Electronic Signatures - A Means of Ensuring Business Continuity during Covid-19?

Due to the current dependence on remote working as a result of the Covid-19 pandemic, both public sector bodies and private entities are seeking ways to continue business as usual, insofar as possible. One question that frequently arises is how documents that would normally be signed/executed with wet ink signature or application of a corporate seal should be managed.
 
We explore below a number of alternatives to original/wet ink signatures and seals, which are likely to be employed far more widely in the current climate.
 
Electronic Signatures
 
An electronic signature is 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.
 
The law in Ireland relating to the use of electronic signatures is governed by the EU Electronic Identification and Trust Services for Electronic Transactions in the Internal Market Regulation 2014 (the "eIDAS Regulation") and the Electronic Commerce Act, 2000 (the "e-Commerce Act").  
 
The eIDAS Regulation provides for a common EU framework requiring the recognition and acceptance of electronic signatures, electronic seals and electronic documents. It has direct effect throughout the EU since 1 July 2016, which means that in the event of a conflict between this and national law, it will prevail. The eIDAS Regulation does allow some latitude to member states however, and in fact provides that it is for national law to define the legal effect of electronic signatures.
 
Most importantly, both the eIDAS Regulation and the e-Commerce Act provide that an electronic signature cannot be denied legal effect and admissibility 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.
 
There are three recognised types of e-signatures, defined in the eIDAS Regulation as follows:
 

• Electronic Signature (the "simple electronic signature") – “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 Signature – an electronic signature that is uniquely linked to, and capable of identifying, the signatory. Such a signature is linked to the signatory in a way that any change to the data at a later date is detectable. It involves the encryption of a document using a code unique to the signatory, which can only be decrypted by the recipient.
• Qualified Electronic Signature – this is similar to an advanced electronic signature, however it has an added layer of security in that it has to be created by a qualified creation device and based on a qualified certificate for e-signatures. These qualified certificates are provided by trust services providers (various companies provide this service), who verify the identity of the signatory prior to issuing a certificate. A list of qualified trust service providers is available on the EU Commission website, available HERE. This list is recognised across all EU member states.

Requirement for Consent
The e-Commerce Act provides that where an e-signature is to be used, the other party must consent to the use of an electronic signature. The recently issued Law Society Guidance Note on electronic signatures suggests that, while consent can be implied or inferred, best practice is to seek express consent, where possible.
 
Exceptions to the Use of Electronic Signatures
Certain types of documents cannot be executed by electronic signature. Section 10 of the e-Commerce Act provides that, notwithstanding the provisions, the law in relation to the execution of certain documents still applies. These are documents that, by law, require wet ink signatures, specifically:
 

• A will, codicil or other testamentary instrument to which the Succession Act 1956 applies;
• A trust;
• An enduring power of attorney;
• Documents for the creation, acquisition, disposal or registration of interests in real property (including leasehold interests), other than contracts for the creation, acquisition or disposal of such interests;
• An affidavit or statutory declaration;
• A document required by the rules, practices or procedures of a court or tribunal.

 
Documents under Seal
 
The eIDAS Regulation also includes a provision for the use of electronic seals. Under the eIDAS Regulation, electronic seals can't be denied legal effect simply because they are in electronic form. As with electronic signatures, the eIDAS Regulation provides for different types of electronic seals, including advanced electronic seals and qualified electronic seals. These seals need to be created utilising seal creation data and are at present not commonly used, if at all, in practice in Ireland.
 
Usefully, Section 16 of the e-Commerce Act provides that where a seal is required (by law or otherwise) to be affixed to a document, then that requirement can be taken to have been met where:
 

1. the document indicates that it is required to be under seal; and
2. it includes an advanced electronic signature, based on a qualified certificate, of the person or public body by whom it is required to be sealed.

 
If the document is being given to a person or body which is not a public body, the recipient must consent to the use of an advanced electronic signature based on a qualified certificate.
 
If the document requiring the seal is to be given to a public body, the public body can request that certain IT and procedural requirements are met, provided those requirements are objective, transparent, proportionate and non-discriminatory,
 
The Law Society's Guidance Note suggests that the Society is not aware of this provision being relied upon to date in Ireland, however, it seems to be a useful provision that, if employed, could facilitate continued progression of matters remotely, without the need for hard copy documents and office attendance.
 
For Irish companies that normally execute deeds by way of application of a company seal, another alternative (in addition to Section 16 referred to above) is to utilise a Power of Attorney, whereby a natural person is appointed by the company under a Power of Attorney to execute the particular deed on behalf of the company. The appointee could use an electronic signature to sign the document.

The Power of Attorney itself would not require to be executed under seal, as it would not have to be in the form of a deed.

Guidance
 
While there are some barriers to the use of electronic signatures in certain scenarios, and public bodies and private entities alike need to exercise caution so as to ensure that the execution/signing of documents is legally sound, it seems that the legislation allows considerable scope for the use of alternatives to wet ink signatures.
 
As referred to above, the Law Society's Business Law Committee has helpfully issued a recent guidance note on e-Signatures, Electronic Contracts and Electronic Transactions (available HERE), which provides timely guidance on the law and practice in Ireland on the utilisation of electronic means of signing and executing documents.