I'll start with a confession: When Appleby began this series of articles on the impact of the Covid-19 pandemic on our jurisdictions, clients and business sectors, I did not imagine that we would still be at it some nine months later. Call me an optimist, but I went into this expecting some significant but short-term logistical adjustments to the way we carry on business. There would be lots of research into force majeure and then we would return to a comfortable state of 'normalcy' and I could get back to concentrating on legal tech, knowledge management and law firm strategic planning. Now, as we move on from the longest year in history, can anyone even remember 'normal'?
One of the maxims that I preach in my role in knowledge management at a global law firm is that change is hard. Adopting new practices, abandoning the old 'tried and true', letting go of that dusty old precedent: these things require an act of bravery on the part of most lawyers. The mere thought of executing a legal document with an electronic signature, rather than with a Mont Blanc, an embossed seal, a red wafer and two witnesses? Madness. Yet that is exactly the kind of change that had to take place, and so far it is all working rather well. So well in fact that in agile, responsive and commercial jurisdictions like ours, some of these changes may well become standard practice.
In previous articles, we have touched on executing documents electronically in different contexts. In this expanded article, we take a broader look at the ways in which different kinds of documents - from written resolutions to wills - can be executed remotely. As parts of the world reinforce social distancing measures and some places re-enter lock down, we expect that this round up of information will be most valuable to our clients in the months or even years to come. (Maybe I'm not such an optimist after all?)
For each of our key jurisdictions we offer an overview of the law regarding electronic transactions. We then provide in table format specific information about execution formalities and requirements for different types of documents. It should be noted that this article is intended to give an overview of the law pertaining to effecting legal arrangements and executing documents electronically. In some cases, other factors may be at play, including the constitutional documents of the particular entity that is executing the document, and the requirements of the counterparty or recipient. You should always take legal advice on your particular situation and Appleby's team of experts stands ready to assist.
Bermuda law permits the use of electronic signatures under the Electronic Transactions Act 1999 (ETA), which was established to facilitate electronic transactions and promote confidence in the validity, integrity, and reliability of conducting transactions electronically, among other things.
The ETA provides that information, including signatures, will not be denied legal effect, admissibility or enforceability solely because it is in the form of a record that was created, stored, generated, received or communicated by electronic means. In essence, the ETA gives electronic signatures the same legal effect as wet-ink signatures.
Careful consideration of the ETA is necessary to ensure the validity and legality of electronic signatures, as it governs the use of digital signatures and electronic records generally. More specifically, it is important to ensure that e-signatures satisfy the legal requirements under the Act.
These requirements include, but are not limited to, that the signature must be uniquely linked to the signatory, capable of identifying the signatory, created using means that the signatory can maintain under their sole control, and it must be linked to the information to which it relates in such a manner that any subsequent alteration of the information is revealed.
Section 11 of the ETA provides that where a person's signature is required by law, that requirement is met by an electronic record if the method used is able to identify the signatory and to indicate that the signatory intended to sign the document or otherwise adopt the information in the electronic record. In addition, the method used must be reliable, as appropriate, for the purpose for which the electronic record was generated or communicated.
Similarly, where information is required by law to be in writing, the ETA authorises the use of electronic signatures as a valid means of satisfying such requirement, provided the information contained in the electronic record is accessible and capable of retention for subsequent reference.
Where the law requires information to be presented or retained in its original form, the ETA provides that this requirement is met by an electronic record of the information if a reliable assurance exists of the integrity of the information from the time it was first generated in its final form as an electronic record or otherwise. Further, where the requirement is for the information to be presented, that information must be capable of being accurately represented to the person it will be presented to.
To safeguard the validity and security of electronic signatures, the ETA provides for the use of certification service providers that issue identity certificates for the purposes of e-signatures, among other things. The ETA requires that certification service providers meet certain criteria and issue an accredited certificate that associates unique data that is used to verify an electronic signature to a person and confirms the identity of that person.
An authorised certification service provider will be liable to a person where it has issued an accredited certificate and that person reasonably relied on the certificate for the accuracy of the information in the certificate as from the date it was issued, among other things, unless the person who relied on the certificate knew or ought reasonably to have known that the authorisation of the certified service provider had been revoked.
