by Adrian Burke and Robert O’Shea, of A & L Goodbody Solicitors, Dublin
The Irish Government recently published a draft Electronic Commerce Bill containing outline proposals on electronic signatures, electronic contracts and related matters. The draft Bill paves the way for further significant developments in internet banking in Ireland. The Bill is one of the first to be published in the E.U. It follows a consultation process between Government and industry to address the need for legislation to further promote Ireland’s development as an international hub for electronic commerce.
The Bill adopts a light regulatory touch. The Government has sought to ensure that the Bill is as "technology neutral" as possible in order to allow for future technological developments.
Legal Recognition of Electronic Contracts
The Bill provides that electronic contracts will be on the same legal footing as contracts in paper form. This formal recognition of electronic contracts will give greater legal certainty to internet banking. Parties to contracts are free to agree to exclude this recognition. It is notable that real estate documents are excluded from the ambit of the Bill. Accordingly, real estate mortgage documentation in electronic form will not be recognised under the Bill.
Encryption
The Bill recognises current encryption technology, and is flexible enough to cover future technologies in this area.
Electronic Signatures
The Bill provides that an electronic signature or an encrypted electronic signature will be accepted in law in the same way as a hand-written signature. Again, the parties to a contract may exclude the application of the legislation by agreement. Where the law currently requires that a document be executed under seal or that witnesses be present (for example, in the case of certain deeds), these requirements will be dispensed with for electronic agreements. These rules, once finalised, will clearly simplify contracting over the internet.
Provision of Certification Services
The draft Bill has provisions dealing with certification service providers (CSPs). A "trusted third party" may act as intermediary between parties communicating on the internet. The intermediary would operate a "key" escrow system and would certify that a given key is linked to an individual or corporation. The Government proposes that a voluntary certification system to be known as the National Accreditation Board be put in place.
Liability of CSPs
CSPs would be liable for "any damage caused to any person who reasonably relies on such certificates, unless the certificate service provider proves that he has not acted negligently". The provider may, in issuing the certificate, place a limit on his liability.
Paperless Transactions and Records
The draft Bill provides that where there is a requirement under law that contractual information should be presented or retained in its original form, that requirement may be met by electronic means. These provisions will clearly have a great impact on the regulatory requirements and document retention policy and for banks. For example, in the context of consumer credit agreements, the requirement to provide customers with hard copies of credit agreements or guarantees may be satisfied by providing electronic copies and bank statements could be sent by electronic means. All of this assumes of course that the customer agrees to paperless transactions. It is important to note that electronic agreements will still have to comply with Irish consumer and other laws in all respects.
Improved Domain Name Registration Procedures
New regulations have been proposed in the Bill to facilitate the registration of domain names in Ireland.
Standard Documentation
Banks will need to review existing standard documents to deal with the provisions of the Bill once enacted.
Penalties
The Bill proposes to create a number of new electronic fraud offences backed up by fines of up to IR£80,000 and prison terms of up to five years, or both. This is clearly aimed at promoting further public confidence in e-commerce in Ireland.
Conclusion
The publication of the draft Bill is a welcome development in the evolution of internet banking in Ireland. The pro-business focus of the Bill, with its emphasis on giving legal certainty to electronic contracts and signatures, will be of great interest to banks, financial services companies and companies providing internet services, both domestic and overseas. A consultation process inviting comments from interested parties on the draft Bill has just been completed. It is expected that the Bill will become law in the first half of this year.
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