COVID-19: Pandemic disclosed the vital role of electronic signature
COVID-19: Pandemic disclosed the vital role of electronic signature
September 07, 2020
By Fadi Hassoun
As COVID-19 continues to spread, with new active cases being reported on an almost daily basis, the current status quo in the United Arab Emirates (the “UAE”) is governed by state measures imposing quarantines, sanitary cordons and social distancing restrictions in an attempt to stop, or at least control, the effects of the COVID-19 outbreak.
Despite the relaxation of some of the above measures, operating remotely seems to be the predominant way of carrying out business operations. In fact, many businesses and public entities are increasingly resorting to digital tools allowing them to validly sign documents electronically.
As a matter of fact, in the UAE, electronic signature has been recognized and regulated by virtue of Federal Law No. 1 of 2006 concerning Electronic Transactions and Commerce (the “E-Commerce Law”). Electronic signatures are defined under the E-Commerce Law as “any letters, numbers, symbols, voice or processing system in electronic form applied to, incorporated in, or logically associated with an electronic message with the intention of authenticating or proving the same” (E-Commerce Law, Art.1). Further to the promulgation of the E-Commerce Law, an amendment to the Federal Law No. 10 of 1992 concerning evidence in civil and commercial transactions was enacted by virtue of Federal Law No. 36 of 2006 introducing the concept of recognizing electronic signatures as evidence in civil and commercial transactions.
Moreover, and amidst the Covid-19 pandemic, the UAE Cabinet has issued on March 31st, 2020, the resolution no. 18 of 2020 concerning the grant of temporary licenses for the use of digital transaction technologies for notarial services.
As detailed subsequently in this article, it should be noted that, in 2019, the UAE Ministry of Justice issued in 2019 two resolutions (the “MOJ Resolutions”), which further shows UAE’s openness to accept electronic dealings and electronic signatures. The two resolutions are as follows:
- Ministerial Resolution No. 259 of 2019 concerning the procedural manual for regulating litigation using electronic and remote communication technologies in criminal proceedings; and
- Ministerial Resolution No. 260 of 2019 concerning the procedural manual for regulating litigation using electronic and remote communication technologies in civil proceedings.
Although the E-Commerce Law provides that electronic signatures may be adopted for any contractual engagement or commercial activity concluded or performed through electronic means, however, such law explicitly excludes certain types of documents that cannot be executed through electronic signature, which are the following:
- Transactions and matters related to UAE Federal Law No. 28 of 2005 concerning personal affairs (e.g. marriage, divorce, wills etc.);
- Immoveable property title deeds;
- Negotiable (financial) instruments;
- Documents that are legally required to be authenticated by a notary public; and
- Other documents or transactions excluded by special applicable laws.
On another note, the E-Commerce Law differentiates between three categories for e-signatures: (i) secure electronic signatures, (ii) other types of electronic signatures and (iii) foreign electronic signatures. In light of the E-Commerce Law we have set out below a brief description for each category of e-signatures.
Secure Electronic Signature
Such type of electronic signature is considered as the most protective from a legal perspective since such Secure Electronic Signatures, as long as their authentication process meets certain criteria, would be considered as valid and would have probative force unless otherwise proven.
The criteria that Secured Electronic Signatures should meet are listed under Article 17 of the E-Commerce Law and provide that an electronic signature would be considered “Secure” if at the time it was made:
- It was unique to the concerned signatory;
- It was capable of identifying such signatory;
- It was, at the time of signing under the sole control of the signatory in terms of the creation data and the tools used; and
- It was linked to the relevant electronic record in a manner that provides reliable confirmation as to the validity of such electronic signature.
Moreover, and as mentioned above, the reliance on Secure Electronic Signature is considered to be reasonable unless otherwise proven.
In light of the above, by virtue of the Ministerial Resolution No. 1 of 2008 concerning the issuance of certification service provider regulations, the UAE Telecommunications Regulatory Authority (the “TRA”) has been appointed as the authority responsible for the licensing, approval, monitoring and overseeing of the activities of certification service providers in the UAE, in line with the provisions of Article 20 of the E-Commerce Law.
According to the latest information shared on the TRA’s websites, there are currently two entities licensed by the latter to act as certification service providers. Such entities are DocuSign, Inc. (DocuSign) and Adobe Systems Software Ireland Limited, which provide electronic signature and certification tools that comply to a certain extent with the Secure Electronic Signature criteria provided by the E-Commerce Law (i.e. unique tool to the signatory, allows the identification of the signatory etc.).
Other types of electronic signatures
In addition to the Secured Electronic Signatures, the E-Commerce Law stipulates that electronic signatures that do not comply with the criteria listed under Article 17 (the “Non-Secure Electronic Signatures”), would still have legal force and effect, provided that reliance on such electronic signatures is “reasonable” according to the provisions of Article 18.
