Menu

Where are we up to with e-signatures?

Print publication

19/02/2016

The concept of the electronic signature has been around since the turn of the century but we are still a long way from gaining critical mass. There are, however, just the first suggestions of a possible momentum shift. The European Commission hopes that its Electronic Identification Regulation [1], the majority of the provisions of which come into force on 1 July this year, will give further impetus to this shift.

The position in the UK is governed by the Electronic Communications Act 2000 (the ECA). The ECA allows for contracts to be signed by electronic means. Section 7 of the ECA confirms that electronic signatures may be admissible in legal proceedings to determine the authenticity of any electronic communication in which they are incorporated. This makes it possible for a person to validly “sign” a document without the need for a “wet ink” signature.

A Law Commission report in 2001 advised that statutory requirements for “in writing” and “signature” could be fulfilled by electronic means. The threshold requirement for a valid signature is whether the conduct of the signatory indicates an authenticating intention to a reasonable person i.e. that he or she agreed to be bound by the contract.

After a lively start to the century, things have quietened down and the developments, such as there have been, have come through the courts rather than legislative channels. For example, in a 2012 case an email that contained the name of a party was held by the Court of Appeal to be “in writing” and “signed” (and, as such, satisfying the requirements for a guarantee under the Statue of Frauds 1677) as the inclusion of the name gave authenticity to the contract [2]. This, however, is the case with simple contracts – not with deeds, for which there is still no clear authority. Prudence dictates wet ink signatures for deeds and, in any event, Land Registry practice is not to accept electronically signed documents for registration.

Part of the reason for the slow take-up of electronic signatures is the complexity of the E-Signature Directive [3] (implemented in the UK by the ECA and the Electronic Signatures Regulations 2002). The Directive distinguishes between “electronic signatures” and “advanced electronic signatures”. Under the Directive, ordinary “electronic signatures” may or may not be admissible depending on the circumstances. By contrast, “advanced electronic signatures” will be.  However, the procedure for generating an “advanced electronic signature” is not wholly straightforward – it must be based on a qualified certificate and created by a secure signature creation device. Certification service providers (CSPs) were established to verify the advanced electronic signatures and much of the focus of the 2002 Regulations and subsequent discussion has centred on the regulation of the CSPs rather than on the lawfulness of electronic signatures in different contexts.

The Electronic Identification Regulation does not solve this difficulty. The purpose of the Regulation is to establish rules for mutual recognition of electronic identification schemes within the EU and thereby facilitate cross-border e-commerce. The Regulation covers electronic signatures, electronic seals, electronic stamps and electronic registered delivery services. However, they all follow the existing position, namely that an electronic signature should not be inadmissible and denied legal effect simply because it is electronic but that only an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures, is automatically accorded the same legal effect as a handwritten signature.

It is doubtful that the Regulation will prompt an uptake in electronic signatures by commercial parties. The Commission’s focus at present is on the public sector, for example in e-procurement. So far, it is in the fields of e-government and e-banking that most use is made of electronic signatures. It is possible that a big take-up by public bodies (and banks) may have a knock-on effect on the private sector and that business people who are using electronic signatures to access, for example, healthcare or tax records, may start to ask why they cannot do the same in their corporate and commercial transactions.

______________________

[1] Regulation (EU) No 910/2014
[2] Golden Ocean Group v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265
[3] Directive 1999/93/EC