As from July 1, 1999, the "Basic Law on Electronic Commerce" and the "Electronic Signature Act" come into force in Korea. These two acts are expected to build up Korea's information infrastructure so badly needed in this information age.

Existing acts, for example, the "Act for the Promotion of Trade Business Automation", provide for administrative supporting measures for a closed network, like EDI, in a limited area. Moreover, they are ineffective with respect to the validity and security of electronic messages in general use.

With Internet commerce pervading every sector of our daily life, the government has to establish legislation to ensure legal security of electronic messages and electronic signatures in line with global standards.

Basic Law on Electronic Commerce

To that end, the government has built upon the work of the UN Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce as well as the American Bar Association's Digital Signature Guidelines. First of all, the drafters incorporated some of the basic concepts from the UNCITRAL Model Law on the validity and security of electronic messages.

The Basic Law provides that an electronic message shall not be denied paper-based effect or validity on the grounds that it is in the electronic form, and that the digital signature certified by the authorized certification authority shall be deemed such signature or seal as prescribed by the relevant laws. Also the electronic messages shall not be denied admissibility in evidence in legal proceedings on the grounds that it is in the electronic form.

To ensure the maximum security and privacy of electronic messages, the Basic Law calls for electronic traders not to use the personal information collected through electronic commerce beyond the alleged purpose for such business without prior consent of the relevant person. The Basic Law allows electronic traders to use the cryptographic techniques to ensure the security and reliability of electronic commerce.

According to the Basic Law, the government is to prepare necessary policy measures based on such principles as the private sector's initiatives, minimal government restrictions, enhanced reliability of electronic commerce, and the strengthening of international cooperation in this area. In addition, the government shall formulate and carry out measures on the standardization of electronic commerce and consumer protection.

Electronic Signature Act

On the other hand, the "Electronic Signature Act" stipulates the digital signature using an asymmetric cryptosystem with a pair of public and private keys. In addition, the Act provides for the operation and supervision of authorized certification authorities.

With the implementation of the information infrastructure legislation, many legal issues, including formalities of contracts, will be resolved in due course. Furthermore, the most significant impact is expected on the banking community, which has been eager to make use of new information technology. Now we see a considerable number of foreign banks have started cyberspace banking.

As a variety of digital cash is in use, and, in particular, the authorities concerned have already endorsed the security system, a small group of Korean banks are going to operate cyberbanking through the Internet. (http://www.banktown.com)

Internet banking will be used in both retail and wholesale banking, and properly satisfies the financial needs of customers. Korean banks will lag behind foreign banks if domestic banks pay little attention to Internet banking and the next generation banking market.
(Source: Abstract from the KDB Monthly Bulletin, May 1999)