British bill may `drive' e-commerce to Republic

The British government's Regulation of Investigatory Powers (RIP) Bill will badly damage Britain's e-commerce environment and could encourage e-business companies to locate in the Republic instead, a conference at the London School of Economics has heard.

However, Mr Charles Clarke MP, Home Office Minister of State, told the audience at Scrambling for Safety 2000 that the RIP bill would help "make the UK the best place in the world for e-commerce".

The Labour government was "trying to build a partnership with industry", he said. E-commerce is expected to be worth £24 billion sterling in Britain by 2003, and 15-20 per cent of all business-to-consumer transactions may be carried out over the Internet, one speaker noted earlier.

The controversial bill allows for the imprisonment of people who say they have lost their private or business encryption "keys", mathematical formulas that allow e-mail messages and computer documents to be encoded and decoded.

The bill, which had its second reading in Parliament earlier this month, would also compel Internet service providers to build in "reasonable interception capabilities" to networks and could force ISPs to hand over data traffic information - e-mail destinations, website visits, IP names - to law enforcement without a search warrant. It includes provisions for listening in on mobile and satellite phone calls, intercepting pager messages, and bugging office switchboards.

Mr Clarke, who acknowledged the bill deals with "very difficult and problematical issues", said he believed RIP would protect human rights and individual privacy, concerns which are at the heart of debate over the bill.

But opposition MPs and legal experts disputed Mr Clarke's interpretation of the bill. One audience member said he believed the bill would drive companies out of Britain "to Ireland and other, more open countries".

The Irish e-commerce Bill, which will be published next week, clearly states that law enforcement will not have the right to force individuals or businesses to surrender encryption keys.

Speaking at the conference, Mr Nigel Hickson of the Department of Trade and Industry claimed that the Irish Bill only protected encryption keys in the case of the use of digital signatures and was a "minor" element of the Irish legislation.

But this claim was dismissed on Wednesday evening by senior Department of Public Enterprise spokesman Mr Brendan Tuohy, who said the protection of all encryption keys was "a fundamental principle of the e-commerce Bill and an e-commerce environment and an important part of our e-commerce philosophy."

If approved, the e-commerce Bill would give the Republic the strongest legal climate internationally protecting the use of encryption. It is understood that the Government sees this provision as an important competitive advantage for the State.

While the Department of Justice must eventually draft a Bill considering encryption in the context of criminal law, Mr Tuohy said that the Government's e-commerce Bill would provide the State's only legislative framework on encryption for the foreseeable future. It is understood the Bill would also be likely to establish legal precedent which would shape any further legislation.

Mr Ian Walden, a lawyer who provided a legal perspective on RIP on behalf of the Alliance of Electronic Businesses (AEB), said even payroll and personal data could fall under the remit of the Bill. He noted that internationally, the bill will be seen to create a discouraging e-commerce environment.

Under one RIP provision, company directors would be held legally responsible for company data and the control of a business's encryption keys. Directors would thus be subject to fines or imprisonment if keys were lost.

Another provision would allow the British Secretary of State to issue surveillance warrants to be used against companies based outside the UK, according to Mr Danny O'Brien, a member of anti-RIP pressure group STAND.

"It's not just going to be a question of whether companies will want to locate here to do business. Its going to be a question of whether they can even do business with companies here," he said.

Many changes needed to be made to the existing Bill, argued Mr Richard Allan, Liberal Democrat frontbench spokesman on RIP.

Ironically, the Bill was introduced in order to give Britain a national framework for human rights law. Civil rights experts expect RIP to be challenged in the European Court of Human Rights if it is adopted.