To avoid liability and ensure due diligence the Government issued the Certification Service Providers (Relevant Criteria and Security Guidelines) Regulations 2002, which provide an authorisation scheme for certification service providers and helpful guidance to such bodies.
It is important to note that the use of electronic signatures is not permitted in relation to certain documents, namely the creation, execution or revocation of a will or testamentary instrument and the conveyance of real property or the transfer of an interest in real property, as they are expressly excluded under the Act.
Some practical points to consider when using e-signatures include, but are not limited to, reviewing the company's byelaws to determine whether they contain any restrictions or requirements relating to the execution of documents; considering whether hard copies of the documents need to be filed, and if so, whether the traditional physical signing is required; verifying that the e-signature complies with any applicable execution formalities; and considering the legal consequences of the place of signature, particularly as it relates to tax implications.
For a detailed overview of Bermuda's wet ink and electronic requirements please click here.
British Virgin Islands
The British Virgin Islands (BVI) has longstanding and flexible legislation which recognises the use of electronic signatures. The Electronic Transactions Act, 2001 (ESA) provides for the use of electronic signatures and electronic records. Under ESA, a requirement for a signature is satisfied by an e-signature if:
(a) it adequately identifies the signatory;
(b) it adequately indicates:
(i) the signatory's approval of the information to which the signature relates; or
(ii) if a signature (or a company seal) is to be witnessed, that the signature (or company seal) has been witnessed;
(c) it is reliable as is appropriate given the purpose for which, and the circumstances in which the signature is required; and
(d) the recipient of the information to which the signature relates consents to receiving the e-signature and the signature of each and any witness.
An e-signature is presumed reliable as is appropriate if:
(a) the means of creating the e-signature is linked to the signatory and to no other person;
(b) the means of creating the e-signature was under the control of the signatory and no other person;
(c) any alteration to the e-signature made after the time of signing is detectable; and
(d) where the purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable.
Examples of forms of e-signature that have the potential of being recognised include a cryptographic digital signature (which are offered through a variety of digital signing platforms) and a scanned image of a 'wet-ink' signature.
ESA specifies that electronic signatures may not be used for wills or other testamentary instruments, the conveyance of real estate, any other thing required to be done by deed or any other matter prescribed by the Regulations. [Questions arise where a document is not required by law to be executed by way of deed but is indeed executed by way of deed, in which case we suggest that specific BVI legal advice is obtained.]
It is important to check a BVI company's constitutional documents and the provisions of the document being entered into to ensure that there are no restrictions on the use of e-signatures. Where a wet-ink signature is required, mobile scanning applications may be a solution where a scanner is not readily available.
It is anticipated that the ESA will be repealed and replaced in order to embrace new developments in electronic transactions.
For a detailed overview of BVI's wet ink and electronic requirements please click here.
The Electronic Transactions Act1 (2003 Revision) (ET Act) puts electronic signatures on an equal footing with "wet ink" signatures in the Cayman Islands. Technologically neutral, the ET Act was established to promote public confidence in the validity, integrity and reliability of conducting transactions electronically and recognises electronic records as records created, stored, generated, received or communicated by electronic means.
The common law adopts a pragmatic approach to what will satisfy a signature requirement. In determining whether the method of signature adopted demonstrates an authenticating intention the courts adopt an objective approach, considering all of the surrounding circumstances.
The ET Act is not prescriptive as to the method of authentication protocol used. Any electronic signature will be considered to be reliable where:
(a) the means of creating the electronic signature is linked to the signatory and to no other person;
(b) the means of creating the electronic signature was, at the time of signing, under the control of the signatory and of no other person; and
(c) any alteration to the electronic signature, made after the time of signing, is detectable.
Electronic signatures should also not be used in Cayman where the requirements of a specific law, contract or an entity's constitutional documents expressly provide (or may be interpreted to mean) that a hard copy document and wet ink signature are required.
For a detailed overview of Cayman's wet ink and electronic requirements please click here.
