Electronic signature and legality: time to reflect
Are electronic signatures legal in the UK?
Yes, and Electronic signatures are legally binding under UK law. Electronic signatures are legally recognised in the United Kingdom. They are provided for in the Electronic Identification and Trust Services for Electronic Transactions Regulations (Regulations) in 2016, the Electronic Communications Act of 2000 (ECA), and the retained UK version of Regulation (EU) No 910/2014.
In 2018, the Law Commission for England and Wales formally ruled that “Electronic signatures can be used to sign formal legal contracts under English law”. More than that, the Law Commissioner said: “Contract law in the UK is flexible, but some businesses are still unsure if electronic signatures would satisfy legal requirements. We can confirm that they do.” eIDAS also ensures that each form of electronic signature is admissible as evidence in EU courts. Often, these cases demonstrate how powerful an e-signature audit trail can be, even in the face of allegations of forgery.
Does eIDAS still apply in the UK?
The “eIDAS Regulation” came into force on 1 July 2016. The eIDAS Regulation repealed and replaced the e-Signatures Directive (1999/93/EC). It basically means that any electronic document you send between two EU countries is safe, legally compliant, and regulated. The UK has left the EU, and the UK eIDAS Regulations are an amended form of the EU eIDAS Regulation. They retain many aspects of the EU regulation but are tailored for use within the UK. Following the UK withdrawal from the EU, the eIDAS Regulation was adopted into UK law and amended by The Electronic Identification and Trust Services for Electronic Transactions (Amendment (EU Exit) Regulations 2019)
eIDAS provides a common foundation for secure electronic interaction across borders, between people, businesses and public authorities. With its arrival, public and private online services immediately became exponentially easier and more effective.
When is an electronic signature legal?
Legislation carves out specific use cases, such as employment contracts and commercial agreements, including NDAs, sales agreements, and more. However, it firmly establishes that an “electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form…”
This means that companies can reap the benefits of e-signature in their business without worrying about discrimination against electronic signatures simply for being electronic. In the UK, many types of electronic signatures are used for different situations. Explore the different types of electronic signature and digital signatures and how they comply with eIDAS regulations.
Has Brexit impacted the acceptance of electronic signatures in the UK?
There is still an acceptance of electronic signatures, and they are still legal. Although the UK eIDAS supervisory body has no EU eIDAS regulatory obligations, it continues to work closely with other EU supervisory authorities. Brexit (from 1 January 2021) has not had any material impact on the legal validity and admissibility of electronic signatures under UK law. Accordingly, Brexit did not adversely impact the use of e-signing platforms following the end of the Brexit transitional period in December 2020.
What is the UK eIDAS Regulation?
The UK eIDAS Regulation generally defines an electronic signature as data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign. The UK eIDAS Regulation recognises the following three levels of electronic signatures:
Simple: an electronic signature that does not meet the definition requirements for higher levels of electronic signature, i.e., Advanced or Qualified.
Advanced: an electronic signature that is (i) it is uniquely linked to the signatory; (ii) it is capable of identifying the signatory; (iii) it is created using electronic signature creation data that the signatory can, with a high level of confidence, use under the signatory’s sole control; and (iv) it is linked to the data signed in such a way that any subsequent change in the data is detectable.
Qualified: an advanced electronic signature created by a qualified electronic signature creation device and which is based on a qualified certificate for electronic signatures.
Because the UK eIDAS Regulation sets out minimal, not maximal, standards for electronic signatures, it has limited effect on pre-existing English law, given the already broad definition of electronic signatures that had been adopted in the Electronic Communications Act (ECA).
Electronic signature law - why was eIDAS created?
The Regulation (EU) No. 910/2014 on electronic identification and trust services gave members of the European Union a way to conduct seamless digital transactions across countries – ultimately establishing a climate of trust for online and digital transactions throughout the EU. eIDAS set the stage for innovative development of e-signature solutions, therefore allowing commerce to flourish. It has allowed for the development of a wide range of technologies to authenticate signers, which businesses can take advantage of to the degree they deem necessary. ID verification is one such development. DocuSign’s Identify platform makes it easy for eSignature users to connect virtually any identification method to an agreement. Many companies are choosing to incorporate photo ID checks into electronic signing to drive up compliance and reduce risk.
Take the Swedish law firm, Cederquist, for example. Under Swedish law, certain transactions or processes require an advanced level of electronic signature in compliance with Europe’s eIDAS regulation. This signature level can be achieved when combining a digital signature with the online Swedish Bank Verification. Integrating DocuSign eSignatures with online ID verification from the DocuSign Agreement Cloud has given Cederquist an edge in the legal sector.
Electronic Signatures in the Future
The use of electronic signature platforms, such as DocuSign eSignature, is now a well-established business practice for many contracts and formal documents. Some documents, however, must comply with additional formalities. One particularly challenging situation is where deeds need to be executed, i.e. where there has typically been a legal requirement for the witness to be physically present with the signer that they’re witnessing for. Under English law, a deed can be validly signed and witnessed using an electronic signature platform, such as DocuSign eSignature, where the law allows electronic signing. DocuSign provides solutions for signing and witnessing the signature of deeds electronically based on specific requirements and use cases, including HMLR deeds. On July 27, 2020, the HMLR announced that it would accept witnessed electronic signatures (WES) with immediate effect to transition as quickly as possible to the use of Qualified Electronic Signatures. (more specifically, Qualified Electronic Signatures). UK law firm Hugh James completed the first-ever UK property deal utilising the DocuSign Qualified Electronic Signature (QES) solution in a pilot with HMLR. The future of agreement technology looks bright indeed.