Leg. Dev.: Electronic Signatures

6 Colum. J. Eur. L. 251 (2000)

Miriam A. Parmentier.

With both electronic commerce and electronic administration in rapid advance and the Internet promising to become a major factor of economic growth, the European Union is facing the challenge of the rise of the paperless society. Electronic signature technology is expected to have considerable impact on the further evolution of online business and electronic commerce. E-commerce will only realize its full potential if a modem legal infrastructure supports the use of electronic signatures. This raises the issue whether so-called electronic signatures on electronically created documents will be legally recognized to the same extent as handwritten signatures on paper documents. To address this issue, on December 13, 1999, the European Parliament and the Council, in accordance with the co-decision procedure laid down in Article 251 of the Treaty, adopted Directive 1999/93 on a Community framework for electronic signatures.

The purpose of this Directive, as laid out in its Article 1, Section 1, is “to facilitate the use of electronic signatures and to contribute to their legal recognition” by establishing a legal framework for electronic signatures and certain certification-services in order to ensure the proper functioning of the internal market by fostering the economy and the efficiency of electronic commerce. By adopting this Directive the Community aims to make electronic signatures as easily employable as handwritten ones. The Community seeks to prevent obstacles from inhibiting the free movement of goods and services within the Common Market, as provided in Article 30 of the Treaty, which is at the heart of the basic constitution of the Community. Because more and more business transactions rely on electronic commerce as a vehicle for forming contracts, this movement might be hindered by diverse and potentially incompatible legal regimes in the Member States. Moreover, there is a need to hold participants in electronic transactions accountable should they try to deny involvement in a given transaction. This requires the availability of certification services acknowledged by the market participants and thus a framework regulation for providers of these services.

On April 16, 1997, the first Commission Communication concerning an initiative on electronic commerce was issued. On October 8, 1997, the Commission adopted a communication that recommended creating a European framework for electronic signatures, which was followed by an invitation to submit a proposal on December 1, 1997. The Commission made an initial proposal on May 13, 1998. At this point in time, some Member States either had enacted or were in the process of enacting digital signature legislation. Thus, the Commission’s initiative was very timely in view of indications that these Member States, while aiming for the same goal, would follow different legislative paths. An opinion of the Economic and Social Committee followed in December 1998. On January 13, 1999, the European Parliament completed its first reading of the proposal. The Commission delivered an amended proposal on April 29, 1999, which was met by the Council’s common position of June 28, 1999. On October 27, 1999, the Parliament completed its second reading, which was followed by the November 26, 1999, Commission opinion. The Directive is part of a widely scattered assortment of EU rules concerning electronic commerce. A common legislation became necessary due to the increase of electronic commerce across national boundaries and in order to allow Europe to fully participate in the global technological revolution. The Directive meets the subsidiarity requirement according to Article 5, Section 2 of the Treaty, as leaving the matter entirely to the national legislatures would entail the danger of incompatible legal solutions which might inhibit the development of international electronic commerce. Not only does the lack of a common framework directly impede cross-border commerce, in the long run the discrepancies are also bound to prevent the development of Community-wide certification authorities. Since the proliferation of electronic commerce has virtually eliminated the barriers to cross-border trade-the express purpose which the Common Market was created for-the European Union institutions are ideally suited to address the issue of electronic signatures. While the Single Market is designed to allow competing regulatory models within that Market, it must not place the Member States at a competitive disadvantage within the global marketplace, but rather has to provide unified legal solutions, when appropriate under the subsidiarity principle. By comparison, in the United States, diverging state regulations have threatened to hamper interstate electronic commerce. The widespread use of authentication technologies limited by competing state legislation nurtured the call for federal legislation.