Russia: New Electronic Digital Signature law signed by Putin

[Xeni Jardin]

Forwarding this from a friend in Russia (Michael Novikov, founder of
Russia-based consultancy www.admin.spb.ru). The original source is a legal
alert published by the US-based law firm Baker and Mackenzie. --XJ

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Electronic Digital Signature Law now in Russia

On 10 January 2002, the Russian President Vladimir Putin signed the
Federal Law No. 1-FZ "On Electronic Digital Signature"

On 14 January the Law was officially published and, as a result, it went
into effect. Unfortunately, it seems that this new
law will not create enough confidence to drastically increase the use of
electronic documents in Russia.  In fact, the impact of the Law on IT
business and commerce in Russia would be far more significant if a draft
Law on Electronic Trade was also adopted, since this draft law contains
important provisions with respect to the use of electronic documents
(including use as evidence in court), as well as, other provisions
relating to transactions concluded over the Internet.  Additionally,
several practical limitations, which we have described below, will most
likely serve as barriers to the value of the Law.

The underlying concept of the Law establishes encryption as the only
method whereby a valid (from the standpoint of Russian law) electronic
digital signature may be created.  The Law is drafted to intentionally
omit other analogues of personal signatures and exclude the use of other
technologies for electronic digital signature creation.  Further, the Law
limits the scope of use of electronic digital signatures to civil law
transactions and transactions where electronic digital signatures are
specifically permitted under other Russian legislation; as of today, such
specific references only exist in the Russian Civil Code.

Accordingly, an electronic digital signature can be used for any civil law
contract (with a few exceptions specified below),
but cannot be used for signing of any electronic documents submitted to
the government authorities.  Equally, it cannot be
used for signing of any civil law documentation that will subsequently
need state registration (or notarisation).

Basic Provisions of the Law

The Law defines an electronic digital signature as:

(1) A part of an electronic document that is designated to protect the
document from falsification;

(2) A product of encryption using a secret key; and

(3) The part of the document that allows for the authentication of the
rightful holder of the secret key, as well as, a point
of reference that can assist in detecting any distorted information
contained in a document.

A person may have a number of electronic signatures.

An electronic signature is deemed equivalent to a handwritten signature if
the following three conditions are complied with:

(1) The certificate of the open key of the signature is valid at the time
of the authentication or at the time of the signing
of the document;

(2) The signature owner's name and the secret key match and there is no
evidence that the document has been distorted; and

(3) The document signed with the electronic signature falls within the
scope of the transaction(s) and the restrictions
indicated in the certificate.

When the abovementioned conditions are met, the electronic document will
be deemed-by operation of law-to be legally signed by the individual.
Thus, the transaction will have binding legal force.

Certificates of Electronic Digital Signature and Certification Centres

Certification of electronic digital signature should be issued in hard
copy.  Foreign certificates will be recognized in Russia, provided that
they are on paper and duly certified (notarised and legalized or
apostilled).

Activity of the centres that are authorized to authenticate digital
signatures and issue the certificates for open keys
(the "Centres") will be subject to regulation by "an authorized federal
executive body" which is to be selected (and dismissed)  by the
Government.  It should be noted that the Law does not name the particular
government body that will carry out this function.  Further, the Law tends
to be conservative with respect to the rights of the Centre to the
detriment of the holders of certificates and the recipients of digitally
signed documents.

Use of Electronic Digital Signature

In conclusion, taken the abovementioned points into account, the contents
of a document signed on paper and stamped with
a company seal may be considered legally equivalent to an electronic
document if the content is converted into an electronic
form and the e-document is electronically signed by an "authorized"
company officer.  However, under the Law, electronic digital signatures
used in public domain (any information system open for use to anyone) must
be created exclusively by means of software and hardware certified in
Russia.  Since certification in Russia can be a lengthy process that may
require, among other things, that the software is de-compiled, many
companies will not be able to reap the benefits of electronic digital
signatures.

Source: Baker & McKenzie Legal Alert, 14 January 2002
Baker & McKenzie, http://www.bakernet.com
(MN)


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