EXPERTS MEETING ON ELECTRONIC SIGNATURES AND CERTIFICATION AUTHORITIES:  ISSUES FOR TELECOMMUNICATIONS

Document No. 2

16 November 1999  

English only  

Geneva, 9-10 December 1999  

BRIEFING PAPER

Background and Issues Concerning
Authentication and the ITU

This Briefing and Issues Paper sets forth many of the key issues for electronic signatures and certification authorities and is intended to serve as the basis for discussions at the ITU Experts Meeting in Geneva (9-10 December 1999).

This Paper has been prepared by Stewart BAKER and Matthew YEO of the law firm Steptoe & Johnson, Washington, D.C., in collaboration with the secretariat of the ITU.

The views expressed in this Paper are those of the authors and do not reflect the position of the ITU or its membership.

 This Paper serves as a background document for the International Telecommunication Union high-level Experts Meeting on “Electronic Signatures and Certification Authorities:  Issues for Telecommunications”, to be held in Geneva on December 9&10, 1999.  As this Paper is intended for an expert audience, it assumes familiarity with the principles of asymmetric cryptography, the operation of public key infrastructures, and other aspects of authentication technology and policy.

             Our objective is not only to provide an overview of the state of the law and technology in the area of authentication, but also to provide a framework for a discussion of how the ITU can best facilitate the use and interoperability of authentication technologies.  It has been our experience that, in many discussions of authentication issues – even among experts – it can take an exceedingly long amount of time to reach consensus on what the topic is, let alone to devise solutions.  In particular, we have found that the lack of a shared understanding on two basic issues – the objectives of law and regulation in the area of authentication and the likely applications of authentication technology – often stands in the way of a common approach to the issues.  Thus, we will first attempt to “set the table” by reviewing these two basic issues, and then turn to specific issues for the ITU to consider.

I.What Are the Objectives of Law and Regulation in the Area of Authentication?

A.          Legislative Motivations … and Divergent Paths

             The past several years have witnessed a remarkable amount of legislative and regulatory activity around the world relating to electronic signatures and the operation of public key infrastructures (“PKIs”).  The amount of attention that these issues have received is, quite frankly, out of proportion to the commercial significance of authentication technologies at the present time.  There is a widespread belief, however, that the further emergence of authentication technologies will require the “enabling hand” of the law, if only to remove any uncertainty as to the legal effect of electronic signatures.  While others are inclined to view law and regulation in this area as unnecessary, the simple fact is that laws and regulations relating to electronic signatures and PKIs are likely to continue to be adopted, albeit in many different shapes and colors.

             To simplify matters greatly, one can perceive two basic motivations behind much of the recent legislative and regulatory activity.[1]  The first motivation, as suggested above, is simply to remove existing legal obstacles to the recognition of electronic signatures and records.  Here, the principal goal is to ensure that electronic signatures and records are, at least in most cases, allowed to fulfill any existing legal requirement for a “signature” or a “writing.”  This objective can often be met by defining, in fairly broad terms, the circumstances under which an electronic signature or record will be deemed to have fulfilled any such requirement.

             The second, and surprisingly unrelated, motivation behind legislative and regulatory activity in this area is to establish a legal framework for the operation of public key infrastructures.  Some proponents of PKIs have argued that, in order to facilitate the adoption and use of this technology, legislators should prescribe regulatory standards for certificate authorities (“CAs”) and allow CAs to limit their liability when they comply with those standards.  Legislation and regulations designed to advance this objective typically enshrine asymmetric cryptography as the approved means of creating an electronic signature, impose certain operational and financial requirements on CAs, address the duties of key holders, and describe the circumstances under which reliance on an electronic signature is justified.

             These two motivations converge, and are often in conflict, when its comes to the basic question of what types of electronic signatures the law should recognize.  In general, those who are motivated by the desire to remove obstacles to the use of electronic signatures prefer broad, criteria-based definitions of what constitutes an electronic signature.  By contrast, those who are motivated by the desire to facilitate PKIs tend to prefer legislation that ties the legal effect of an electronic signature to the use of a technology that is specifically approved by the legislation – typically, digital signature technology, and sometimes only those digital signatures that are authenticated by licensed CAs. 

