Development of data processing technology, diffusion of highly efficient personal computers and establishment of computer networks in recent years enable broadening interchange of digital data through open computer networks. Such sophisticated telecommunications enable electronic commerce and will significantly contribute to the realization of digitized government by making electronic applications and reports possible.

But there are many issues to be resolved concerning telecommunications through such open networks. For example, it is relatively easy to intercept the contents of data when transmitting digital data through open networks. It is also easy to alter the contents of intercepted data or to generate forged data because anyone can generate the same data in the case of digital data. Thus, parties to telecommunications cannot confirm that data received in the name of a person was really generated by that person or that the data was not altered over the computer networks. These issues are especially critical when conducting electronic commerce or making electronic applications to public entities by exchanging electronic documents.

To deal with these issues, encryption is widely used in current telecommunications. Especially, technology to identify the generator of digital data is widely referred to as "electronic authentication". In relation to electronic authentication, digital signatures based on public key cryptography are used to deal with these issues. In fact, there are some private companies offering electronic authentication services. The Ministry of Justice, which governs the commercial registration system and the notarization system, must examine how to provide measures to realize secure data exchange including electronic authentication, utilizing these current systems.

In addition, although there are presently no special laws governing electronic authentication, a legal framework that provides some legal effect to certain electronic signatures, which is a method for realizing electronic authentication, and that must be examined governs the relation of parties to electronic authentication may be needed.

Furthermore, the contents of current private laws applied to electronic commerce should be reviewed. At present, such current private laws as the Civil Code, the Commercial Code and the Code of Civil Procedure are applied to electronic commerce, but such private laws did not necessarily plan for the emergence of electronic commerce . So it should be discussed whether it is appropriate to apply these current laws directly to electronic commerce or whether there is some necessity for establishing rules dealing with issues caused by electronic commerce.

In July 1996, the Civil Affairs Bureau of the Ministry of Justice set up the "Study Group on the Legal System of Electronic Commerce" (hereinafter "the Study Group") as a study group sponsored by the Director of the Civil Affairs Bureau in order to study the above- mentioned issues. (Members of the Study Group are listed in the Annex 1.) The Study Group held 5 general assemblies by March 1998 and set up two subcommittees, the System Subcommittee which discussed the foundation of systems necessary to realize secure electronic commerce and applications and the Substantive Law Subcommittee which discussed issues concerning substantive law and the need for amendment of substantive law. In addition to discussions, the Study Group conducted a "Questionnaire on the Need for the Electronic Authentication and Notarization Systems" (hereinafter "the Questionnaire") to research circumstances of electronic commerce and applications and demand for the electronic authentication and notarization systems. An interim report was published in March 1997 based on these discussions and the Questionnaire. This report is based on discussions held at the System Subcommittee. (Matters discussed at the general assemblies and the System Subcommittee are referred to in the Annex 2.) The System Subcommittee will be closed after this report is published, although the discussions at the Substantive Law Subcommittee will continue.

The System Subcommittee continued to discuss the above-mentioned issues after the interim report was issued. But such issues as the consistency with the actual situations of transactions and details of technical matters should be further discussed. As electronic commerce will expand worldwide, a framework to promote global electronic commerce should be established. In fact, various international standards concerning electronic commerce are being formed mainly by private entities, and discussions are conducted in such international organization as the United Nations Commission on International Trade Law (UNCITRAL) and the Organization for Economic Cooperation and Development (OECD). Discussions should continue toward the establishment of systems and legislation and pilot projects should be started, taking these circumstances into consideration. In conducting such work, private entities and government offices and agencies should cooperate with one another. The establishment of systems, including necessary legislation, should be carried out quickly to deal with the rapid improvement in telecommunications and to foster electronic commerce and applications.

(Annex 1)

Members of the Study Group on the Legal System of Electronic Commerce

(Professor of Law, Univ. of Tokyo)

(Professor, Research Development Department,
Academic Information Center)

(Professor of Law, Univ. of Tokyo)

(Professor, Institute of Asia-Pacific Studies, Waseda Univ.)

