CORONAVIRUS – a guide to electronic signatures during the COVID-19 UK lockdown
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People may have limited or no access to printers and/or scanners and be unable to physically sign documents, and witnessing signatures may be practically impossible. With travel restrictions unlikely to be lifted any time soon, businesses and individuals will need to adapt and find alternative means of signing documents. James Lewis and Bhavul Haria consider whether electronic signatures may be the answer.
What is the English law position on electronic signatures?
The English law position is that electronic signatures are valid. In September 2019, the Law Commission set out its findings in its report entitled 'Electronic execution of documents’. The report found, inter alia, that electronic signatures can be used to execute documents provided that there is an intention to authenticate and that any execution formalities are satisfied. The Law Commission report was supported by a UK Government Ministerial Statement on 3 March 2020.
The report also sets out an explanation of the existing English law on electronic signatures, which is based on the EU eIDAS Regulation, the Electronic Communications Act 2000, as amended, and case law relating to electronic and non-electronic signatures. The report can be seen here.
What is an electronic signature?
The law does not prescribe a particular type of electronic signature. However, each of the following is a valid form of electronic signature:
- An individual typing their name into a contract.
- An individual electronically pasting their signature as a pictorial image into an electronic version of the document.
- Signatures generated by e-signature platforms such as DocuSign.
- An individual using an e-pen or finger to sign their name on a tablet.
The courts have also held that a name typed at the bottom of an email, a scanned signature or clicking 'I accept' on a website are all valid signatures.
All the above may be valid under English law, but the best way of avoiding disputes further down the line is still to circulate a formal contract for the parties to sign, and for the document to be dated by agreement once both parties have exchanged signed versions. The act of signing can be made much easier by using an e-signature platform. E-signature platforms have encryption software which helps to verify the identity of the signatory, and gives increased evidential weight to the e-signature process.
Practical considerations
a. Can all documents be signed electronically?
Not all documents can or should be signed electronically. There are several limitations of which to be aware:
- Registries and regulators: certain documents still require original 'wet-ink' signatures. For example, this requirement applies to documents that need to be filed with the UK tax authorities or the Land Registry. For these types of documents, electronic signatures will unfortunately not be an option. In addition, UK Companies House does not currently accept e-signatures and may still require a 'wet-ink' signature.
- Corporate limitations: the articles of association of companies should be carefully checked prior to signature, as these may include a restriction on the ability to sign documents electronically.
- Location of signature: there may be tax considerations depending on where the document was signed. If this is the case, the parties may need to reconsider whether it is appropriate to sign electronically.
b. Witnessing of documents
Where there is a requirement for a deed to be signed "in the presence of a witness", the Law Commission's view is that the witness must be physically present. However, there is industry-wide debate over whether "presence" means the witness being physically present in the room or whether watching the signature being applied live via video-link would be sufficient. In the absence of any case law or legislation to provide substantive clarity, it is generally agreed that it remains best practice for the witness to be physically present, rather than use a video-link.
With the current UK lockdown in place, this requirement for the physical presence of a witness may prove problematic. The best that can be done is to ensure that the witness stands at least two metres away from the signatory with all necessary precautions taken.
If families are isolated together, it may be that an adult family member could act as a witness for convenience. However, for certain types of deeds, such as wills, there is also a requirement for the witness to be truly independent, meaning not related to the signor.
For further commentary on the witnessing of documents during the current lockdown restrictions, please see this recent Fieldfisher article here.
c. Documents for share transfers
Prior to the UK lockdown, HMRC required paper transfers bearing 'wet-ink' signatures to be lodged with them for stamping with the relevant stamp duty paid. This requirement has now been temporarily lifted and HMRC has now confirmed it 'will accept e-signatures while coronavirus (COVID-19) measures are in place' (see https://www.gov.uk/guidance/pay-stamp-duty).
d. Documents for court proceedings
In the case of the majority of court documents, electronic signatures will be sufficient. However, please note that in respect of documents which require some form of witnessing (such as an affidavit), there may be serious difficulties in circumstances where it is not practical or safe to physically meet with the relevant professional. As discussed above, it is best practice for the witnessing to be done in person instead of via video-conference.
e. Contracting with legal entities outside the jurisdiction
Under English law, contracts entered into by overseas (i.e. non–UK) legal entities will generally need to be executed by those entities in accordance with the law of their place of incorporation. If a contract is being entered into with a company incorporated outside the UK, legal advice should be taken in that company's jurisdiction of incorporation to make absolutely certain that the use of e-signatures will not impact on the contract's validity.
f. Legalisation of documents
Documents issued in one country that need to be legally recognised in another are required to undergo a process known as legalisation. Legalisation is normally performed by the relevant foreign embassy or by the government through the Foreign and Commonwealth Office (the 'FCO') or both, as appropriate. In England and Wales, the FCO normally legalises documents and affixes the apostille, thereby certifying a notary's signature and seal as genuine.
The most recent guidance suggests that while it is still possible to find a notary to complete the notarisation of a document, the FCO is only issuing apostilles through their business counter at Milton Keynes to existing registered business users. If an individual wants to get a document legalised, they will have to initiate the process by going through a third-party agency or service-provider who is already a registered business user, who will then liaise with the FCO on their behalf. There is some indication that the FCO is making plans to return to a "business as usual" service once lockdown restrictions are lifted, but it remains unclear when this will be.
The ramifications of COVID-19 may lead to the FCO modernising its approach going forward. Although currently the FCO does not issue e-apostilles, since March 2014 the UK (through the FCO) has operated an electronic register of apostilles (known as the e-register). If the FCO does begin to issue e-apostilles, it may partly be as a result of the work being undertaken by the Hague Conference on Private International Law to promote the use of both e-apostilles and e-registers to electronically register e-apostilles and paper apostilles. We will endeavour to update you on any developments in this area as and when they arise.
Fieldfisher comment
You may wish to consider the following points when looking to sign documents during COVID-19:
- Prepare for signature by communicating with all relevant parties as early as possible, in order to agree a method of signature that is acceptable to each party.
- Find a way of obtaining scanned copies or pictorial images of manuscript signatures in advance so they can be easily inserted into electronic copies of documents. Consider which of your colleagues may have access to printers or scanners to facilitate this.
- If speed is not of the essence, consider arranging for original documents to be posted between the parties for physical signature.
- Check in advance if witnessing is likely to become an issue, and if so, ascertain who would be the most suitable candidates for witnessing.
- Obtain access to e-signature platforms such as DocuSign in advance, and work out who will be co-ordinating the signatures on the platform.
- As an additional protection and to add further evidential weight to the validity of an e-signature, the following additional confirmations could be provided:
- An email from the signatory confirming that they e-signed the relevant document.
- Where relevant, an email from the witness, confirming that: (i) they were physically present to witness the signatory e-signing the relevant document; (ii) they witnessed that e-signature; and (iii) they subsequently inserted their own e-signature into the document.
Please do not hesitate to get in touch if you require any assistance with signing documents during the COVID-19 lockdown.
If you are an ISDA member, please see Fieldfisher's recently launched E-Signature Opinion Portal, which contains digestible summaries of the Legal Opinions on Electronic Signatures (the "E-Contract Opinions").
Please click here to read Fieldfisher's latest COVID-19 related updates and practical guidance