             Note that the supporters of these two different objectives do not necessarily have to disagree on what types of electronic signatures the law should recognize.  The law can prescribe standards for the operation of PKIs, and, at the same time, take a broad view of what constitutes a valid electronic signature for legal purposes – in fact, as discussed below, some “two-tier” pieces of legislation have taken roughly this approach.  In practice, however, the proponents of PKI legislation tend to believe that only certain types of electronic signatures are sufficiently trustworthy to be given legal effect, while those who seek to remove obstacles to the use of electronic signatures tend to believe that the law should give effect to virtually any electronic signature, so long as the technology used to create the signature was appropriate to the nature and purpose of the communication.  Thus, the question of legal effect has become a point of division for these two different philosophies.[2]

             The tension between these divergent legislative trends can be seen in legislative chambers and in regulatory agencies throughout the world.  In the United States, the early preference – as reflected in the legislation adopted by the State of Utah in 1996 – was for heavily prescriptive, technology-specific laws that enshrined the use of digital signatures and set standards for the operation of public key infrastructures.  Other states, such as California, took a more criteria-based approach, but still relied heavily on digital signature technology.  Still other states have taken the “minimalist” or “enabling” approach, whose general purpose is to give effect to a broad class of electronic signatures.  These different approaches have raised a concern within the United States that electronic signatures may not be recognized even among the different states of the United States.

             In the U.S., however, the tension between these different approaches appears to have been largely resolved by the adoption last summer of the Uniform Electronic Transactions Act (UETA).[3]  UETA is a victory for the minimalists – it avoids any effort to set technological standards for the use and recognition of electronic signatures, and makes no effort to address issues that are specifically related to the operation of public key infrastructures.  Instead, UETA allows parties to prove the validity of virtually any type of electronic signature, by demonstrating that it was “executed or adopted by a person with the intent to sign the electronic record.”  Whether or not an electronic signature can be attributed to a particular person can be proven “in any manner,” including by reference to the level of security and authenticity provided by the technology used to create the signature (e.g., by reference to the security and authenticity provided by a particular class of digital signature).  The effect of an electronic signature is to be determined from the “context and surrounding circumstances at the time of its creation,” including any agreement that the parties to the communication have entered into concerning the use of electronic signatures.

             UETA has already been adopted by the State of California, and numerous other states are scheduled to consider the model law within the next year.  While Congress has recently been considering the adoption of uniform federal legislation in the area of electronic signatures, it is now agreed that any federal law will act merely as an interim measure pending the adoption of UETA by the individual states, a process that could take four or five years or more.  Thus, UETA has become the baseline in the United States for any state or federal legislation relating to electronic signatures and records.  Its minimalist approach to enabling the use of electronic signatures strongly suggests that the United States will avoid any type of mandated regulatory scheme for signature devices and the operation of PKIs.

             In the meantime, Europe seems to be moving in a different direction.  In Europe, the preference so far has been for prescriptive, technology-specific statutes and regulations.  The German Digital Signature Law, for example, establishes stringent technical standards for what types of digital signatures are to be deemed “secure.”  While the law does not directly address the legal effect of digital signatures, the German government is currently considering legislation that would link the satisfaction of any statutory requirement for a signature to the use of an approved digital signature technology.  Italy has already taken that step by granting legal effect only to those digital signatures that are authenticated by licensed CAs and that fulfill fairly stringent technical standards.  Among the Member States of the European Union, the United Kingdom is, to date, the only country that has proposed legislation pertaining to electronic signatures that is more akin to the “minimalist” approach exemplified by UETA.

             The European Union has its own harmonization processes, of course, and has taken up the topic of electronic signatures in a draft directive that is currently in the final stages of consideration by the European Parliament and Council.  The draft directive takes what is sometimes referred to as the “hybrid” or “two-tier” approach to electronic signature legislation.  At the first level, the directive prohibits the EU Member States from denying legal effect to an electronic signature solely on the grounds that it is in electronic form or on the grounds that it does not satisfy the technical standards set forth elsewhere in the directive for “advanced” electronic signatures (discussed below).  While important in principle, this “non-discrimination” prohibition may not impose much in the way of a practical restraint on the Member States if they can find other grounds on which to deny effect to a signature.  It is significant, in this regard, that the draft directive does not purport to harmonize any “non-contractual formalities requiring signatures,” which means that the Member States will largely remain free to prescribe particular standards for the satisfaction of statutory form requirements under national law.

             At the second level, the draft directive affirmatively requires the Member States to give legal effect to “advanced electronic signatures” that are based on “qualified certificates” and that are created by “secure signature creation devices.”  Those terms are defined by reference to a series of technical annexes that, while somewhat vague in their current form, are likely to give rise to fairly detailed and stringent standards.  The seeming intention of this second level is to create a European-wide regulatory regime for electronic signatures and certificate authorities.  Even though the directive has not yet been adopted, let alone implemented by the Member States, this process is already underway in forums like the European Electronic Signatures Standardization Initiative (EESSI), which is developing standards for the fulfillment of the draft directive’s technical annexes.

