V. Amendments to the ETO: 2004

Following the dissemination of the ITBB's Consultation Paper on the Review of the Electronic Transactions Ordinance in 2002,136 and the subsequent responses to it by the Chamber of Commerce137 and other interested parties, a bill was prepared for consideration by the Hong Kong Legislature.138 As a result, the Electronic Transactions (Amendment) Ordinance139 (the “Amendment Ordinance”) was enacted and went into effect on 30 June 2004.140

A. Private Contracts: Electronic Form Allowed, With Technological-Neutrality

One of the amendments grants private parties the right to select the form of electronic signature they desire. No particular form of electronic signature is required in the case of private contracts, subject to certain exceptions pertaining to reliability, appropriateness in specific circumstances, and of course the preferences of the parties.141 This is commensurate with the worldwide trend toward technological-neutrality and less regulation of electronic signatures.

In private contracts, it is recognized that the private parties themselves should decide the issue of which form of electronic signature to use. One factor in this decision is the economics, i.e., the parties must decide whether to use a more sophisticated, yet more expensive form (i.e., the digital signature) or to use a less sophisticated, yet cheaper form.142 In the private sector, it is considered unwise to tie the parties to a specific form of electronic signature. Instead, let market forces decide.143 Furthermore, technological innovation continues at a rapid pace, so better forms of technology may exist tomorrow which are only on the “drawing board” today.

However, the digital signature requirement continues in force for electronic communiqués with the government.144 This is considered “necessary and defensible”145 because the focus on one form of electronic signature provides clarity and certainty to citizens, making filing requirements easier to comprehend. This will also be “cost-effective”146 to the Hong Kong government because only one form of electronic signature will have to be dealt with.

B. Electronic Delivery Allowed in Cases of Serving Documents “by Post or in Person”

Many statutes in Hong Kong allow for service of documents “by Post or in Person.” These statutes were enacted before the invention of the computer and before it was possible to send electronic messages. The government and the citizens would be well-served for these laws to allow for the legal recognition of electronic service. For both the government and the relevant parties, electronic service carries the important advantages of being cheaper and more convenient.147

Accordingly, the ETO was amended. It now states that electronic service “to an information system designated by the person” satisfies the requirement for “a document to be served on a person by personal service or by post.”148

This amendment does not apply if an ordinance requires the personal service upon one private party by another private party, where neither is affiliated with the government. In that situation, another amendment is applicable: electronic service will be allowed to fulfill the service requirement only if the recipient gives consent to the utilization of the electronic form.149

C. Voluntary Recognition Program for Certification Authorities: Two Changes

As mentioned, the original ETO provided for “recognition” of CAs.150 It established a program of recognition for CAs that show themselves to be especially trustworthy entities. A CA applying for “recognized” status must submit a report prepared by an approved independent assessor attesting to the applicant's adherence to requirements of the ETO and the Code of Practice.151 After attainment of recognition, the RCA must continue to submit an assessment report every twelve months and each time it applies for renewal of recognition.152

1. Bifurcation of the Assessment Report

The ETO was amended to allow the RCA to submit a sworn statement in regard to its operational aspects (e.g., adherence to non-discrimination against handicapped persons).153 The independent assessor is no longer required to address the operational issues; the independent assessor will only address the issues pertaining to trustworthiness of the RCA.154

2. Major Changes in Mid-Year

The original ETO did not consider the impact of major changes upon the RCA occurring in mid-year, between the times that the assessment reports are submitted. In 2004, this omission was addressed; the ETO was amended requiring the RCA to inform the Director at once of the occurrence of major changes in its organization which could have a bearing upon its suitability for recognition.155