Introduction - where are we coming from
Provided a number of technical and other requirements are met,
intended to guarantee authenticity and integrity, an electronic (or
microform) copy of a document will be presumed to have the same
probative value as the original, pursuant to the actual rules of
evidence set out in the Luxembourg Civil Code. These requirements
are laid down in a grand ducal regulation of 1986 (the "1986
Regulation").
The Commercial Code requires undertakings to store all
business-related information and documents (contracts, invoices,
incoming and outgoing correspondence, etc.) for a certain period of
time. Such documents, with the exception of the balance sheet and
profit-and-loss statement, can be kept in electronic form (or
microform) provided the requirements of the 1986 Regulation are
met.
Why introduce new rules?
The current legislation, which dates back to 1986, is not very well known and has certain shortcomings:
- an electronic (or microform) copy, within the meaning of the Civil Code, will only be deemed equivalent to the original paper version if the latter no longer exists;
- some of the requirements are not in line with current archiving practices, e.g. the requirement that information be stored on a device where, once written, it cannot be modified (e.g., a "write once, read many" or WORM device);
- the company bears the burden of proving that the requirements of the Regulation are met.
In view of the foregoing, Luxembourg businesses have proved hesitant to dematerialise their documents, and the Luxembourg financial regulator, the CSSF, has in its 2008 annual report discouraged entities in the financial sector from doing so.
2. How do the new rules address these shortcomings?
On 13 February 2013, the Luxembourg government has submitted to the Luxembourg Parliament the long-awaited e-archiving act and accompanying grand ducal regulation (the "Proposal"). The Proposal will bring about the following changes:
- an electronic (or microform) copy of written agreements within the meaning of the Civil code and commercial documents that must be stored according to the Commercial code, will be deemed equivalent to the original even if the paper version still exists;
- the conditions of equivalence guarantee the authenticity and integrity of the copy but will be neutral from a technological perspective and in line with current archiving practices;
- the burden of proof of the compliance with these conditions will be shifted for undertakings that wish to dematerialise and store their business documents (including contracts) by electronic means provided they use a certified dematerialisation and conservation service provider (PSDC);
- two new categories of "support" financial services professionals will be introduced.
3. What is a dematerialisation and conservation service provider (PSDC)?
Pursuant to the Proposal, any undertaking can perform document
dematerialisation and conservation services in Luxembourg once it
has obtained a general business licence.
However, only qualified dematerialisation and conservation service
providers (PSDCs) can certify that all conditions are
met for an electronic (or microform) copy to have the same
probative value as the original.
Undertakings can only obtain PSDC status after certification by
duly accredited organisms and after validation of notification by
the Luxembourg Institute for Normalisation, Accreditation and
Security (ILNAS). Although the Proposal has yet to be approved,
undertakings that wish to apply for PSDC certification can start
preparing their applications now, in accordance with the technical rules for certification issued by
ILNAS. These rules are based on international standards, such as
ISO/IEC 15489:2001 on record management, ISO/IEC 27001:2005 and
ISO/IEC 27002:2005 on information security management, and ISO
30301:2011 on operational management. Undertakings can obtain
certification and ILNAS notification validation for
dematerialisation activities only (PSCD-D), for conservation
activities only (PSDC-C) or for both dematerialisation and
conservation activities (PSDC-DC).
The Proposal also requires PSDCs to provide
information to their customers about, amongst other
things, the dematerialisation, conservation, copy, transfer and/or
destruction procedures to be used as well as the contractual terms
and conditions, prior to conclusion of the agreement. Customers
have specific rights, as well, including the right
to claim back dematerialised and/or conserved data if a PSDC is
subject to insolvency proceedings or ceases or must cease its
activities (due to loss of certification). PSDCs are further
prohibited from granting any kind of security interest in the
equipment and supports used to conserve data. These rights are in
line with those provided for by another Proposal, which will allow
http://tinyurl.com/bmt5eph data to be claimed back from bankrupt
service providers.
4. What other rules are relevant in a dematerialisation and conservation project?
When a Luxembourg-based financial sector
professional (FSP) wishes to outsource document
dematerialisation and/or conservation, it must in principle call
upon a so-called "support FSP" which is authorised by the
finance minister to conduct dematerialisation and/or conservation
activities on behalf of FSPs. Both the FSP and the support FSP must
also abide by the CSSF's http://tinyurl.com/bsoqfe5 outsourcing
rules. Undertakings that dematerialise for FSPs documents with
probative value and/or conserve such documents must have the PSDC
status as well as an authorisation of the Minister of Finance.
These authorisation requirements are also laid down in the
Proposal.
If personal data are involved, it goes without saying that EU and
national data protection rules must be respected.
These rules will be amended in the near future by a new Data
Protection Regulation. This forthcoming regulation will probably
impose an obligation to carry out a data protection impact
assessment for processing transactions and procedures that pose
specific risks, such as "large-scale filing systems" (see
Recital 71 to the European Commission proposal for such a regulation). It remains to
be seen whether the risk assessment carried out in the PSDC
certification process will be sufficient in this respect.
5. What is the probative value of electronic copies in a cross-border context?
The new rules on the dematerialisation and conservation of
documents are based on international standards and good practices.
They will certainly contribute to the acceptance of dematerialised
documents abroad, e.g., before a foreign court.
The cross-border acceptance of dematerialised documents, archived
in accordance with the conditions laid down in the Proposal, will
most likely be ensured by the forthcoming Regulation on electronic identification and trust
services for electronic transactions in the Internal Market.
According to the proposal for the regulation, issued by the
European Commission on 4 June 2012, an electronic document shall be
considered equivalent to a paper version and admissible as evidence
in legal proceedings in all EU countries, if the authenticity and
integrity of the electronic document can be warranted. It goes
without saying that in its new dematerialisation and conservation
rules, Luxembourg is taking the lead in determining how the
conditions of authenticity and integrity can be applied in
practice.
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.