             Elsewhere in the world, countries are similarly divided in their approaches to electronic signature legislation.  Australia and New Zealand, for example, have adopted strictly minimalist approaches to enabling the use of electronic signatures, while Malaysia, Singapore, and South Korea have taken a more prescriptive approach (although Singapore’s legislation is “two-tier” in that it permits parties to prove virtually any type of electronic signature while according special legal presumptions to “secure” electronic signatures).

B.          Sources and Implications

             It is worth briefly considering some other reasons why countries are moving down divergent paths with respect to the recognition and regulation of electronic signatures and CAs.  There are many complex reasons, but among the most important are:

·        Countries with civil law traditions tend to have more stringent and particularized form requirements with respect to signatures and writings, while countries in the common law tradition tend to focus on the intent of the signing party and to permit a broad array of proof with respect to signatures.  These different approaches tend to influence attitudes toward what level of security is required to produce a legally valid electronic signature.  It is probably not a coincidence that the United States, the United Kingdom, Australia, and New Zealand – all common law countries – have tended toward the minimalist approach, while Germany, Italy, and, to some extent, the European Union have tended toward a more prescriptive approach.

·        Some countries are more accustomed to playing a direct role in setting standards for new technologies, and may believe that they confer a competitive advantage on their industries by doing so.

·        Legislators and policymakers in different countries may have different assumptions about how authentication technologies will emerge, and how they are likely to be used.  These assumptions may, in turn, influence their assessment of what kind of legislation is required to facilitate the use of those technologies.  As discussed in more detail below, those who believe in the model of the “general purpose certificate” are more likely to be concerned about technical standards and the operational requirements for CAs, while those who believe that most uses of authentication technologies will take place for a limited purpose and according to the terms of a contractual agreement are more likely to be concerned about ensuring that the law gives effect to those agreements.

·        Lastly, as with any type of law or regulation, the outcome may depend, in part, on who has the most influence in the decision-making process.  Companies that specialize in authentication technologies tend to promote legislation that specifically endorses the use of their technology, preferably to the exclusion of others, while companies that are building business models that incorporate authentication technologies tend to promote legislation that gives them maximum flexibility and that ensures that any agreement that they enter into concerning the use of authentication technologies will be enforced.  To some extent, telecommunications companies fall into both camps.

             The policy divergence that is occurring internationally is probably the result of a combination of all of these factors, in varying degrees. Unfortunately, this divergence could have serious repercussions for the recognition and interoperability of electronic signatures and certificates across national borders.  Among the problems that might arise are:

·        Some countries, such as Germany, Italy, and Malaysia, have a  de jure or de facto requirement that any electronic signature that is to be given legal effect in that jurisdiction must fulfill the technical standards prescribed by law or regulation.  In some cases, the signature may have to be authenticated by a CA licensed in that jurisdiction.  This requirement will likely give rise to a patchwork of conflicting technical standards and licensing requirements that will make it very difficult to use electronic signatures across national borders.  Moreover, these legal requirements can act as barriers to international trade in authentication products and services.  Given the inherently global nature of electronic commerce, much of the benefit of authentication technologies may be lost.

·        By the same token, a system in which each country prescribes its own standards will make it very difficult to enter into the kinds of mutual recognition and cross-certification agreements that some believe are part of the solution to this problem.  

·        Contractual agreements concerning the use and recognition of electronic signatures may not be given effect in different jurisdictions if national laws do not explicitly recognize such agreements, or if technical or regulatory standards imposed by law cannot be altered by agreement.  This could seriously impede the development of global authentication models that are built upon contractual agreements or a series of contractual agreements.  As discussed below, there are many who believe that contractually-based authentication systems are likely to be the dominant form of authentication, particularly at the international level.  If these systems are not permitted to operate according to their own terms across national borders, they may never fulfill their promise.

II.         What are the Likely Applications of Authentication Technology?

             Two Different Paradigms

             One of the interesting aspects of the current policy debates over electronic signatures and authentication technologies is that our understanding of how these technologies will be used in the “real world” is still evolving.  This is not a situation in which law and policy are reacting to a technology that has already gained widespread acceptance in the marketplace; rather, legislators and policymakers are trying to predict, and in some cases influence, the direction in which these technologies will emerge.  As noted above, different assumptions about the future of these technologies tend to influence the evaluation of what type of legislation, regulation, or  standards-setting processes are required.

