In a move that brings Slovak legislation closer to that of many European Union member states, the Slovak government May 16 approved a draft of a long-awaited Law on Electronic Signatures. The draft would give documents in electronic form - for example, tax declarations filed over the Internet, or electronic business contracts between suppliers and consumers - equal legal status to traditional, printed documents.
However, the cabinet draft, which is expected to go before parliament for approval in September, was immediately attacked by some experts in the information technology sector for lacking vital safeguards against abuse of electronic 'signatures' - registered codes used by contracting parties that would guarantee the documents and transactions were genuine. The law's opponents said they would propose their own draft.
"The way the government's law is formulated leaves it unsafe. It seems that most of the people who prepared the law were lawyers, who forgot about the important technical parts of the law," said Július Lintner, co-author of the planned alternative proposal and project manager of the Ditec information technology (IT) consulting firm.
Criticism of the cabinet proposal centres on the provision of certificates authenticating the electronic signatures employed by users. Lintner argued that under the cabinet draft, the certificates issued to make the signatures legal would bear an expiry date but not a start date.
Lintner explained that his proposal would give certificates a set validity period, ensuring that firms could not abuse unclear validity dates on their certificates.
"If we didn't have this, a company could enter into a contract using an electronic signature and later break the contract, claiming that the signature was given before they were issued the certificate, rendering the contract invalid. There would be no way of checking the veracity of the claim because there would be no way to prove when a signature's legal status came into being - there would be no proof of the start of validity on the certificates," said Lintner.
But the government has rejected suggestions that the signatures could be misused, insisting their draft had closely followed similar legislation in other European countries.
"At this point we don't know of any such threats to safety. In preparing our draft we followed European Union recommendations, and closely studied similar legislation in Austria and the Czech Republic," said Slavomír Beňo, co-author of the government's law.
Importance of the law
Analysts said that problems with the formulation of the draft law had not been entirely unexpected, given the novelty of the legislation, and believed that the 'e-signatures' law eventually accepted by parliament would be a hybrid of the cabinet's proposal and Lintner's draft.
"It's a new and fairly complicated piece of legislation. There are certain holes in it, which people are right to criticise. But we have to remember that this is brand new legislation for Slovakia," said Michal Grajcar, head of electronic banking at the Slovenská sporiteľňa bank.
"The crux of the two proposals are the same, but they differ in the details. The ideal, therefore, would be to increase the quality of the law by having some kind of combination of the two proposals," he added.
The approval of the cabinet draft means Slovakia has nearly caught up with EU member nations on e-signatures. Under an directive from the European Commission, an EU ruling body, all EU countries must have a law on e-signatures passed by June this year. If parliament approves the law according to schedule, Slovakia would be no more than five months later than EU member states on e-signatures.
Attracting investors, business
The law itself has been seen as crucial to boosting business-to-business activities in Slovakia, and attracting more foreign investors into the country.
Under current legislation, electronic signatures are already used in business-to-business transactions where a prior contract has been signed between two entities allowing for this. However, by giving e-signatures full legal status, all transactions, from contracts between firms to banking, could be inked using electronic rather than hand-written signatures.
A law on e-signatures would also mean that businessmen would no longer have to physically sign documents related to their business activities at state offices.
Finally, the Electronic Signature Law would allow business people and private individuals to communicate with state officials via e-mail and, for example, file value-added tax (VAT) returns, or use the on-line registry of Slovak business entities for legal purposes. At present, they have to do these tasks in person.
Several foreign investors have said they have been discouraged from investing in Slovakia because of the long hours they would find themselves queueing at state offices to fill each single document they required. If the law is passed, these documents could be arranged with the touch of a computer button from the company's offices.
In other countries which have already passed the legislation, electronic signatures have been embraced by business.
"In the Netherlands, my home country, such a law has been in effect for about two years, and companies file their VAT using electronic signature because it just makes things faster - that's what makes it attractive for firms and business. It will be the same here," said Ton Verbraeken, senior tax manager with the KPMG international auditing and advisory firm.
Many enterprises are already gearing up for the change in Slovakia.
"I expect the e-signature law to make an important contribution to business. It will make communication between enterprises and state offices easier and cost-effective," said Juraj Majtán, general director of the National Agency for the Development of Small and Medium-Sized Enterprises.
28. May 2001 at 0:00 | Peter Barecz