Report on the Legal System of Electronic Commerce -Summary-

1. History of The Study Group

2. Background of the Study

3. Outline of the Report

(1) The Electronic Authentication Systems Based on the Commercial Registration System

In Japan, a corporation's exemplified copy of the commercial register, a certificate of qualification, and a certificate of an impression of a seal, all of which are based on the information registered in the commercial register, are widely used to certify the existence of a company, power of representation of a company's director, and the identity of a director. Then, in the Japanese commercial area, it is considered appropriate to establish electronic authentication systems utilizing information registered in the commercial register in order to realize secure electronic commerce. There are two possible schemes to realize electronic authentication systems utilizing information registered in the commercial register:

1. A scheme to provide private certification authorities with information registered in the commercial register

   A scheme to provide private certification authorities with information registered in the commercial register electronically in order that the authorities can utilize the information, which has been regarded as highly reliable.

2. A scheme for the commercial registry as a certification authority

   A scheme to establish a certification authority which is operated by the commercial registry and issues electronic certificates for directors of companies, which are highly reliable electronic substitutes for paper-based copies and certificates issued by the commercial registry.

(2) The Electronic Notarization System Based on the Notarization System

In Japan, the notarization system is used to certify the existence and the contents of a contract and to attach an officially-stamped date to a document to prevent future disputes. The Study Group considers that the following electronic notarization system, which offers the same functions as those of the present notarization system, would be useful to realize secure electronic commerce:

1. An electronic officially-stamped date

   A notary shall attach an electronic officially-stamped date and his/her digital signature to an electronic document.

2. Notarization of an electronic private document

   A notary shall inspect the contents and effectiveness of an electronic private document and attach a certification statement and his/her digital signature to the document.

3. Preparation of an electronic notarial document

   A notary shall verify the identity of parties to a contract, prepare an electronic notarial document, and attach his/her digital signature to the document.

4. Keeping of electronic documents and certification of the existence and the contents of the electronic documents

   A notary shall keep electronic notarial documents, notarized private documents, and electronic officially-stamped documents and certify the existence and the contents of the electronic documents.

(3) Necessity of Legislation on Electronic Signatures

The following issues should be taken into consideration in discussing on possible legislation on electronic signatures in order to establish the same effects of electronic signatures as handwritten signatures to realize secure electronic commerce.

1. The effects of electronic signatures

   (a) Presumption on authenticity of an electronic document

   It should be discussed whether it can be presumed that an electronic document with an electronic signature which is functionally equivalent to a handwritten signature is made by the generator of the electronic signature (cf. Art. 228(4) of the Civil Proceedings Act).

   (b) Presumption on a generator of an electronic signature

   When presumption mentioned above is established by law, the generator of an electronic signature should be proved. It should be discussed whether it can be presumed that a digital signature verified by reference to a public key listed in a certificate issued by a certification authority which fulfills certain requirements is generated by the person listed in the certificate.

   (c) Satisfaction of signature requirements

   In some cases, a document with a handwritten signature or a seal is required by law. It should be discussed whether a document with a handwritten signature can be substituted by an electronic document with an electronic signature in such cases. In permitting such substitution by law, the reason for such signature requirements in individual provisions should be investigated.

2. Designation scheme for certification authorities

   (a)In establishing legal effects of electronic signatures (see a.), a scheme for clarifying what electronic signatures are regarded as effective electronic signatures may be necessary.

   (b)In establishing presumption on a generator of an electronic signature (see a.(b) ), requirements concerning certification authorities may be needed.

   (c)Then, it can be possible that establishing requirements concerning certification authorities by law and designating certification authorities which fulfill such legal requirements for the purpose of regarding a digital signature verified by reference to a public key listed in a certificate issued by a "designated" certification authority as a legally effective electronic signature and presuming such a digital signature is generated by a person listed in a certificate issued by such "designated" certification authority. (The purposes of establishing such designation scheme are to clarify what electronic signatures are regarded as effective electronic signatures and to establish requirements for presumption on a generator of an electronic signature. The scheme dose not prevent any operations of non-designated certification authorities. Digital signatures verified by reference to a public key listed in a certificate issued by a non-designated certification authority may have some of the legal effects mentioned above.)

(4) Policies for Studies

The purposes of the Report are to suggest possible schemes and to point out issues. There remain such issues to be discussed as concerning details of technical matters and consistency with domestic and foreign legal systems. The necessity for establishing global framework to improve international electronic commerce, the discussions on many international standards concerning electronic commerce formed by private entities, and discussions held in such international conferences as UNCITRAL and OECD should be taken into consideration in continuing studies on establishment of the systems and legislation in the future.

In addition, in conducting such studies, private companies and government offices and agencies should cooperate one another. The establishment of systems, including necessary legislation, should be carried out rapidly to deal with rapid improvement in telecommunication and to foster electronic commerce and applications.

4. Future Work