             Because so much about the future of authentication is either unknown or speculative, it is important for any organization considering the adoption of recommendations or standards in this area to evaluate what the needs are likely to be and, from a precautionary standpoint, to consider whether any proposed form of action is premature.  In order to facilitate this process, we have sketched out below two different “paradigms” of authentication.  These paradigms represent heavily simplified and stylized sets of assumptions about the manner in which authentication technologies are likely to be used.  It is important to note from the outset that the two paradigms could, in fact, come to co-exist and even overlap with each other, and are likely to do so to some degree.  However, the purpose of evaluating these paradigms is less to determine what the world will “actually” look like down the road, and more to serve as a kind of heuristic device for making decisions about the current need for action by the ITU and other organizations.

A.          Paradigm 1 – Universal Authentication

             The core assumption of the first paradigm, which we will call “Universal Authentication,” is that the principal use of authentication technologies will be to authenticate identities and attributes among persons who have no pre-existing relationship with each other, and whose common use of the technology is not the subject of a contractual agreement or a series of contractual agreements.  In this paradigm, the main purpose of authentication technologies is to confirm the identity or other attributes of a certificate holder to a potentially unlimited number of persons and for a potentially unlimited number of purposes.

             A closely related assumption underlying the Universal Authentication paradigm is that persons are likely to hold only one certificate, or perhaps a limited number of certificates, that they use for multiple purposes.  Typically, people who are oriented toward the Universal Authentication paradigm believe that general purpose identity certificates will lay the foundation for most applications of the technology; these certificates can be used, for example, to enter into contracts, sign electronic messages, and engage in communications with the government – sometimes based on identity alone and sometimes in conjunction with another authenticated attribute.  The important point, though, is that beyond whatever general limitations are set forth in the applicable certificate policy, there is no restriction on the potential uses of the certificate and no limitation on the classes of persons who might rely on the certificate for some purpose.

             In the Universal Authentication paradigm, the extent to which, and the circumstances under which, a person may rely on a certificate for a particular purpose are defined almost exclusively by the relevant certificate policy.[4]  That policy, addressed by the certificate authority to the universe of potentially relying parties, usually defines, inter alia, the procedures by which the certificate was issued, the procedures that exist for its revocation, the technical specifications of any signature device and, perhaps most importantly, any limitations on the type or value of transaction for which the certificate may be used.  The recipient’s decision to rely upon the certificate is determined by an evaluation of the suitability of that policy for the intended purpose.  It is also determined by an assessment of the reliability of the CA that issued the policy and authenticated the certificate, which assessment may be influenced, in part, by any law or regulation governing certificate authorities to which the authenticating CA is subject.

             As is evident from the foregoing, the core element of trust arises principally from two sources in the Universal Authentication paradigm: (1) the practices and procedures followed by the CA in issuing a certificate, as well as the terms and conditions set forth in the applicable certificate policy; and (2) any law or regulation that sets standards for the operation of public key infrastructures and that defines general conditions for the use and acceptance of certificates.  In these respects, the operation of public key infrastructures can be seen as a matter of general public concern, and therefore a suitable area of public regulation.

B.          Paradigm 2 – Bounded Authentication

            The core assumption of the second paradigm, which we call “Bounded Authentication,” is that the principal use of authentication technologies will be to authenticate identities and attributes among persons whose common use of the technology is the subject of a contractual agreement or a series of contractual agreements.  In this paradigm, the main purpose of authentication technologies is to confirm the identity or other attributes of a certificate holder for a set of specifically defined purposes, and within a defined community of potentially relying parties who are subject to common terms and conditions for the use of the technology.

             The Bounded Authentication paradigm envisions a world in which most uses of authentication technology will be particular to a specific application or business process.  Alternatively, the authentication technology may be used for a potentially unlimited number of purposes, but solely within the context of a particular industry or community of users who have some commonality of interest.  Either way, the critical feature of this paradigm is that most uses of certificates will be bounded in some fashion, and that the use of the certificate within those boundaries will be defined by an agreement or series of agreements.  Although it amounts to saying the same thing, a critical point of distinction from the Universal Authentication paradigm is that, in the Bounded Authentication paradigm, there are no potentially relying parties who are not in privity with the sending party through one or more agreements concerning the use of the technology.  In this paradigm, there are no “strangers” to an authenticated communication.