1 By virtue of the Citation of Acts of Parliament Act, 2020 which came into force on 3 December, Cayman enactments are now called "Acts" rather than "Laws".
Guernsey was fortunate to come out of the first lockdown on 22 June and is currently in Phase 5c of its exit. From that date the island has fundamentally returned to its pre-covid ways of working. However some new processes adopted during lockdown which have been deemed to be more efficient have continued. The framework and software for effecting most electronic transactions in Guernsey were already in place. Our Covid experience has highlighted some areas that could be improved and these have been changed or are in the process of being changed.
The Electronic Transactions (Guernsey) Law, 2000 (ETL) states that a signature, seal, attestation or notarisation in electronic form will not be denied legal effect, validity, enforceability or admissibility solely because it is in electronic form and a signature in electronic form satisfies a law requiring a signature written by hand.
A signature in electronic form is defined as being 'a signature wholly or partly in electronic form attached to or logically associated with information in electronic or non-electronic form, and references to a signature being in electronic form will be construed accordingly'.
Technologically neutral, the ETL was established to promote public confidence in the validity, integrity and reliability of conducting transactions electronically and recognises electronic records as records created, stored, generated, received or communicated by electronic means.
The common law adopts a pragmatic approach to what will satisfy a signature requirement. In determining whether the method of signature adopted demonstrates an authenticating intention the courts adopt an objective approach, considering all of the surrounding circumstances.
The ETL is not prescriptive as to the method of authentication protocol used. Electronic transactions may not however be valid for other reasons- the Electronic Transactions Law simply clarifies that such information and documents cannot be invalid solely because they are in electronic form or done by electronic means.
Statutory and Other Exceptions to Electronic Signatures of Any Kind
Documents which cannot be signed electronically
The Electronic Transactions (Exemptions) Order, 2001 (Exemptions Order) sets out certain transactions and other matters which are generally excluded from the application of the Electronic Transactions Law, ie they must continue to be carried out without the benefit of making use of electronic means or electronic form. These include transactions concerning real property, eg conveyancing and leasing, and wills or any other testamentary instrument for example:
- the conveyance of real property or the transfer of any interest in real property, including any contract prior to such;
- leases of real property;
- the creation, execution, variation, rectification or revocation of a will, codicil or any other testamentary instrument;
- the creation, execution, variation, revocation or enforcement of an indenture, declaration of trust, power of attorney or any document required to be sealed;
- negotiable instruments;
- the making of an affidavit or a statutory or sworn declaration;
- any notice of:
- the cancellation or termination of utility services, including water, power and gas;
- default, repossession, foreclosure or eviction in respect of real property;
- the cancellation or termination of any insurance benefits; or
- recall of a product, or material failure of a product, that risks endangering health or safety; and
- the rules, practices and procedures of a court or tribunal, including pleadings, judgments and orders.
Other circumstances where an electronic document or signature should not be used include where:
- the requirements of a specific statute or contract expressly require physical writing, eg a hard copy document and wet ink signature;
- the document needs to be presented to an authority and it requires a wet ink original (currently not all documents submitted to the Guernsey Financial Services Commission (GFSC) can be submitted electronically). However, during lockdown, the GFSC issued guidance and FAQs in response to the Covid-19 pandemic lockdown on the provision of " wet" signatures on applications. Basically, where a printer but no scanner is available, the paperwork should be printed, the signature box signed and the individual take a picture of the document and email the image to the GFSC. Where no printer is available, the individual should copy out the signature box statement on a blank piece of paper, sign and date the statement, then photograph it and email it to the GFSC together with a pdf copy of the unsigned final version of the document. This has somewhat alleviated this circumstance.
- the document is to be signed by an overseas entity and, as a matter of local law, it does not have the capacity to use electronic signature or the person signing does not have the authority to use an electronic signature; and
- enforcement action may need to be taken in another jurisdiction and that may be made difficult as a matter of local law because the use of an electronic signature.
