eSignature Legality in Czech Republic

eSignature Legality Summary

Under Czech law, a written signature is not necessarily required for a valid contract – contracts are generally valid if legally competent parties reach an agreement, whether they agree verbally, electronically or in a physical paper document (Section 559 and 574 of the Civil Code). To prove a valid contract, parties sometimes have to present evidence in court. Leading digital transaction management solutions can provide electronic records that are admissible into evidence under Section 125 of the Code on Civil Procedure, to support the existence, authenticity, and valid acceptance of a contract.

In addition, Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market (the “eIDAS Regulation”) came into force on 1 July 2016. The eIDAS Regulation repealed and replaced the e-Signatures Directive (1999/93/EC) and is directly applicable in the 27 member countries of the European Union.

To the permitted extent, the eIDAS Regulation is supplemented by national legislation, namely primarily the Act no. 297/2016 Coll., as amended, Act on Trust Services for Electronic Transactions.

Notable Changes in E-Signature Law Since 2020

The most notable change is an amendment of the Act on Trust Services for Electronic Transactions effective as of 1 July 2022 which introduced a possibility of a signature notarized in an electronic form (i.e., by electronic signature of a notary). An additional change, effective since September 2021, enables the possibility of electronic notarial deeds, which a notary can  also draft based on a remote (electronic) identification of the signatory. 

These amendments substantially limited the spectrum of the types of legal acts (i.e., typically contracts) where written form and handwritten signatures are required, as they have enabled the use of electronic signatures basically at all instances where Czech law requires either a notarized (verified) signature or a form of notarial deed (as opposed to plain written form).

Types of Permitted Electronic Signature

The eIDAS Regulation is technology neutral and defines an electronic signature generally 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 eIDAS Regulation recognizes three types of electronic signature - SES, AES, and QES. 

• An SES is a "simple electronic signature," an electronic signature not meeting definition requirements for higher levels of electronic signature, i.e., AES or QES. Thus, typing one´s name at the bottom of an email might constitute a simple electronic signature.

• An AES is an “advanced electronic signature”, a type of electronic signature that meets the following requirements: (a) it is uniquely linked to the signatory; (b) it is capable of identifying the signatory; (c) it is created using means that are under the signatory’s sole control; and (d) it is linked to other electronic data in such a way that any alteration to the data can be detected.

• A QES is a "qualified electronic signature" which is a specific digital signature implementation that has met the particular specifications of a government, including using a secure signature creation device, and has been certified as "qualified" by either that government or a party contracted by that government.

Article 25(1) provides 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 electronic form or does not meet the requirements of a QES. Articles 25(2) and (3) give a QES the same legal effect as a handwritten signature and ensure that a QES recognized in one Member State of the EU is also recognized in other Member States. Finally, Recital 49 allows national law to set requirements regarding which type of electronic signature may be required in which circumstances. 

Additionally, under Section 6 (2) of the Act on Trust Services, a "recognized electronic signature" (RES) (in Czech: uznávaný elektronický podpis) is defined as (i) an AES based on a Qualified Certificate or (ii) a QES (as defined by the eIDAS Regulation). The Czech Republic maintains a full list (in Czech) accessible to the public of authorized Qualified Certificate providers.

Documents That May be Signed Electronically

Transactions where an SES is typically appropriate include:

• Commercial agreements between corporate entities, including purchase orders, order acknowledgements, other procurement documents, sales agreements, service agreements

• Consumer agreements, including sales terms, services terms, software licenses, purchase orders, order confirmations, shipment documentation, user manuals, policies, but excluding consumer loan agreements

• Software license agreements

• Non-exclusive copyright, patent and trademark licenses

Transactions where an electronic signature other than SES may be required, or at least highly recommended, include:

• RES - Consumer loan agreements (Section 6 of Act No. 145/2010 Coll., on Consumer Credit, as amended)

• RES - Standalone acknowledgment of debt (Section 2053 of the Civil Code)

• RES - Agreement on cancellation of co-ownership of real estate or business enterprise (Section 1141 of the Civil Code)

• RES - Contract for construction (Section 1170 of the Civil Code)

• RES - Agreement on novation or a settlement agreement if the original obligation was created in writing or where it is made with respect to a right that has already been time-barred (Section 1906 of the Civil Code)

• RES - Declaration of guarantee (Section 2018 of the Civil Code)

• RES - Contract on a lease of residential real estate and notice on termination of lease of residential real estate (Section 2237 and 2286 of the Civil Code)