             Although not a necessary element of the Bounded Authentication paradigm, people who are oriented toward this paradigm tend to believe that limited-purpose attribute certificates will be much more common than general-purpose identity certificates.[5]  Most certificates will authenticate some attribute that is relevant to a specific application or business process (e.g., the authority to enter into a contract on behalf of a company, the right to access protected content, or the fact that the certificate holder bears a particular kind of license or credential).  A related assumption of this paradigm is that most certificates will be issued to a certificate holder by some business or organization with which the certificate holder has a pre-existing relationship – most commonly, the certificate holder’s employer, but it could also be, for example, the certificate holder’s bank or a company with which the certificate holder does business.

             In the Bounded Authentication paradigm, the extent to which, and the circumstances under which, a person may rely on a certificate for a particular purpose are defined almost exclusively by a relevant agreement or series of agreements among the parties that use the technology.  That agreement, which could take the form of a direct contract between the parties or a “system” agreement to which all parties subscribe, will likely define, inter alia, the process by which certificates are issued and revoked, the types of transactions for which they may be used and under what conditions, the legal effect of any electronic signatures that are created pursuant to the agreement, and the allocation of liability among the parties for such risks as the compromise of a private key or the use of the certificate for an unauthorized purpose.

             As in the Universal Authentication paradigm, the core element of trust in the Bounded Authentication paradigm arises principally from two sources, although these sources are rather different.  In this case, they are: (1) the terms and conditions of any agreement or agreements that govern the use of certificates within the bounded space; and (2) the enforceability of any such agreement or agreements in jurisdictions where the agreement may need to be enforced.  In these respects, the operation of a public key infrastructure for some purpose is essentially a private concern, although its utility could be affected by external laws and regulations that cast doubt on, or fail to give effect to, the terms and conditions of the relevant agreement or agreements.[6]

C.          Policy Implications

            As noted at the outset, the two paradigms described above are not meant to be exclusive of each other, and have only limited value in predicting how the use of authentication technologies will evolve.  They are intended, instead, to provide a framework for evaluating and prioritizing any policy  or standards-setting activities that an organization like the ITU might undertake.  To begin this process, we have set forth below a comparison of the key policy considerations and needs with respect to each paradigm.

             As is evident from the foregoing, the needs of the two paradigms are quite different, and sometimes  conflict with each other.  Our objective in identifying these differences is not to suggest that the ITU and other organizations with responsibility in this area must make a decision among conflicting alternatives, but rather to suggest that: (1) depending upon a sense of which paradigm is likely to be the dominant paradigm, there are likely to be different priorities for action; and (2) whatever actions the ITU and other organizations choose to take in this area, they should be neutral with respect to each paradigm i.e., they should not take actions that impede the emergence of different authentication models.

III.        Issues for Discussion

             The primary objective of this two-day Meeting  is to evaluate the legal and technical obstacles to the use of authentication technologies in cross-border applications, and to consider the role that the ITU and other organizations can play in overcoming these obstacles.  The implications for the telecommunications community should also be a focal point for the discussions.  Toward that end, we have attached to this Paper a suggested outline of basic issues that should be discussed in evaluating potential solutions.  While the basic structure of the outline is intended to serve as an agenda for discussion, the issues raised under each heading are meant to be illustrative, not exclusive.

             Without prejudice to the course that the discussion might take, and the conclusions that might be reached, we have attempted below to draw together some of the basic themes of this Paper as they relate to the issues for discussion.  While not covering all of the specific issues set forth in the outline, we hope to catalyze the discussion with a few observations on basic issues.

A.          An International Agreement on “Signatures” and “Identity?”

            One of the conclusions that one can take away from the review of basic issues in Parts I & II of this Paper is that the question of identity is at the heart of many of the policy debates in this area.  On the one hand, there is a strong sentiment in some countries and in some industry sectors that there is a need for a highly reliable and secure form of certificate that is bound to the certificate holder’s physical identity.  Many believe that this is the only basis upon which to achieve a degree of non-repudiation that should be legally recognized as equivalent to a “signature.”  On the other hand, there are many who believe that the need for certainty with respect to a signer’s identity is a sliding scale, and should be evaluated on a case-by-case basis in light of the nature and purpose of the transaction and in accordance with traditional methods of evidentiary proof.  Overlying this issue is whether, and under what circumstances, the parties to a transaction should be allowed to agree on what constitutes a valid signature, at least as between the parties to the transaction.