In addition, a person cannot be compelled to do or accept anything in electronic form or by electronic means, unless such an obligation is imposed by ordinance. The only such ordinance to date is the Electronic Transactions (Obligation to use Electronic Form) (Guernsey) Ordinance, 2014 under which the GFSC may require the submission of certain documentation required under Guernsey's regulatory laws in electronic format, including statutory declarations.
Where it is important to establish where a document has been signed or is held for tax reasons, extra precautions may need to be taken to establish where the signatories are when they sign and where the document is kept. Wet ink signatures may be preferable in such cases.
Powers of attorney and security documentation
As noted in the list above, a power of attorney (or a document containing a power of attorney) does require execution in the usual way with a "wet ink" signature to ensure that the power of attorney is enforceable under Guernsey law. However following the normal form requirements that apply to a security interest agreement or for example any document which will invariably contain a power of attorney from a company - such document will be signed in accordance with the Companies (Guernsey ) Law, 2008 (as amended) by a director or in accordance with the company's articles). We feel that whilst the Exemption Order may result in a challenge to such a document being executed electronically, we believe that such a challenge is remote and that any document executed in this way is enforceable. In light of the issues that were raised by Covid-19 restrictions, we have sought clarification from the legislature in this regard as we do not feel that the order was drafted to deal with such documents. In the meantime we have included new reservations in our opinion to deal with this appropriately.
Different types of documents have different execution formalities so before an electronic signature is used, any formalities relating to the execution of a document must be satisfied in order for that document to be validly executed. The source of the formalities may be statutory. Formalities may also be found in the constitutional documents of a company (for example, a company's articles of incorporation may require that deeds be executed under seal, or be signed by two directors). Care must always be taken to ensure that any particular document is properly executed in accordance with the relevant statute and the requirements specific to the entity in question.
For a detailed overview of the Guernsey's wet ink and electronic requirements please click here.
Isle of Man
The Electronic Transactions Act 2000 (ETA) is the primary statute in the Isle of Man concerning electronic contract formation. Unless it is an Excluded Transaction (defined below), a transaction will not be invalid merely because it takes place wholly or partly by means of one or more electronic communications. An electronic communication is a communication, by means of a telecommunication system, of information (a) in the form of data, text or images, or (b) in the form of speech, where the speech is processed at its destination by an automated voice recognition system.
Under the ETA, the requirement for a signature will be taken to have been met in relation to an electronic communication if:
(a) a method is used to identify him and to indicate his approval of the information communicated; and
(b) having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated; and
(c) if the signature is required to be given to a public authority or to a person on behalf of a public authority, and the authority requires that the method used as mentioned in (a) above be in accordance with particular technical requirements, that requirement has been met;
(d) if the signature is required to be given to a person who is not a public authority and is not acting on behalf of a public authority, that person consents to that requirement being met by the use of the method mentioned in (a) above.
Electronic signatures should not be used where the requirements of a specific law, contract or an entity's constitutional documents expressly provide (or may be interpreted to mean) that a hard copy document and wet ink signature are required.
Transactions which cannot be carried out electronically (Excluded Transactions) are set out in Electronic Transactions (General) Regulations 2017 (as amended) as:
- A marriage
- A testamentary disposition
- Conveyance or creation of an interest in land
- Mortgage or charge of land
- Covenant burdening an estate in customary fee simple in land
- Grant of a power of attorney
- Transfer or mortgage of, or share in a registered ship or vessel
- Bill of exchange
- Mortgage, debenture or charge on the undertaking, property or revenues of a company or public authority.
Electronic signatures should also not be used where the requirements of a specific law, contract or an entity's constitutional documents expressly provide (or may be interpreted to mean) that a hard copy document and wet ink signature are required. Certain governmental, judicial or regulatory authorities may also require a wet ink original. These exceptions should be considered on a case by case basis.
For a detailed overview of the Isle of Man's wet ink and electronic requirements please click here.
The use of electronic signatures, and electronic transacting in general, is widely accepted in Jersey and relatively common place in large international transactions. This approach is in no small part due to the Electronic Communications (Jersey) Law 2000 (the EComms Law) which, as a result of the express permissive language, allowed this practice to develop.