• QES - Last will (testament) (with certain exceptions) (Section 1532 of the Civil Code)

• QES - Declaration of disinheritance (Section 1649 of the Civil Code)

• RES - Commercial agency contract (Section 2483 of the Civil Code)

• RES - Power of Attorney unless the representation is related only to a particular legal act (441 of the Civil Code)

• RES - Consents to certain interventions to physical integrity of an individual (Section 96 of the Civil Code)

• RES - Proposal to expel a member of an association (subject to certain exceptions) (Section 240 of the Civil Code)

• RES - Confirmation of contribution obligation with respect to a foundation (Section 332 of the Civil Code)

• RES - Package tour certificate (Section 2525 of the Civil Code)

Further Guidance

In addition to the document types named above, an RES is required to execute agreements on the conclusion, modification or termination of an employment relationship (Section 34 (2), 49 (2), 50 (1), 60, 66 (2) of Act No. 262/2006 Coll., Labor Code, as amended). However, the Labor Code sets out additional and quite complex “procedural” requirements for communications between parties when they contract using electronic signatures, which requirements often result in reluctance to use any form of electronic signature for these types of agreements. 

Additionally, as discussed above, recently introduced amendments have enabled that acts in law (such as contracts) which require a verified (notarized) signature or even form of notarial deed can be signed using an electronic signature (namely a QES) of a notary. Attempts to use them can at this time result in legal uncertainty issues or problems with the authorities refusing to accept documents in electronic form. Accordingly, the following types of transactions no longer require written form and handwritten signatures; but the use of electronic signatures for such documents has not been tested in the courts and may result in a high risk of potential problems or at least delays:

• Agreements on purchase (or other type of ownership transfer) or other in rem disposals (e.g., a mortgage) of real estate (Section 560 of the Civil Code in connection with Section 7 Act No. 256/2013 Coll., as amended, Cadastral Act, and Section 62 (1) of Regulation No. 357/2013 Coll., on Cadastre Register, as amended) – RES + qualified time stamp

• Formal notarization – certain contracts governed by family law, such as contract on matrimonial property regime (including so called prenuptial contracts) (Section 716 of the Civil Code)

• Formal notarization – certain contracts on pledge of movables, contracts on pledge of enterprise and mortgage contracts with respect to real estate not registered in the Cadastre Register (Section 1314 (2) of the Civil Code)

• Formal notarization – certain instruments of inheritance law such as inheritance contracts (Section 1582 (2) of the Civil Code), inheritance sales (Section 1714 (3) of the Civil Code), renunciation of succession right (Section 1484 of the Civil Code), contract of inheritance alienation (Section 1714 of the Civil Code), selection of an administrator of the decedent’s estate (Sec. 1556 of the Civil Code)

• Formal notarization (notarial deed) - certain instruments of corporate law such as Memorandum of Association/Foundation Deed of a limited liability company and a joint stock company (Section 8 (1) of Act No. 90/2012 Coll., on Business Corporations and Cooperatives, as amended), and their amendments

• Formal notarization - certain instruments relating to foundations/endowment funds (Section 309 of the Civil Code), contract on merger by acquisition of a foundation (Section 383 of the Civil Code), decision to change the legal form of a foundation to an endowment fund (Section 391 of the Civil Code)

• Formal notarization - articles of association of unit owners (Section 1200 of the Civil Code)

• Formal notarization - legal act of an individual who cannot read and write (subject to certain exceptions) (Section 563 of the Civil Code)

• Formal notarization - personal declaration of a member of a family enterprise waiving his/her right to a share in its profits (Section 701 of the Civil Code)

• Formal notarization - by-laws of a trust (Section 1452 of the Civil Code)

• Contracts on marriage property regime (notarial deed)

• Inheritance contracts and inheritance sales 

Enforcement Penalties for Non-Compliance

As a civil law sanction, failing to comply with legal requirements set out for electronic signatures and/or limitations on their use may result in the electronically signed documents being invalid and not enforceable in the courts due to lack of legal form. In addition, this may result in penalties under the laws applicable to the underlying transaction. 

Further, where such a civil law consequence was due to non-compliance of a trust service provider with legal requirements for the relevant service, affected parties may have a claim against the provider for compensatory damages.

Seminal Case Law

None

Publicly Accessible Hyperlink(s) to Laws/Regulations Discussed Above 

• Regulation (EU) No 910/2014 (in English)

• Act on Trust Services for Electronic Transactions (in Czech)

• Additional helpful information from the Ministry of the Interior of the Czech Republic