             If this circle is not squared, we are likely to see the emergence of fundamentally discordant standards as to what constitutes a “signature” in different jurisdictions.  The result would be a lack of legal certainty in cross-border transactions that depend upon the validity of electronic signatures.  Ironically, the outcome could be significantly worse than the status quo with respect to the recognition of traditional signatures in international commerce, if countries were to impose technical standards and licensing requirements for electronic signatures that have no counterpart in the world of traditional signatures.

             What, then, are the options for trying to avoid this outcome?  While this issue has been much debated, we perceive the following as among the most likely solutions:

·        Reach an international agreement on a definition of “electronic signature” that incorporates “a scalable set of signature requirements based on the security needs of the particular application.”^[7]  As our colleagues Christopher Kuner and Anja Miedbrodt observe, the 1996 UNCITRAL Model Law on Electronic Commerce already moves down this path by stating that an electronic signature must be “as reliable as was appropriate for the purpose for which the data message was generated or communicated, in the light of all the circumstances, including any relevant agreement.”  Some countries – particularly those in the civil law tradition – may not, however, be willing to accept so open-ended a standard, at least for the purpose of fulfilling non-contractual form requirements.  This may be one reason why a convention proposed by the United States government, and based roughly on the Model Law, has not yet advanced.

·        Either by international agreement, by a Memorandum of Understanding or through other international  guidelines, or through the natural course of events, countries can adopt “two-tier” legislative models that allow parties to prove a broad class of electronic signatures, while conferring heightened legal status to certain types of “secure” electronic signatures.  This is generally the approach taken by the current draft of the UNCITRAL Uniform Rules on Electronic Signatures.  This approach will only ameliorate the problem, however, if countries do not require the use of “secure” electronic signatures for various form requirements that affect international commercial transactions.  In other words, to the extent that the use of “secure” electronic signatures is mandatory, as opposed to merely conferring a presumption, these requirements should be limited to areas of the law that do not have a significant impact on commercial transactions (e.g., trusts, family law, real property transactions, etc.).  Moreover, two-tier laws should explicitly give effect to contractual agreements concerning the use and recognition of electronic signatures, so as to ensure that global contract-based authentication models do not run afoul of national legal requirements.

·        In a somewhat different vein, the creation of a global web of cross-certified CAs could  lessen the need for international agreements on the recognition of electronic signatures, provided that the CAs within the system followed practices that generally fulfilled the requirements of major commercial jurisdictions.  This system of cross-certification could either be hierarchical, with a single entity establishing uniform practices for all CAs to follow, or could take the form of a more distributed network of CAs following generally comparable practices.

B.          Accommodating Bounded Authentication

            A pervasive theme of this Paper has been that many of the most extensive and far-flung implementations of authentication technologies will take place within a contractually-bounded space.  These communities of users could be very small – as few as two – or could potentially involve millions of people around the world, as is the case with Bolero and Identrus.  As is the case with international commerce generally, the power to contract is probably the most effective means of overcoming national legal differences, but only if the terms of those contracts are enforced – a problem that global traders have faced for centuries.

             The means by which national laws should give effect to contractual agreements concerning the use and recognition of electronic signatures can be reduced to several key principles, some of which have already been mentioned:

·        To the extent that countries adopt laws or regulations that give effect to electronic signatures, those laws or regulations should explicitly recognize that parties may agree by contract what constitutes an electronic signature, and what its legal effect will be, at least as among those parties.  Exceptions to this basic principle should be limited and should not arise in areas that would affect the great bulk of international commercial transactions. 

·        By the same token, those countries that prescribe technology standards for electronic signature devices should allow parties to vary those requirements by agreement – again, at least in those areas that are likely to affect international commercial transactions.  (A government might, for example, prescribe certain standards for the use of electronic signatures in communications with the government.)

·        Similarly, any licensing requirements for CAs or other providers of trusted services should not extend to entities that provide those services within the context of a contractually-bounded authentication model. 

C.          Facilitating Universal Authentication

             As suggested by the table in Part II describing the principal needs of the two different paradigms of authentication, achieving global interoperability under the Universal Authentication paradigm is largely a question of developing harmonized practices and technical standards.  Harmonized practices and standards would permit other countries, certificate authorities, and relying parties to have greater confidence in certificates that originate in a foreign jurisdiction, and would also facilitate technical interoperability.  Shared understandings at the international level may facilitate this process.

             In the context of this discussion, there are two issues that merit particular attention: (1) what harmonized practices and standards are most likely to facilitate cross-border usage and recognition; and (2) what institution or institutions should undertake to develop those practices and standards and by what means?