(Professor of Law, Univ. of Tokyo)

(Manager, Multi-Media Business Acceleration Dept.,Mitsubishi Corp.)

(Chief Director, Tokyo Notary Publics Federation)

(Professor of Social Science, Tsukuba Univ.)

(General Manager, Public System Division, NTT Data Communications Corp.)

(Professor of Law, Univ. of Tokyo)

(Manager, Network Development Dept., Sanwa (Apr. 1997-) Bank Ltd.)

(Manager, Electronic Network Business Division,(-Mar.1997) Sakura Bank Ltd.)

(Assistant Prof., Division of Electrical and Computer Engineering, Yokohama National Univ.)


(Assistant Professor of Law, Tohoku Univ.)

(Executive Manager, NTT Information and (Mar.1997-) Communication Systems Laboratories, Nippon Telegraph and Telephone Corp.)

(Professor of Social Science, Tsukuba Univ.)

(Professor of Law, Kobe Univ.)

(Professor of Law, Hitotsubashi Univ.)


(Executive Manager, NTT Information and (-Apr.1997) Communication Systems Laboratories,Nippon Telegraph and Telephone Corp.)

*: Members of the System Subcommittee

(Annex 2)

Matters Discussed in General Assemblies and the System Subcommittee

General Assembly (1)
(Jul. 22, 1996)
•On Establishment of the Subcommittees
•Report concerning Legal Issues

General Assembly (2)
(Sep. 24, 1996)
•Issues on the Electronic Authentication/Notarization
•On the Questionnairing on the Need for the Electronic
Authentication and Notarization Systems

General Assembly (3)
(Oct. 29, 1996)
•On U.S. Encryption Policy ( Report of Mr. Iwamura)
•On European Encryption Policy (Report of Mr.Matsumoto)
•Encryption in the Area of Telecommunication(Report of Mr.Asano)

System Subcommittee (1)
(Dec. 18, 1996)
•On the Notarization System (Report of Mr. Oshitani)
•Necessity of Legislation on Electronic Authentication
(Signatures) and Its Contents(Report of Mr. Iwamura)

System Subcommittee (2)
(Jan. 29, 1997)
•Outline of the Result of the Questionnairing
•Authentication and Notarization Service to be Offered by the Ministry of Justice (Report of Mr. Kawai)
•Legal Matters on Registration and Certification of Electronic Signatures(Report of Mr. Muromachi)

System Subcommittee (3)
(Feb. 27, 1997)
•Cryptography Technology to be Used in the Authentication/Notarization Systems Offered by the Ministry of Justice(Report of Mr. Matsumoto)
•System for the Authentication/Notarization Services Offered by the Ministry of Justice(Report of Mr. Yasuda)

General Assembly (4)
(Mar. 21, 1997)
•On the Interim Report on the Legal System of Electronic Commerce
•On the Report on the Questionnairing

System Subcommittee (4)
(Jun. 18, 1997)
•On Key Recovery(Report of Mr. Tosiaki SAISYO, Toshiba)

System Subcommittee (5)
(Jul. 16, 1997)
•Issues on Electronic Notarization(Report of Mr. Uchida)

System Subcommittee (6)
(Sep. 19, 1997)
•On the Electronic Authentication Systems Based on the Commercial Registration System (Report of Mr. Koji HARADA, Director of Commercial Division, Civil Affairs Bureau, Ministry of Justice)

System Subcommittee (7)
(Nov. 14, 1997)
•On Legislation on Electronic Signatures(Report of Mr.Naofumi KANEKO, Attorney, Civil Affairs Bureau, Ministry of Justice)

System Subcommittee (8)
(Dec. 19, 1997)

System Subcommittee (9)
(Jan. 16, 1998)
•On the Electronic Notarization System Based on the Notarization System(Report of Syuya FUKUMOTO, Attorney, Civil Affairs Bureau, Ministry of Justice)

General Assembly (5)
(Mar. 31, 1998)
•On the Draft of the Report on the Legal System of Electronic Commerce

back next