Key points of the Amendment

1. Affirm the Legal Effect of Electronic Documents and Signatures (Article 4 of the Amendment)

The Amendment expressly provides that electronic documents or electronic signatures that comply with the ESA should be equivalent to physical documents or signatures and that no one should deny the legal effect of electronic documents or electronic signatures merely because they are in electronic form. By ensuring the legal effect of electronic documents and signatures in accordance with the ESA, the Amendment will streamline business processes and enhance efficiency.

2. Clarify the Definition of "Digital Signature" and a New Presumption of Execution by the Signatory (Articles 2 and 6 of the Amendment).

The Amendment clarifies that while a digital signature is one type of electronic signature, it should involve certain techniques, such as Public Key Infrastructure (公開金鑰基礎建設) and be supported by a certificate issued by a certification authority approved by the Ministry of Digital Affairs (MODA).

According to the Amendment, a digital signature is "an electronic signature generated by the use of a mathematic algorithm or other means to create a certain length of digital data encrypted by the signatory's private key, and capable of being verified by the public key, backed by a certificate issued by a certification authority."

Under MODA's current views, an "electronic signature" and a "digital signature" under the ESA are respectively equivalent to an advanced electronic signature (AES) and qualified electronic signature (QES) under the EU eIDAS Regulation. Simple/basic electronic signatures, such as a copy-pasted digital image of a handwritten signature or signature drawn on a device screen and saved, would not meet the technical requirements of an electronic signature or digital signature under the ESA.

Since digital signatures can identify and confirm the signatory and detect the change in the documents to which the digital signatures are attached and have the certificates issued by the certification authorities, they have a higher degree of security and credibility than other types of electronic signatures. The Amendment thus explicitly provides that a digital signature backed by a valid certificate issued by a certification authority shall be "presumed" to be signed or affixed by the signatory, unless it can be proved otherwise.

3. Presumption of Counterparty Consent to Use of Electronic Documents and Electronic Signatures (Article 5 of the Amendment)

In practice, electronic documents and electronic signatures can be used in situations where there is no counterparty. The Amendment eliminates the requirement for counterparty consent in situations where no counterparty is involved.

Further, taking into account the need for digitization and the possibility of digital disparity of the counterparty, the Amendment refines the consent requirement of the counterparty. Where there is a counterparty, unless the counterparty has given express consent, the counterparty must be given an opportunity to object within a reasonable period and in a reasonable manner prior to the adoption of the electronic documents or electronic signatures. If the counterparty does not object, it will be presumed that the counterparty has consented to the use of the electronic documents or electronic signatures. The counterparty may still request to cease using electronic documents or electronic signatures at any time.

4. Limit the Government Agencies' Exclusion of Electronic Signatures (Articles 1, 11, and 20 of the Amendment)

While the use of electronic signatures has become more popular among the public, government agencies should refrain from unilaterally excluding the application of electronic signatures and electronic documents. The Amendment, therefore, no longer allows government agencies to make public notices to exclude the application of the ESA. Going forward, the exclusion shall only be made by law.

Also under a sunset clause, the existing public notices excluding the application of ESA will cease to be applicable after one year from the effective date of this Amendment, which may be extended once for up to two years with the approval of MODA.

However, considering the special nature of judicial proceedings, the judicial competent authorities are still allowed to make public notices to exclude certain judicial proceedings from the application of the ESA.

5. Relax Approval Requirements for Foreign Certification Authority (Articles 15 of the Amendment)

According to the current ESA, a certificate issued by a certification authority organized or registered pursuant to foreign law shall be equivalent to the one issued by a domestic certification authority, provided that the foreign certification authority has been approved by the competent authority. However, for the private sector, there are currently only two local certification authorities (which are both government-invested enterprises) approved by the competent authority: PublicCA (中華電信通用憑證管理中心) and TWCA (台灣網路認證公司).

In consideration of the international political reality, the Amendment added "technical cooperation" between governments as an alternative to "international reciprocity" to relax the requirements for the competent authority's approval of foreign certification authority.

Impact

The Amendment represents a significant advancement in facilitating e-commerce and digital transactions in Taiwan. By affirming that electronic documents and signatures have the same legal effect as their hard-copy counterparts, the Amendment would streamline business processes, enhance efficiency, and foster trust in digital transactions. The clearer definition of digital signatures and the presumption of execution by signatories add extra security and credibility to electronic transactions. Furthermore, the presumption of counterparty consent would simplify the process and promote the use of electronic signatures. By limiting the government agencies' ability to exclude the application of the ESA, the Amendment would foster widespread acceptance and use of electronic signatures across various sectors, ultimately supporting the growth of Taiwan's digital economy.