Commercial Property Article
07 September, 2018
With a Law Commission Consultation Paper adding its voice to the advocates for electronic signatures, the advancement of electronic signatures continues towards universal acceptance.
Traditionally, the law has never been very good at keeping up with technology. Whether it involves downloading music, development of AI or any other type of advancing science, the law often finds itself playing catch up. The issue of Electronic Signatures has been no exception.
Electronic Signature technology has been around for many years now, and electronic transactions have become completely commonplace in some areas, such as sale of goods. Yet some would argue its legal authority and legal position has never been fully addressed when it comes to more complex documents that have a requirement of being executed 'in writing'.
Last week, the Law Commission published a consultation paper on the legal position of electronic signatures. Its findings, though not legally binding, send out a message very much in tune with what many have long suspected; that electronic signatures are perfectly legal, and can be used in the overwhelming majority of cases to execute legal documents effectively.
Their conclusion is hardly revolutionary; this report is just the latest in an ever increasing line of statutes, cases and commentary that have helped nudge electronic signatures into becoming a normal, everyday practice. Most notably the EU's Electronic Identification and Trust Services Regulation in 2014 laid down an EU-wide framework for the validity of electronic signatures which received universal praise at the time from the Law Society and the City of London Law Society, who hailed it as a watershed moment for normalising electronic signatures. Additionally, domestic cases of 'Bassano v Toft' and 'Golden Ocean Group Ltd v Salgaocar Mining Industries' have already debated the issue of electronic signatures and have consistently ruled in favour of allowing the new type of execution; confirmation for many that there is absolutely no reason why any legal requirement for a document to be 'writing' cannot be satisfied by an electronic signature.
If there are any who still have doubts, or are looking for clearer guidance in the form of specific legislation that acknowledges the validity of electronic signatures, they may be forced to wait even longer for anything so explicit. The Commissions' report concluded that the law in this area is already sufficiently clear, and was unconvinced that an unambiguous legislative statement on the validity of electronic signatures is required, suggesting instead that anybody so inclined should look to bring a test case to the courts to remove any doubts that continue to linger.
The Commission does, however, offer some advice for reform, specifically on the issue of witnessing electronic signatures. The Commission have acknowledged that as technology progresses, uncertainty has arisen regarding how electronic signatures should be witnessed; if you need a second party over your shoulder as you sign, if a video link could suffice, or if indeed witnessing is even required at all since digital security and computer verification software performs essentially this same task. The Commission's advice on this point is straight forward; that at this stage there is no law that justifies departing from the requirement for a human to witness a signature. They were, however, receptive to the idea of doing this via video, which is itself a step in the right direction of embracing newer, more convenient technologies.
There is, however, a glaring gap in the Commission's report. The Commission specifically excludes the use of electronic signatures in Property Law from its scope. It is still the case that registered dispositions of land continue to require a traditional 'wet-ink' signature. This is because the law is still completely beholden to the rules of the Land Registry, which refuses to accept electronic signatures (though this may soon change too, as HMRC have this year announced that they shall be trialling a completely digital mortgage service, with a view to expanding this out to all other types of land documents).
However, whilst it is unfortunate that Property Law seems to be falling behind in embracing modern signature technologies, it is without a doubt encouraging that in most other areas of law the pathway to electronic signatures is increasingly clear. There is no reason why UK organisations should not take steps to utilise this faster, cheaper and more convenient form of execution.
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