Despite being an early adopter of such technologies and the views taken in practice, the EComms Law is now over 20 years old and in need of updating to better reflect current practices and technologies. This need was recognised in 2019 when the certain clarificatory amendments were made to the EComms Law to remove uncertainty and further encourage the formation of contracts by electronic means. In particular, a new provision was included that expressly states a signature, seal, attestation or notarisation is not to be denied legal effect, validity or enforceability only because it is in electronic form.
As is doubtless the case in jurisdictions, the disruption caused by the global COVID-19 pandemic has led to greater adoption and scrutiny of electronic signatures and the electronic formation of contracts and a number of other areas where clarification would be beneficial have been identified. In some areas, such as the remote witnessing of affidavits, powers of attorney and wills, have been expressly catered for in emergency legislation and court directions, including the Covid-19 (Signing of Instruments) (Jersey) Regulations 2020 (the 2020 Regulations) and the revised COVID-19 – Court Directions: Powers of Attorney & Affidavits (Court Direction). Nonetheless, while the direction of travel is clear there remain a few points which would benefit from greater legislative certainty.
In response to this, the Government of Jersey (working with local practitioners and stakeholders) has proposed a number of amendments to the EComms Law and launched a consultation on their implementation in early December 2020 (the EComms Consultation). The EComms Consultation, among other things, expressly addresses any concerns in relation to remote witnessing or the affixing of electronic signatures by third-parties on behalf of another and clarifies the general scope and application of the EComms Law to signatures, seals, attestations or notarisations regardless of circumstances and to both to documents sent to another, and documents which are simply stored after execution.
For a detailed overview of Jersey's wet ink and electronic requirements please click here.
Against the backdrop of Covid-19, coupled with the travel restrictions and physical distancing restrictions in place across the globe, the perfect countermeasure would appear to be the use of electronic signatures to ensure the proper perpetuity and tenacity of the business. Whilst this technological tool has always existed in our legislative framework for almost 20 years, its significance has only been perceived with the emanation of the pandemic. It is safe to say the hesitation came from the uncertainty of the validity of such signature.
An electronic signature has been defined by the Electronic Transaction Act 2000 (ETA) as an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record. The ETA gives legal validity to electronic signatures and electronic documents. Pursuant to the ETA, no record, contract, or signature shall be denied legal effect solely because the record or signature is in electronic form. Furthermore, the ETA also provides for secure electronic signatures, which may be useful in the application of a prescribed security procedure or a commercially reasonable security procedure agreed to by the parties involved. In such a case, an electronic signature will be verified as a secure electronic signature if, at the time it was made, it was:
(a) unique to the person using it;
(b) capable of identifying such person;
(c) created in a way or using a means under the exclusive control of the person using it; and
(d) linked to the electronic record to which it relates in a manner such that the electronic signature would be invalidated had the record been changed.
Additionally, the ETA provides that any person relying on a digital signature will also rely on a valid certificate containing the public key by which the digital signature can be verified. A digital signature means an electronic signature consisting of a transformation of an electronic record using an asymmetric cryptosystem such that a person having the initial untransformed electronic record and the signer's public key can accurately be determined - (i) whether the transformation was created using, the private key that corresponds to the signer's public key; and (ii) whether the, initial electronic record has been altered since the transformation was made.Digital Signatures also includes voice recognition features, digital fingerprint or such other biotechnology features or process, as may be prescribed. It is worth noting that the digital signature has a higher level of reliability.
In light of the enactment of the ETA, the Financial Services Commission (FSC) has laid down a common set of standards for the guidance of insurers in 2017 regarding the issue of insurance policy documents in digital format to ensure that insurers conduct their business in a way that promotes the best interests of consumers and the integrity of the financial services industry in the context of electronic marketing and sale of insurance. The guidelines provide, amongst others that insurers should put in place appropriate measures to address security concerns over the authentication of electronic documents, including but not limited to:
(a) ensuring that information transmitted electronically is not altered in the transmission process by third parties or accidentally altered during the transmission process;
(b) preventing misappropriation of personal and credit card information transferred from the consumer to the insurer or any authorised third party;
(c) demonstrating that unauthorised persons or programs are prevented from altering records; and
(d) ensuring that the electronic signature is and remains valid and verifiable.
