Electronic signature and legality: time to reflect
Are electronic signatures legal in the UK?
Customers often ask about the legality of electronic signatures. It’s been four years since Regulation (EU) No 910/2014, 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 The eIDAS Regulation repealed and replaced the e-Signatures Directive (1999/93/EC).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. eIDAS was incredible news for the business communities of Europe, providing 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.
Three years is long enough time for reflection: a time to consider how far we have come in the legal admissibility and general acceptance of electronic signatures, and what the future may hold.
So, let’s briefly reflect.
Electronic signature law - why was eIDAS created?
The prevailing EU directive on electronic signatures termed the eSignatures Directive 1999/93/EC, gave member states the flexibility to interpret the regulation in their own way and impose their own restrictions, and exceptions. Inevitably, some countries imposed stricter laws than others and the differing laws made it impossible to establish a single acceptable standard for cross border transactions.
The new 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.
The impact of the new, predictable regulatory environment was potent. eIDAS set the stage for innovative development of e-signature solutions, therefore allowing commerce to flourish. For example, 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 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 level of signature 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.
Is an electronic signature legal?
eIDAS carves out specific use cases such as employment contracts, commercial agreements including NDA’s, sales agreements, certain real estate documents 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 in the EU can reap the benefits of e-signature in their business without worrying about discrimination against electronic signatures, simply for being electronic.
What types of electronic signatures are covered under eIDAS?
There are three different electronic signature types necessary to conduct business in the EU that are defined under eIDAS:
- Electronic Signatures, defined by eIDAS 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.”
- Advanced Electronic Signatures, which must meet a number of requirements as outlined by eIDAS. Find out more about this in our eIDAS whitepaper.
- Qualified Electronic Signatures, defined by eIDAS as, “Created by a qualified signature creation device and which is based on a qualified certificate for electronic signatures.
Electronic signature legality in the UK
Though technically still in its infancy, eIDAS has prompted a range of legal questions. 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. Electronic signatures are legally binding under UK law.
Where will eIDAS help us go next?
The UK eIDAS regulations were amended most recently in the Data Protection Act 2018. This was to reflect changes in investigatory powers. What’s more, from September 2018, eIDAS began covering multiple EU electronic solutions including electronic identification and electronic Seal (eSeal) to enable quicker and more secure cross-border transactions. Drafted with prescient care, eIDAS should continue to serve us well as agreement technology advances.
The future of agreement technology looks bright indeed.