"The validity of e-signatures will depend on the legislation and/or common law of the relevant jurisdiction."
"If the physical location of a document is important for such matters as stamp duty, it may be preferable to use wet-ink signatures."

Electronic signatures and the validity of their use

22 Apr 2020

The use of electronic signatures ("e-signatures") is increasingly popular and it is not hard to see why. They provide flexibility and efficiency, without the need for contracting parties to convene at the same location to sign a single document. Instead, parties are able to access and sign documents electronically from anywhere in the world, including the convenience of their home. This is particularly useful for individuals who find themselves working remotely away from their offices.

However, contracting parties need to be careful and ensure that their relevant jurisdiction recognises e-signatures as a valid method of signing documents.

This briefing covers whether the use of e-signatures will be considered valid under the relevant legislation of the jurisdictions of BVI, Cayman Islands, Guernsey and Jersey.

For ease of reading, this table also provides a high-level overview and comparison of the relevant provisions of the law on e-signatures in BVI, Cayman Islands, Guernsey and Jersey.

What is an e-signature?
E-signatures may take various forms including:

  • typing an individual's name into a digital copy of the document and/or contract;
  • pasting an individual's signature into a digital copy of the document and/or contract;
  • using e-signature platforms such as DocuSign; and
  • signing a signature on touchscreen or writing pads using a stylus pen or otherwise.

The validity of e-signatures will depend on the legislation and/or common law of the relevant jurisdiction.

For each jurisdiction

BVI
Relevant law
The BVI have recently amended and updated the Electronic Transactions Act, 2019 (the "BVI Law") to provide for the facilitation and regulation of electronic communications, electronic transactions and related matters.

What is recognised as an e-signature?
The BVI Law does not have a singular definition for an e-signature. Instead, it defines "electronic" as anything "relating to technology having electrical, digital, magnetic, wireless, optical, electro-magnetic, biometric, photonic or similar capabilities".

It then goes on to provide that "signature" means "a method, electronic or otherwise, used to identify a person and to indicate the intention of that person in respect of the information contained in a record".

When will an e-signature be considered valid?
The BVI Law sets out that any transaction conducted electronically "shall not be denied legal effect or validity solely on the ground of the type or method of electronic communication, electronic signature or electronic authentication selected by the parties."

It then goes on to state that, where a law or agreement requires a signature, that requirement is satisfied in relation to an electronic communication if:

a) a method of e-signature is used to identify the person and to indicate the person to sign or otherwise adopt the information in the electronic communication; and
b) the method of e-signature used is as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in light of all the circumstances.

Where an e-signature is required by the parties to an electronic transaction and the parties have not agreed on the type of e-signature to be used, the requirement of reliability in b) above is satisfied in relation to any electronic transaction if:

  • the signature creation data is linked to the signatory and no other person;
  • the signature creation data at the time of signing is under the control of the signatory and no other person;
  • any alteration to the e-signature, made after the time of signing is detectable; and
  • where a purpose of the legal requirement for a signature is to provide assurance as to the soundness of the information to which it relates, any alteration made to that information after the time of signing is detectable.

The BVI Law also provides helpful guidance as to when an e-signature will be treated as secure. It must be:

  • unique to the person using it;
  • capable of identifying such person;
  • created in a manner or using a means under the sole control of the person using it; and
  • linked to the electronic record to which it relates in a manner such that if the record was changed the e-signature would be invalidated.

If disputes involving a secure electronic record subsequently arise then there is a legal presumption that, unless evidence to the contrary can be shown:

  • the secure electronic record has not been altered since the specific point in time to which the secure status relates;
  • the secure e-signature is the signature of the person to whom it correlates; and
  • the secure e-signature was affixed by that person with the intention of signing or approving the electronic record.

Are there any exceptions?
There are circumstances where, even if an e-signature fulfils the above, it will not be considered valid for the signing of documents.

Firstly, the BVI Law explicitly states that it cannot be used to require any person to use or accept electronic signatures. Given this, it would be recommended that all parties' consent to the use of electronic signatures be confirmed prior to the signing of the document.