Moreover, the Court of Mauritius recognises the validity of contracts executed electronically in compliance with another jurisdiction's electronic signature laws. It is provided under the ETA, pursuant to section 17(2), it shall be presumed unless evidence to the contrary is adduced that a secure electronic signature is the signature of the person to whom it correlates and the secure electronic signature was affixed by that person with the intention of signing or approving the electronic record.
Although the laws of Mauritius provide for the binding effect of electronic signatures, this will be subject to the requirements of a specific law, contract or an entity's constitutional documents which expressly provide (or may be interpreted to mean) that a hard copy document and wet ink signature are required. In such circumstances, electronic signatures would not hold the legal effect, admissibility and enforceability provided under the ETA. From Covid-19, Mauritius could have expected some short-term significant and logistical adjustments to the way we carry on business, however, we can rest assure that Mauritius does have an existing platform to carry on an effective business continuity plan in the event of a new pandemic.
For a detailed overview of Mauritius' wet ink and electronic requirements please click here.
The Electronic Transactions Act 2001 (ETA) governs legal recognition and authentication of electronic records and digital signatures in Seychelles.
It grants legal recognition to electronic records and states that where any law provides that information or any other matter shall be in writing then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is rendered or made available in an electronic form; and is accessible so as to be usable for a subsequent reference. The ETA further provides for the authentication of electronic records which may be done by affixing a digital signature and shall be affected by use of an asymmetric crypto system and hash function.
With regards to legal recognition of digital signatures, the ETA stipulates that where any law provides that information or any other matter shall be authenticated by affixing the signature or any documents should be signed or bear the signature of any person then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is authenticated by means of the digital signature affixed in such manner as may be prescribed.
The procedure for affixing digital signatures is provided under the Electronic Transactions (Affixing Digital Signature) Regulations 2018 (ET Regulations) under which a digital signature certificate (Digital Signature Certificate) may be issued in respect of the digital signature which shall represent unequivocally the digital identity of a natural or juridical person and shall be considered as a recognised digital signature certificate generating a legally binding digital signature, provided the following technical standards, as set out in the ETA are met. The Government Department for Information, Communications and Technology (DICT) is responsible for implementing the ETA and ET Regulations which uses overseas certain recognised Certifying Authorities to provide Digital Signature Certificates within the Government. At the moment, there are only two approved overseas Certifying Authorities, which have been submitted to the Controller in Seychelles. They are WISEKEY (being used by Government) and DOCUSIGN (being used by the Central Bank of Seychelles, the FSA and some other private entities).
To be clear, the ETA does not confer a right upon any person to insist that any Public Authority should accept, issue, create, retain or preserve any document in the form of electronic records or effect any monetary transaction in the electronic form. Further, under the ETA there are certain types of documents which would be excluded from digital signature and they are documents which would usually require notarisation such as a power of attorney for the purposes of dealing in disposition of immovable property, deed of transfer of immovable property or interests in land, will and testament, affidavits in court proceedings etc. Hence, these would usually be expected to have original signatures under hand by the person signing before a Notary to be accepted in Seychelles.
Whilst the ETA provides legal recognition to digital signatures, it does not govern any other electronic signatures which are not regulated under this legislation. There is no guidance under Seychelles law with respect to electronic signatures, however, these are generally acceptable. To note, certain public authorities may insist on documents executed by way of wet-ink signatures. There is nothing under Seychelles law to prevent a Company resolving to agree to execute corporate or commercial transaction documents by way of affixing electronic signatures. So far there is no regulatory guidance regarding the signing of corporate documents, such as board/shareholder resolutions and in our view these may be passed by electronic signature provided that the Board resolve that electronic signatures shall be acceptable for use by the company. In this respect we would recommend that the company includes a specimen of the electronic signatures or a procedure for the affixing of digital signatures for and on behalf of the company, in the board/shareholders resolutions approving the use of electronic signatures.
For a detailed overview of the Seychelles wet ink and electronic requirements please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.