your real core, central operations somewhere outside the United Kingdom to avoid this sort of legislation, other parts of your operations will follow. I do not believe that this is a healthy state of affairs for us; indeed, it is something that this Government ought to be taking seriously. They should be taking positive, not just tentative, steps to try to allay the quite reasonable concerns of industry when it comes to this sort of international obligation, as pointed out by my noble friend Lord Berkeley.

I hope that we will hear more from the Government on this area during the Report stage. But, if we do not, I shall certainly wish to return to the matter. However, for now, I shortly hope to be able to sleep on the Government's reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 [Interpretation of Part III]:

Lord McNally moved Amendment No. 180:

    Page 55, line 31, at end insert (", and does not affect the intelligibility or accessibility of that communication or data").

The noble Lord said: About seven-and-a-half hours ago, the noble Lord, Lord Williams of Elvel, chastised my noble friend Lord Phillips for questioning the wisdom of the Marshalled List. I take courage in both hands now partly because--for reasons I do not quite understand--the noble Lord is no longer in his place. However, I am sure that he will read the Hansard report of these proceedings and "buttonhole" me tomorrow.

However, the latter is the preamble to saying that I should prefer to talk to Amendments Nos. 180, 181, 183 and 186 as a group. They all relate to this definition clause and have the same objective; namely, to try to tighten up the electronic signature and key definitions to close various loopholes. The present wording brings all sorts of applications of signature-only keys into the ambit of Clause 46 notices, which is contrary to the content of the Bill. The proposed wording would make it abundantly clear exactly when a key is being used for the purposes of signature.

Amendment No. 181 provides the third reason--"the authority"--for using an electronic signature, which is defined under Amendment No. 186. Amendment No. 183 seeks to ensure that the word "key", as applied to encryption, always implies some intent to conceal, which surely is the essence of encryption. I beg to move.

Lord Bassam of Brighton: I am happy to consider the re-grouping of these amendments, as proposed by the

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noble Lord. These amendments hark back to concerns which underpinned noble Lords' proposed changes to Clause 46(6) by restricting access to keys that have been used solely for electronic signature purposes.

In simple terms, I suppose that an electronic signature can be described as something associated with an electronic document that is the electronic equivalent of a manual signature. Providing a definition for this in statute is somewhat trickier. I understand what the noble Lord is seeking to achieve by way of these amendments, but we believe that the definition in Clause 52(1) is clear enough. Perhaps I may just draw the important words to the attention of the Committee. Clause 52(1)(c) states that an electronic signature is anything in electronic form which,

    "is used for the purpose of facilitating, by means of a link between the signatory or other source and the communication or data, the establishment of the authenticity of the communication or data, the establishment of its integrity, or both".

In respect of Amendment No. 180, I believe that I would probably go further and suggest that if signatures are encrypted they will always affect the intelligibility or accessibility of the data in question. Therefore, the effect of the amendment seems questionable--if, indeed, there is an effect. I am not certain that there is.

Amendment No. 181 seems to have an intended effect similar to Amendment No. 185 which we shall discuss later. Both address the question of whether a legal effect is intended. Similar reference to what is included in this Bill was included in the Electronic Communications Act for fear that, without it, some activity might be caught in which there had been no intent to create legal relations. The provisions as drafted here, and in the other Act, are intended to ensure that signatures are a means of creating legal relations only where that is intended and not, perhaps, by chance through the accidental operation of software. Authenticity and integrity are the crux of the matter. Clause 52(1), as drafted, says that. I hope that that deals with the point.

I turn to Amendment No. 183. We have currently cast the definition of "key" for the purposes of this part of the Bill in what we hope are clear and workable terms. A key which may be required to be disclosed is one--this is the crucial point--which allows access to the electronic data in question, or facilitates putting the electronic data into intelligible form.

This is the whole purpose of the Part III power. We believe that the current definition is clear. We are not convinced that the suggested amendment adds anything to it. We have already discussed the issue of electronic signature keys. We do not believe that the inclusion of limb (b) in Amendment No. 183 is appropriate here. It seems to try to include in the definition of a key something that is more appropriate for the definition of a signature. In as far as the only need to mention signatures in this Bill is to exclude them from what can be accessed as keys, it would be distinctly unhelpful specifically to include these signatures in the definition of keys in the first place only to exclude them later.

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We have difficulties with the first limb of the amendment. What is described in the first limb seems to be an encryption key. What is relevant to this legislation is a decryption key. This is a significant difference which I am sure noble Lords will appreciate. I take it that Amendment No. 186 must be consequential to Amendment No. 181 and provides a definition of "authority" as regards an electronic signature. I have already explained why we do not believe that the proposed addition of a reference to "authority" is appropriate. It follows that this proposed definition is unnecessary. While the amendments have sought to be constructive we do not believe that they add anything to the legislation.

Lord McNally: I thank the Minister for co-operating in my re-ordering of the Marshalled List. I promise not to tell the noble Lord, Lord Williams of Elvel, that he has done that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 181 not moved.]

Lord Lucas moved Amendment No. 182:

    Page 55, line 38, leave out from ("means") to end of line 40 and insert ("anything (including any key, code, password, algorithm or other data) the use of which, with or without any other thing").

The noble Lord said: Amendment No. 182 merely seeks to broaden the definition of "key" and supposes that the "key" is a key as we ordinarily understand that, or at least such a key is part of the "key". We seem to have a definition in the Bill whereby if you have some kind of physical lock on information, as well as a password lock, you are home free. That seems to me unsatisfactory. I beg to move.

Lord Bassam of Brighton: I believe that I have already used the word "perceptive" in regard to amendments moved by the noble Lord. This is a perceptive amendment. However, it has the consequence--I do not know whether this is intended--of widening the definition of "key". I should be interested to know whether that is the noble Lord's intention. The query really is whether the definition we have for "key" in Clause 52(1) is future-proof.

As with the rest of the Bill, we have sought to ensure that the definitions included in it are future-proofed as far as possible without making them too loose or unworkable. The definition of "key" here is probably a case in point.

I am attracted to the suggestion of the noble Lord, Lord Lucas. We have given it a good deal of consideration. However, the use of the word "thing" may be casting the definition of a key too widely. I quite like things being called things.

In drawing up these proposals we considered the issue of what might happen in the future in terms of devices used to access data--something like biometrics or electronic fingerprinting are perhaps good examples. Even these devices will ultimately be reduced to data before they can have their intended effect. The Part III power is about being required to

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hand over something--for example, a key or a password--which allows access to particular data or puts it into what we would accept is an intelligible means or form. We have included a reference to data in the definition of key in Clause 52(1). That is as far as we feel we can legitimately go. I appreciate the helpful way in which the noble Lord moved the amendment. However, I hope that with my explanation he will feel able to withdraw it.

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