In 2001 the Hungarian Parliament adopted the Digital Signatures Act (35/2001). This act applies to any legal relationship other than family or inheritance issues. Preparations for the act's introduction were reported in Government to Regulate Electronic Signatures.

Pursuant to this act, there are three types of electronic signatures, which have different legal recognition and effects.

Electronic Signatures

Section 3 of act provides that an electronic signature or electronic communication (eg, an electronic document containing an electronic signature) will be accepted as evidence and as a legal statement, and will have legal effect, although it will not be considered a 'written communication'. Its effects may not be disputed solely on the ground that the signature, communication or document exists only in electronic form.

Advanced Electronic Signatures

Section 4(1) provides that where a statute requires that a certain document be provided in written form, an electronic communication will satisfy this requirement if it contains an advanced electronic signature.

Qualified Electronic Signatures

Pursuant to Section 196(1)(f) of the Civil Procedure Act (3/1952), as modified by the Electronic Signatures Act, an electronic communication which contains a declaration, an approval of a declaration or a commitment to abide by a declaration, and which is signed with a qualified electronic signature, shall be regarded as a public document or a private document providing full evidence, as long as the authenticity of the signature is evidenced by a qualified certificate. A qualified certificate may only be issued by a qualified certification service provider.

Following the adoption of the Electronic Signatures Act, numerous acts were amended in order to comply with its provisions. As a result, several acts now provide for the use of electronic signatures in different kinds of transactions. For instance, Section 44 of the Capital Markets Act (120/2001) now provides that:

"an offering statement made by the investor to acquire any stock shall only be valid if it is made in writing, in an electronic statement with a qualified electronic signature or through an exchange trading system approved by the authority."
Section 49(4) further provides that "an auction offer and its acceptance must be made in writing or in an electronic statement bearing a qualified electronic signature, or through an exchange trading system approved by the authority".

Similarly, Section 167(5) of the Accounting Act (100/2000) provides as follows:

"For accounting purposes, only electronic documents which are executed by qualified electronic signature and time stamp will be accepted, and then only if they satisfy the requirements set forth in this act and if the validity of the certificate issued by the certification service provider can be guaranteed for 10 years in the case of the annual report and eight years in the case of accounting documents."

In addition, Section 210(1) of the Act on Credit Institutions and Financial Enterprises (112/1996) states that:

"all contracts of financial institutions for financial services and auxiliary financial services must be made in writing or in the form of an electronic document executed with a qualified electronic signature. The financial institution must provide original copies of the written contracts to the customer."

In order to facilitate the practical use of electronic signatures in business transactions, supplementary regulations which implement these new provisions also had to be introduced. Consequently, in 2001 rules were adopted which govern the services provided in connection with electronic signatures, as well as the service providers themselves. Rules relating to the appointment of certification service providers were also adopted.(1) In addition, the government recently adopted rules relating to the operation of qualified certification service providers.(2)

These decrees and rules have established a legal framework that allows for the efficient use of electronic signatures and provides for the operation of certification service providers. However, the standards which certification service providers must meet under these regulations are very high and thus make their operation very costly. In spite of this, the legislature intends certification service providers to be private, market-oriented entities that receive no financial support from the Hungarian Communication Authority.

It therefore remains to be seen whether certification service providers will actually commence activities in Hungary, even though the framework for this has been established. As of May 2002 only three advanced certification service providers had been registered, and as yet no qualified certification service providers have registered with the Hungarian Communication Authority (www.hif.hu)


For further information on this topic please contact Judit Budai or Anna R├ínky by telephone (+361 353 1255) or by fax (+361 353 1229) or by email ([email protected]).


Endnotes

(1) Decree of the Prime Minister's Office 16/2001 (9.1) and Decree of the Prime Minister's Office 15/2001 (8.27) on electronic signature services and service providers.

(2) Decree of the Prime Minister's Office 2/2002 (4.26) on security requirements relating to qualified electronic signature services and service providers, and Decree of the Prime Minister's Office 7/2002 (4.26) on registering experts in relation to electronic signatures.