Taiwan's Electronic Signature Act set for overhaul to embrace digital era

Jerry Chen, special to DIGITIMES Asia, Taipei 0

Credit: SelfieSign

The 2002 Electronic Signatures Act was originally designed to encourage electronic transactions and develop e-government and e-commerce. However, rapid technological advancements in the last twenty years have expanded the use of digital signatures beyond mere transactions, now finding widespread use in diverse sectors of healthcare, finance, government, education, and real estate, among others, prompting the need to modernize the law for the digital age. A recent report by Mordor Intelligence revealed that the global e-signature platform market reached a valuation of US$2.28 million in 2021, and it is projected to further soar to US$10.94 million by 2027.

Taiwan's Ministry of Digital Affairs (MODA) is spearheading the update of the two-decades-old Electronic Signature Act. In March, MODA specified the required algorithms and technical standards for digital signatures to ensure their legal effect. On June 27th, the draft amendments to the Act were made public, inviting feedback through the Public Policy Participation Platform until August 25th. As public hearings and discussions on the changes have begun, officials and industry representatives have expressed support for the modernization, while raising concerns over potential oversights.

The proposed amendments to the Electronic Signature Act entail six key changes aimed at modernizing and updating regulations for electronic signatures.

1. Specifying the principle of equal functionality between electronic and paper formats

The revised legislation makes it explicit that e-documents and signatures carry the same legal validity as their physical counterparts, emphasizing the principle of functional equivalence. This recognition ensures that electronic signatures and documents are legally binding and accepted at the same level as traditional paper-based ones.

This revision enables individuals and organizations to confidently use electronic signatures and documents for various purposes, including signing contracts, transaction authorizations, and official forms, resulting in improved efficiency, reduced costs, and elimination of physical paperwork and face-to-face interactions.

2. Clarifying the relationship between electronic signatures and digital signatures

An electronic signature is a mark attached to an e-document, confirming the identity, qualifications, and authenticity of the person signing the document.

A digital signature is a specific type of electronic signature that converts an e-document into unique digital data using mathematical algorithms or other methods. This data is encrypted using the signatory's private key (PKI), creating a distinctive digital signature that can be verified with the public key. Additionally, a digital signature requires a certificate from a trusted certificate authority (CA), either public or private.

The law change follows the principle of technological neutrality, embracing future innovations like dynamic biometric signatures based on biotechnology, in line with international recommendations from the United Nations and the European Union.

3. Distinguishing the legal effect of electronic signatures and digital signatures

To enhance the legal credibility of digital signatures, they are granted a "presumption" of being personally signed by the individual, treated as if personally signed, placing the burden of proof on the challenging party in disputes over their authenticity. Although electronic signatures hold the same legal weight as physical ones, disputes over their authenticity necessitate evidence from the party claiming their genuineness.

4. Adjusting the requirements for the use of electronic documents and signatures with the consent of the parties involved

The revision expands the use of e-documents and signatures beyond legal transactions with counterparties. It clarifies that obtaining consent from counterparties is not mandatory for e-documents. However, while consent from counterparties is not necessary, the revision acknowledges potential digital gaps and grants them the choice to refuse or seek alternative options when using e-documents or signatures.

5. Reducing the possibility of administrative institutions excluding the application of the Electronic Signature Act through public announcements

The revised law prohibits administrative agencies from exempting the Electronic Signature Act through commands or announcements. However, they can establish separate regulations for technical and procedural aspects of e-documents and signatures. Agencies are granted three years to transition smoothly, and after this period, previous exemptions become invalid. If they still wish to exclude this law, proper legislative procedures or amendments must be followed.

6. To consider the opportunities for international interoperability of electronic signatures

Foreign companies can now serve as digital signature certification authorities in the country. The approval process evaluates international reciprocity, equivalent security standards, and potential technical collaboration. Earlier this year, the National Institute for Cyber Security collaborated with Lithuania, using the "miXed organization Certification Authority" (XCA) issued by MODA for online signing, which was officially recognized and legally valid in Lithuania. This mutual recognition establishes a precedent and foundation for the legislation amendment.

As Taiwan takes steps to embrace cutting-edge technologies, these amendments signal the nation's commitment to staying at the forefront of the digital era.