eSignature Legality in Estonia

eSignature Legality Summary

Under Estonian 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 (Art. 9 Sect. 1 and Art. 11 Sect. 1 of the Law of Obligations Act), unless the law sets forth a specific format requirement. To prove that a contract is valid, parties sometimes have to present evidence in court. Leading digital transaction management solutions can provide electronic records in order to substantiate that a contract exists, is authentic, and valid.  Such elexctronic records are admissible asevidence under Art. 274 of the Code of Civil Procedure.

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 The eIDAS Regulation repealed and replaced the e-Signatures Directive (1999/93/EC) and is directly applicable in all 28 Member States of the European Union.

The eIDAS Regulation is technology neutral and defines three types of electronic signature (SES, AES, QES). Art. 25 Sect. (1) of the eIDAS Regulation 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 an electronic form or does not meet the requirements of a QES. Art. 25 Sects. (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.

Use Cases for Standard Electronic Signature (SES)

Use cases where an SES is typically appropriate, include:

• certain HR documents, including documents regarding employment terms and conditions that are not mandatory under Estonian law, privacy notices, benefits paperwork (unless benefits are individually agreed upon) and other new employee onboarding processes

• commercial agreements between corporate entities, including non-disclosure agreements, purchase orders, order acknowledgements, invoices, other procurement documents, sales agreements, distribution agreements, service agreements

• consumer agreements, including new retail account opening documents, sales terms, services terms, software licenses, purchase orders, order confirmations, invoices, shipment documentation, user manuals, policies, but excluding consumer surety agreements)

• residential and commercial lease agreements

• licenses of intellectual property, including patent, copyright, and trademark

• intangible property transfers (e.g., patent and copyright assignments)

Use Cases for Other Types of Electronic Signatures (e.g. Digital Signature, AES

Use cases where an electronic signature other than SES may be required include:

• QES - acknowledgement of an obligation (Law of Obligations Act Art. 30 Sect. 2)

• QES - the application of the surety by which the surety undertakes to assume the obligations arising from the suretyship (Law of Obligations Act Art. 144 Sect 2) and the consent of surety to be liable for the new obligor (Law of Obligations Act Art. 153 Sect 2)

• QES - contracts concluded with consumers and relating to the purchase of the right to use a building on a timeshare basis, long-term holiday product contracts, exchange system contracts and agency agreements (Law of Obligations Act Art. 381 Sect. 1)

• QES - life annuity contracts (Law of Obligations Act Art. 570)

• QES - employment contracts (Employment Contracts Act Art. 4 Sect. 1)

• QES– agreements regarding non-compete obligations after an employment contract expires (Employment Contracts Act, Art. 24, Sect. 1, Subsect. 2)

• QES– agreement with an employee regarding proprietary liability (Employment Contracts Act, Art. 75, Sect. 2, Subsect. 1)

• QES - author’s contracts (Copyright Act, Art. 49 Sect. 1)

• QES - possessory pledge contracts if the value of the pledged thing exceeds 50 euros (Law of Property Act Art. 282 Sect. 2)

• QES - transactions between a public limited liability company and its sole shareholder (Commercial Code Art. 303 Sect. 2)

• QES - act of delivery of a non-monetary contribution into the share capital unless the transfer of relevant property is subject to notarization (Commercial Code Art. 520 Sect. 2)

Use Cases That Are Not Appropriate For Electronic Signatures

Use cases that are specifically barred from digital or electronic processes or that explicitly require a formal notarization process.

• Formal notarization - certain minutes of shareholder meetings, e.g., when decisions are passed regarding election of management or supervisory board members or takeover of minority shareholding (Commercial Code Art. 174 Sect. 4.1 and 6 and Art. 304 Sect. 7 and Art. 305 Sect. 1 and Art. 363.7 Sect. 2)

• Formal notarization - consent of a trademark owner for use of trademark in a business name (Commercial Code Art. 12 Sect. 3)

• Formal notarization - applications submitted to certain public registers such as the Commercial Register or the Land Register and power of attorneys issued for signing of such applications (Commercial Code Art. 32.1 Sect. 1; Land Register Act Art. 34 Sect. 2.1)

• Formal notarization - foundation agreement or foundation resolution of a limited liability company, merger and division agreements of limited liability companies, as well as power of attorneys issued for signing of the said documents (Commercial Code Art. 32.1 Sect. 2)

• Formal notarization - transfer or pledge agreements of shares of private limited liability companies provided that the shares are not registered in the Central Register of Securities (Commercial Code Art. 149 Sect. 4, Art. 151 Sect. 2)

• Formal notarization - transactions with immovable property (Law of Property Act Art. 64.1, Art. 119 Sect. 1, Art. 120 Sect. 1)

• Formal notarization - inheritance agreements (Inheritance Law Act Art. 100)

• Formal notarization - marital property contracts (Family Law Act Art. 60)

• Formal notarization - maintenance contracts between dependents and maintenance providers (Law of Obligations Act Art. 573)

• Formal notarization - trademark pledge agreements (Trademark Act Art. 50.6 Sect. 2)

[1] 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 said data can be detected.

[2] A QES is 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. A QES has the equivalent legal effect as a handwritten signature.

Local Technology Standards

As a Tiered eSignature Legal Model country, Estonia supports the concept of a QES (Qualified Electronic Signature), requiring independent accreditation for those signatures by an approved certification body. Estonia maintains a full list accessible to the public of authorized qualified electronic certificate providers together with other countries in the European Union.