28th June 2023
Walker Morris has been tracking legal and practical developments associated with the electronic execution of documents. See our report from February 2022 and previous briefing. In this article, following the publication of the Final Report by the expert Industry Working Group on Electronic Execution of Documents, Walker Morris Director and Commercial Dispute Resolution specialist Louise Norbury-Robinson outlines the key take-away points.
The Industry Working Group’s Final Report addresses:
The Final Report identifies that cross-border legal agreements may need to be executed in accordance with the relevant laws of various parties to such agreements. This begs the question whether electronic execution is valid or enforceable under the laws of a different jurisdiction. Differing standards for the execution of documents may prevent cross-border parties’ acceptance of e-signatures, or may result in the failure to meet the requirements for e-signatures in certain jurisdictions. These issues are exacerbated by a lack of certainty as to how courts will evaluate e-signatures in different jurisdictions, and by the lack of any international accepted standard to which electronic execution platforms are held.
The Report suggests that emphasis should be placed on establishing an international norm and advocates international organisations such as UNCITRAL. The Report states that mutual recognition and cross-border bi-lateral agreements dealing with electronic execution are required. It suggests that, in the interim, a body (such as the Information Commissioner’s Office) could establish a ‘one stop shop’ repository for information on international recognition, standards and requirements. Contracting parties could also agree, from the outset, to use the same electronic signing platform, to minimise the risk of legal and practical difficulties and disputes.
The Report also flags the further challenges occasioned by the fact that UK financial institutions continue to require wet ink signing for certain transactions, and perhaps demonstrate a reluctance to adopt electronic execution. It advocates the need for education and reinforcement of the positive attributes of e-signing.
An issue often raised in relation to the use of electronic execution is the risk of fraud. The Final Report considers this, with a particular focus on signatories to deeds. It notes that the presence of an electronic signing platform in the deed authentication process has several significant advantages over paper/wet ink:
The Report refers to trust schemes such as that in operation in the residential conveyancing sector. Trust in platform providers is fundamental to wider adoption and use generally. One possible approach to achieving this is the market-forces view (that only the adequate or best providers will earn trust and survive). Another is the implementation of some sort of regulatory oversight. The Report doesn’t make a recommendation either way, but the issue has been put to consultation and is subject to future consideration by the UK government.
The Final Report also includes best practice guidance for the use of electronic execution. The guidance can be distilled into the following five high-level principles, but also includes detailed, practical advice and technical information:
The Industry Working Group’s Final Report discussed in this briefing is a great ‘go to’ document for anyone wanting to get to grips with electronic execution. Individual queries will always arise, though, as every case, transaction and party will have its own quirks. If you require any training or assistance with staff education and/or the implementation of internal policies on electronic execution, or if you have any queries or concerns in relation to the execution, validity or enforcement of e-signatures, please contact Louise Norbury-Robinson, or any member of the Commercial Dispute Resolution, team.
As the law, practice and guidance around electronic execution continues to evolve, Walker Morris will monitor and report on any key developments.
 UNCITRAL has been very active in electronic commerce and create a model law on e-signatures which sets out a number of conditions which need to apply for an e-signature to be treated as reliable.