             With regard to the first question, some of the possible candidates for harmonization include:

·        On the basic question of identity, it could be useful to have a harmonized set of certificate practices for the issuance of highly-reliable identity certificates.  The IETF has, in fact, already begun work on the format of such a certificate, although the IETF draft does not address the certificate practices underlying these certificates.  The existence of these standards could facilitate cross-border recognition of electronic signatures in applications where non-repudiation is critical.

·        In a similar vein, harmonized message formats could make it easier to identify and evaluate critical elements of any relevant CPS or certificate policy, even on an automated basis.  For example, a standardized methodology for expressing the manner in which a certificate was issued to an individual (e.g., “two forms of government-issued identification presented in person to the CA”) could allow relying parties to evaluate the reliability of the certificate without having to examine the entire CPS.  Likewise, a standardized methodology for expressing limitations on use of the certificate (e.g., by reference to the value or nature of the transaction) could facilitate certificate evaluation.

·        Lastly, a model cross-certification agreement could prevent the need to negotiate potentially thousands of such agreements, and could facilitate “transitive” cross-certification (i.e., CA 1 recognizes CA 2; CA 2 recognizes CA 3; therefore, CA 1 recognizes CA 3).  Even more expansively, the creation of a global network of CAs following the same or comparable practices could, as described above, facilitate cross-border recognition and interoperability.

             With respect to the technical issues, it is worth noting that there is already a large amount of standards-setting activity already underway.  Joint Technical Committee 1/27 of the ITU and the ISO, which was originally responsible for the development of X.509, continues to develop standards relating to specific aspects of public key cryptography.[8]  As befitting the position that it holds in relation to the X.509 standard, much of the work of JTC 1/27 is of general applicability to all X.509 implementations.  As an example, several updated and new ITU-T Recommendations planned for release include:

·        A new version of X.509 (V6);

·        X.ttp1: Guidelines on the Use and Management of Trusted Third Party Services (includes discussion of mutual recognition of services by different TTPs);

·        X.ttp2: Specification of TTP Services to Support the Application of Digital Signatures; and,

·        X.sio: Security Information Objects.

Other organizations, such as the Internet Engineering Task Force, have also undertaken standards-setting projects relating to the use of X.509 in specific applications, including Internet-related applications.[9]  Among the standards-track documents and drafts that the IETF is currently considering are:

·        A new certificate format and certificate revocation list profile for Internet PKI applications;^[10]

·        The format and contents of a “qualified certificate” for use in applications where non-repudiation is critical;^[11]

·        Several operational standards for the Lightweight Directory Access Protocol (LDAP);

·        A standard-form outline of certificate practice statements and certificate policies;^[12]

·        A profile for the use of X.509 attribute certificates, which will typically be linked to one or more identity-based certificates;^[13] and

·        Specifications for the operation of time-stamping services.^[14]

             The World Wide Web Consortium (W3C) is also working on syntax and encoding rules for digital signatures using the Extensible Markup Language (XML).[15]

             The amount of activity already underway in this area naturally raises the question of how the different standards organizations that are active in this area should co-ordinate their respective activities.

D.         The Role of Telecommunications Companies

            Telecommunications companies have not, to date, played an extensive role in the emerging “authentication industry,” although in some respects they are well-positioned to do so.  To begin with, telecommunications companies tend to have relationships with very large portions of a country’s business and residential communities, and are often viewed as trusted organizations.  As such, they are well-positioned to act as a “network of trust” among companies and individuals that do not necessarily have a pre-existing relationship with each other.  Compared to many other kinds of companies, they are also relatively well-positioned to verify identities and certain types of attributes that may be authenticated by a certificate. 

             At the international level, telecommunications companies are already accustomed to laying the technical and legal foundations for globally interoperable networks, and thus may have some advantage when it comes to putting in place multinational public key infrastructures.  Moreover, telecommunications companies are both ubiquitous but also relatively few in number within each country, which may make it easier to develop well-ordered, interoperable public key infrastructures.

             Among the issues that are likely to concern telecommunications companies as they contemplate providing different kinds of authentication services is the core issue of liability. Unlike traditional telecommunications services, where the telecommunications company is essentially providing a conduit for the transmission of voice or data, authentication services would require the telecommunications company to make some positive assertion about the identity or attributes of one or more parties to a communication.  Although national law may permit the telecommunications company to limit its liability for these assertions either by contract or through devices such as CPSs, the provision of authentication services nonetheless exposes the telecommunications company to new forms of risk – a factor that may be of concern to corporate executives and regulators alike.  The clear authority to limit liability is therefore an important legal objective for telecommunications companies entering the authentication business, as it is for any other company in this area.