Unlike the Secure Electronic Signatures, reasonableness is not presumed for Non-Secure Electronic Signatures, therefore, in order to determine whether it was reasonable for a person to have relied on a Non-Secured Electronic Signature, several factors which are listed under Article 18.3, should be taken into consideration and which consist mainly of the following:
- The nature and the value or importance of the underlying transaction that the Non-Secure Electronic Signature was intended to support
- Whether the relying party had applied proper measures to determine the reliability of such Non-Secure Electronic Signature
- Whether the relying party was aware or should have been aware of the fact that the Non-Secure Electronic Signature had been compromised or revoked
- Whether the relying party had previously accepted the Non-Secure Electronic Signature from the same signatory.
Foreign electronic signatures
The last category of electronic signatures recognized under the E-Commerce Law is related to Foreign Electronic Signatures.
In fact, Article 23.3 of the E-Commerce Law provides that as long as electronic signatures comply with the legal requirements of the foreign jurisdiction, the may be recognized as legally equivalent to the relevant electronic signatures recognized under the E-Commerce Law provided that such foreign jurisdiction adopts at least the same level of reliability adopted under the E-Commerce Law.
With regard to the evidential value of the electronic signatures, the E-Commerce Law provides that electronic signatures are considered to have the same level of evidential strength and authenticity in legal proceedings.
Moreover, the Federal Law No. 36 of 2006 which amended certain provisions of the Federal Law No. 10 of 1992 concerning evidence in civil and commercial transactions, stipulated that “electronic signatures shall have the same authenticity defined for the signatures referred to in this Law (i.e. wet ink signature)” provided that the provisions prescribed in E-Commerce Law are observed and complied with therein.
Additionally, the MOJ Resolutions confirmed the principles adopted under both the E-Commerce Law and the Federal Law No. 10 of 1992. In fact, under Article 12 of each MOJ Resolution, it is provided that electronic signatures shall have the same legal effect of handwritten signature, as provided for in Federal Law No. 10 of 1992 (as amended from time to time), as long as the conditions and provisions stipulated in the E-Commerce Law are satisfied.
From a practical perspective, the UAE Courts also admitted, in several instances, the evidential power and probative force of electronic signatures. For instance, the Dubai Court of Cassation considered that a Secure Electronic Signature might be relied on unless otherwise proven (Dubai Court of Cassation 241/2007). The Abu Dhabi Court of Cassation has also issued a similar decision whereby it considered that reliance on Secure Electronic Signatures is deemed reasonable (Abu Dhabi Court of Cassation 472/2014).
On a final note, and in light of the various preventive measures taken in the UAE as a result of the Coronavirus (Covid-19) pandemic, several resolutions have been issued on the level of the federal government and the local governments regarding e-signatures.
For instance, the UAE Cabinet has issued, on 31 March 2020, resolution no. 18 of 2020 regarding the grant of temporary licenses for the use of digital transaction technologies for notarial services. Through such resolution, the UAE Cabinet authorized the use of remote communication and e-signatures, as regulated under the E-Commerce Law, for the performance of procedures practiced by the notary public.
Furthermore, the resolution stipulates as well that the electronic signature and the electronic documents issued in accordance with the provisions of such resolution shall have “the same authenticity as for signature or official paper documents stipulated in Federal Law No. 10 of 1992”.
As a result of such resolution, both Dubai Courts and the Abu Dhabi Judicial Department have issued circulars related to the remote provision of notarial services.
On one hand, the Dubai Courts issued a circular in April 2020, specifying that the following services will be provided remotely by the notary public through BOTIM (i.e. a telecommunication tool) further to the submission of the relevant documentation through the Dubai Courts online system:
- Notarisation of Power of Attorney;
- Notarisation of legal notices;
- Notarisation of local service agreement; and
- Notarisation of articles of association and addendums for civil companies.
On the other hand, the Abu Dhabi Judicial Department issued an Administrative Decision No. 61 of 2020 providing that all notarial services will be provided remotely by the notary public. Subsequently, the Abu Dhabi Judicial Department that the notarization of documents will be conducted through “WebEx Cisco” (i.e. a telecommunication tool) further to the submission of the relevant documentation through the Abu Dhabi Judicial Department online system.
In addition to the above, the Abu Dhabi Department of Economic Development (the “ADDED”) has launched on June 8, 2020, an “electronic contract and electronic signatures system” with regard to the issuance of economic license for sole-proprietorships and limited liability companies. Such electronic contract and electronic signatures system would waive the requirement for the notary public’s certification of the memorandum of association. In fact, the system would entitle applicants to obtain a certified memorandum of association through the Abu Dhabi Business Centre website, after submitting all the required details and information and obtaining the ADDED’s approval. The Abu Dhabi Department of Economic Development clarified that for the initial phase, the initiative will be implemented only for the Tajer Abu Dhabi and All-in-One licenses.
In conclusion to the above, we can observe that the Covid-19 outbreak has accelerated the transition, in various types of transactions, from the wet-ink signature and physical documentation requirements to the “paper-less” and digitalized society. In fact, and as mentioned above, we notice that until today, some matters remain out of the scope of electronic signatures (i.e. immoveable property transactions, personal affairs matters etc.), nevertheless, and with the fast development of technologies, it is assumed that electronic signature’s umbrella could expand in order to cover new types of transactions in the UAE.