CONTEXT
Due to the exceptional circumstances linked to the ongoing COVID-19 pandemic and the related restricting measures taken by the Luxembourg Government, including the confinement and the strong recommendation to implement remote working when possible, a significant number of people are working remotely since mid-March.
In normal time, rules in civil law matters relating to bilateral agreement require such agreement to be signed by each parties by wet ink and in as many originals as there are parties thereto. From a pragmatic standpoint, where many deals are cross-border, parties often sign agreements, scan the signature pages, which are exchanged by email between the contracting parties before the original documents are consolidated and transmitted to each individual signatory.
Hence, given the impact of COVID-19 on daily ongoing of the affairs, the question arise today as to a potential alternative solution to wet ink signature; in this context, does electronic signature offer an efficient legal solution for legal or natural persons required to sign/conclude documents/contracts at distance.
LEGAL FRAMEWORK
The Regulation 910/2014 (EU) of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (the eIDAS Regulation), regulates the matter and directly applies in the Member States of the European Union. The eIDAS Regulation provides for a comprehensive legal framework for trusted services, in particular for electronic signature services.
TYPES OF ELECTRONIC SIGNATURES
The eIDAS Regulation creates three types of electronic signature with different probative values:
- The electronic signature means data in electronic form attached to or logically associated with other data in electronic form that the signatory uses to sign. In other words, the electronic signature does not involve any independent third-party verification of the signatory’s identity. The class of electronic signatures includes, amongst others, scanned signatures, email signatures, etc.
- The advanced electronic signature is an electronic signature that is (a) uniquely linked to the signatory; (b) capable of identifying the signatory; (c) created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and (d) linked to the data signed therewith in such a way that any subsequent change in the data is detectable. In such a sense, an advanced electronic signature that is for instance a digital signature created with public key cryptography and inserted into the code of the signed electronic document.
- The qualified electronic signature is an advance electronic signature that is, (a) created by a qualified electronic signature creation device, and (b) based on a qualified certificate for electronic signatures. The qualified electronic signature is defined as such because it is validated by a qualified trust service provider recorded in a trusted list published by an EU Member State. Such trusted list has a decisive effect on the status of the service provider as "qualified". The current list of certified trusted service providers can be found on the European Commission website.
LEGAL EFFECTS OF ELECTRONIC SIGNATURES
The Luxembourg civil code recognises the legality and validity of an electronic signature.
Furthermore, the eIDAS Regulation sets two main principles relating to the admissibility of electronic signatures:
- The non-discrimination rule which means 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 that it does not meet the requirements for qualified electronic signatures. In other words, all three types of electronic signatures are admissible as evidence.
- A qualified electronic signature shall have the equivalent legal effect of a wet ink signature and the qualified electronic signature based on a qualified certificate issued in an EU Member State shall be recognised as a qualified electronic signature in all other EU Member States.
BURDEN OF PROOF IN CASE OF A DISPUTE
As mentioned above, the validity of an electronic signature is recognized. Nevertheless, its validity may be questioned thus potentially triggering effect on the concerned agreement. In this circumstance, the burden of proof will depend on the type of electronic signature that has been used.
- On the one hand, given that a qualified electronic signature shall have the equivalent legal effect of a wet ink signature, this means that the person questioning its validity must prove its invalidity;
- On the other hand, an electronic and an advanced electronic signature, despite being recognised as valid, are not automatically deemed equivalent to a wet ink signature. Therefore, in case of dispute, the burden of proof rest with the party relying on the authenticity of such signatures.
Such evidences may result from elements surrounding the conclusion of the captioned agreement like correspondence/emails between parties, behaviour of the parties, experts’ reports, etc. For these types of signature, one way to circumvent such potential problem could be the provision of a specific clause in this respect in the agreement whereby parties formally agree in advance on the manner such agreement will be signed.
SCOPE
It is important to draw attention to the fact that not all documents are eligible for electronic signature. Without being exhaustive: (i) shareholder loans; (ii) board minutes; (iii) minutes of ordinary general meeting of shareholders (not to be held before notary); (iv) NDA; (v) purchase orders; (vi) service agreements, etc. can be signed electronically; while (i) notarial deeds (incorporation of a company, amending the articles of association, etc.); (ii) agreement transferring ownership in real estate; (iii) agreement requiring by law the intervention of Courts, public authorities or officers; etc. cannot be signed electronically.
IN PRACTICE
As of 30 December 2019, the list of trusted service providers for Luxembourg mentions: (i) Be INVEST International SA and (ii) Lux Trust SA as currently active trust service providers both delivering qualified certificate for a qualified electronic signature.
Should you need any further information, please contact Pierre-Alexandre Degehet by sending an email to padegehet@bsp.lu
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