LC: 2nd reading debate resumed on Electronic Transactions (Amendment) Bill 2003

Following is a speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, in moving the second reading of the Electronic Transactions (Amendment) Bill 2003 in the Legislative Council today (June 23) :

Madam President,

I would like first of all to express my sincere gratitude to the Honourable Sin Chung-kai, Chairman of the Bills Committee, and Members of the Bills Committee for their effort and time spent on scrutinising the Electronic Transactions (Amendment) Bill 2003 as well as their valuable input to make improvements to the Bill. Taking into account their useful advice, we have proposed a number of amendments to the Bill. I shall move these amendments later on during the Committee stage. Now, let me briefly recapitulate the background of the Bill.

The Bill seeks to improve and update the Electronic Transactions Ordinance, or ETO, which was enacted in January 2000 to provide a clear legal framework for the conduct of e-business. The ETO accords electronic record and digital signature the same legal recognition as that of their paper-based counterparts. A voluntary recognition scheme for certification authorities has also been established under the ETO to enhance public confidence in electronic transactions.

We have made a commitment to the Legislative Council to review the ETO 18 months after its enactment to ensure that Hong Kong continues to have the most up-to-date legal framework for e-business. Accordingly, we conducted a review of the ETO in 2001 having regard to the operating experience, international e-business development and technological advancement. The review was followed by a public consultation exercise in early 2002. In light of the public comments received, we formulated a set of proposed amendments to improve the ETO, as contained in the Bill before Members today. I would now like to highlight the key features of the Bill.

At present, under the ETO, only digital signature generated by Public Key Infrastructure technology satisfies the signature requirement under law. To ensure that our legal framework for e-business can keep pace with technological advancement, we propose to adopt a technology-neutral approach for transactions not involving Government entities. Clause 4 of the Bill provides that signature requirement under the law can be met by any form of electronic signature so long as it is appropriate, reliable and agreed by the recipient of the signature. For transactions involving Government entities, we propose to continue with the existing practice of accepting digital signature only. This is to provide clarity and certainty to the public as to the form of electronic signature to be used for transactions with Government entities. Also, it will be more cost-effective for Government entities to be equipped to deal with only one specified form of electronic signature.

Second, we propose to remove unnecessary impediments to the adoption of electronic means created by legal provisions that contain obsolete requirements of serving documents "by post or in person". We propose to add a new section 5A and a new Schedule 3 to the ETO stipulating that, for the documents that are required or permitted to be served by post or in person under the provisions set out in the new Schedule 3, the service of the documents in the form of electronic record will be accepted.

Initially, the new Schedule 3 will contain certain provisions of the Landlord and Tenant (Consolidation) Ordinance, the Rating Ordinance and the Government Rent (Assessment and Collection) Ordinance that require or permit the service of certain notices, applications or other documents on or by the Commissioner of Rating and Valuation and related parties. The Secretary for Commerce, Industry and Technology may, by order published in the Gazette, amend Schedule 3. The order will take the form of subsidiary legislation. Our intention is to expand Schedule 3 to include other legal provisions as and when Government departments are ready to accept submission of documents under those provisions electronically.

Some Members of the Bills Committee, however, considered that amendments should instead be made to the Ordinances containing the provisions in question. They considered this a more user-friendly approach, because the public perusing the respective Ordinances would not be aware of the availability of an e-option for serving documents unless they also refer to the ETO.

Our view is that the proposed new section 5A and Schedule 3 is a more efficient legal vehicle for allowing the electronic submission of documents under different legal provisions. Schedule 3 also allows for adjustment and expansion, by order published in the Gazette, as and when departments are ready to provide an e-option. On the other hand, the alternative suggested by Members will require amendments to the many individual Ordinances, and hence entail a lengthy and complex legislative process. Our current proposal is consistent with the ETO framework which provides for acceptance of electronic record and digital signature as satisfying the requirements under other Ordinances without amending those Ordinances per se. Moreover, this proposal has received general support during the public consultation in 2002. To address Members' concerns about the user-friendliness of this approach, the relevant Government departments will widely publicise the availability of the e-option when it is implemented.

A third feature of the Bill is the various proposals to improve the operation of the voluntary recognition scheme for certification authorities under the ETO. We propose that the requirement for a certification authority to engage an independent assessor to prepare a report on its compliance with the ETO should only apply to the trustworthiness aspects of its service. The other operational aspects can be dealt with by a statutory declaration made by a responsible person of the certification authority. We also propose to empower the Director of Information Technology Services to require a recognised certification authority to furnish such an assessment report or declaration, or both, when there are major changes in its operation between two annual assessments.

Madam President, I shall later on move a number of amendments to the Bill during the Committee stage to address the Bills Committee's concerns, to improve certain provisions of the ETO, and to appoint June 30, 2004 as the commencement date of the Amendment Ordinance, if enacted. All these amendments have been discussed and endorsed by the Bills Committee. Subject to the passage of these amendments, I recommend that the Bill be passed.

Thank you, Madam President.

Wednesday, June 23, 2004

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