OUTLINE OF ISSUES FOR DISCUSSION

I.           Building a Global Framework

A.          What are the possible objectives of any international agreement or guidelines?

1.    Ensure that electronic signatures are given legal effect comparable to hand-written signatures, at least in those areas of the law that affect commercial transactions.

2.    Establish reasonably uniform standards for the provision of certificate authority services, at least for “universal” applications.

3.    Establish basic principles by which countries agree to enforce contractual agreements concerning the use and recognition of electronic signatures.

B.          What are the potential elements of any international agreement or guidelines?

1.    Signature-Related Issues

a.    A definition of “electronic signature.”

                           (i)   Intent-based definitions (cf. UETA).

                           (ii)   Criteria-based definitions (cf. UNCITRAL Model Law Article 7).

                           (iii)  Technology-based definitions (cf. national digital signature laws).

                           (iv)  A “sliding scale” of definitions for different applications.

b.    Basic principles concerning the legal effect of electronic signatures.

                           (i)   Non-discrimination (e.g., parties allowed to prove in same manner as hand-written signatures).

                           (ii)   Affirmative legal effect.

                           (iii)  “Presumptions” for certain types of electronic signatures.

                                     (a)       What presumptions?

                                     (b)       What types of signatures?

c.    A statement of the types of laws to which the signature provisions apply.

                           (i)   How to define the scope of exemptions so that the agreement remains meaningful, and yet allows countries to exempt areas in which electronic signatures are not appropriate?

                           (ii)   Consumer protection issues.

2.    CA-Related Issues

a.    PKI elements

                           (i)   Issuance procedures.

                           (ii)   Revocation procedures.

                           (iii)  The rights and duties of certificate holders and relying parties.

                           (iv)  The liability of CAs.

                           (v)  Security standards for root keys, audit procedures, etc.

b.    Licensing issues

                           (i)   Should licensing ever be mandatory for legal effect, or should this practice be prohibited by agreement?

                           (ii)   How to accommodate the interaction between regulated and unregulated CAs.

3.    Contract Issues: How to draft a party autonomy clause so as to ensure legal effect for most commercial applications of authentication technologies?

C.          What are the Appropriate Instruments and Forums for Developing a Global Framework?  What Can Each Forum Contribute?

1.    ITU

2.    UNCITRAL

3.    OECD

4.    Multilateral negotiations

II.         Accommodating Bounded Authentication

A.          Other than the basic issue of enforcing contractual agreements concerning the use and recognition of electronic signatures, what are the other obstacles that these systems face in cross-border usage?

1.    Licensing requirements.

2.    Mandatory technical standards.

3.    Foreign origin of entity that authenticates signature.

B.          If properly structured, could large-scale contractually-based authentication models obviate the need to create an international technical and legal framework for PKIs?

III.        Facilitating Universal Authentication

A.          Standards and Harmonization

1.    Policies and Practices

a.    Is there a need for harmonized certificate practice statements and/or certificate policies for different types of applications, e.g., non-repudiation?

b.    Could any such harmonized CPSs and certificate policies be drafted at a level of detail that made them both useful and globally applicable?

c.    Could harmonized CPSs and/or certificate policies facilitate cross-border recognition of electronic signatures, even in the absence of an international agreement or an applicable cross-certification agreement?

2.    Technical Standards

a.    Standardized certificate profiles

                           (i)   Identity certificates / “qualified” certificates.

                           (ii)   Attribute certificates.

b.    Standardized message formats

                           (i)   Limitations on usage.

                           (ii)   Limitation of CA liability.

                           (iii)  Underlying elements of relevant CPs, including nature of certificate issuance and revocation procedures.

                           (iv)  Technical specifications of signature creation device.

c.    Standardized extension usage.

d.    Standards for CA operational procedures and requirements.

                           (i)   Security procedures and standards.

                           (ii)   Audit procedures.

                           (iii)  Financial standards.

B.          Cross-Certification

1.    Is there a need for a model  cross-certification agreement?

2.    How to avoid the need for potentially thousands of bilateral cross-certification agreements?

3.    To what extent is cross-certification a solution to the problem of cross-border recognition of electronic signatures?

4.    What role can be played by “global” root authorities?

C.          Institutions

1.    ISO/ITU/IEC.

2.    IETF.

3.    Industry-Specific Organizations.

IV.        The Role of Telecommunications Companies

A.          What are the natural competencies of telcos in the authentication area? 

B.          What role, if any, can telcos play in facilitating cross-border usage of authentication technologies?