Secondly, an e-signature will not be considered valid for the purposes of the BVI Law if it is used in relation to the following documents:-

  • a will or testamentary instrument;
  • the conveyance of real or personal property or the transfer of any interest in real or personal property;
  • indenture, declaration of trust or power of attorney;
  • documents relating to immigration, citizenship or passport matters;
  • any other thing required to be done by deed; or
  • any other matters that may be prescribed by the Minister by Order.

Cayman Islands
Relevant law
The Electronic Transactions Law (2003 Revision) (the "Cayman Law") regulates, inter alia, e-signatures.

What is recognised as an e-signature?
The Cayman Law defines e-signature as "an electronic sound, symbol or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record”.

When will an e-signature be considered valid?
The Cayman Law provides that, where a person is required by the law to provide his signature, a contract shall not be excluded, restricted or deprived from having full legal effect by virtue of the contract being executed with an e-signature, subject to satisfaction of section 19(1) of the Cayman Law and provided that it otherwise meets any applicable statutory requirements for the execution of these contracts. This essentially puts an e-signature on the same footing as a wet-ink signature in the Cayman Islands.

In respect of section 19(1) of the Cayman Law, this requirement "shall be met in relation to an electronic record if an e-signature is used that is as reliable as was appropriate for the purpose for which the electronic record was generated or communicated, in all the circumstances, including any relevant agreements."

Section 19(3) of the Cayman Law provides guidance as to what is to be construed as "reliable" for the purpose of satisfying section 19(1) of the Cayman Law, this criteria is as follows:

  • the means of creating the e-signature is, within the context in which it is used, linked to the signatory and to no other person;
  • the means of creating the e-signature was, at the time of signing, under the control of the signatory and of no other person;
  • any alteration to the e-signature, made after the time of signing, is detectable; and
  • where a purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable.

However, the criteria set out in section 19(3) of the Cayman Law are not the only ways that reliability (or non-reliability) can be evidenced. They are merely methods that can provide reliability in respect of an e-signature.

The criteria for reliability as set out in section 19(3) has a strong evidential nature and it does not have specific standards for proving identity in electronic transactions. Instead, it merely lists a set of measures that assists in evidencing the parties' intention for a document to be binding.

Should any dispute as to the authenticity of the e-signature arise at a later stage, then the Cayman Law provides that the legal burden is on the person seeking to rely on the e-signature. The person may not be able to rely on the e-signature if they failed to:-

  • take reasonable steps to verify the reliability of an e-signature; or
  • where an e-signature is supported by a certificate, take reasonable steps to –
    • verify the validity, suspension or revocation of the certificate; or
    • observe any limitation with respect to the certificate.

Are there any exceptions?
The Cayman Law does not apply in relation to signatures for the creation, execution, variation or revocation of a will or other testamentary instrument.

Guernsey
Relevant law
The Electronic Transactions (Guernsey) Law, 2000 (as amended) (the "Guernsey Law"), together with The Electronic Transactions (Exemptions) Order, 2001 (the "Guernsey Order") govern e-signatures.

There are also special rules for signing documents to be given to the Guernsey Financial Services Commission (the "GFSC"), as set out in The Electronic Transactions (Obligation to use Electronic Form) (Guernsey) Ordinance, 2014 (the "Guernsey Ordinance").

What is recognised as an e-signature?
The Guernsey Law defines an e-signature as "a signature wholly or partly in electronic form attached to or logically associated with information in electronic or non-electronic form". (The Guernsey Law uses the term "signature in electronic form" rather than "e-signature".)

Electronic includes "electrical, magnetic, wireless, optical, digital or electromagnetic".

When will an e-signature be considered valid?
Section 4 of the Guernsey Law provides that "A signature, seal, attestation or notarisation shall not be denied legal effect, validity, enforceability or admissibility solely because it is in electronic form".

In addition, section 8(1)(b) of the Guernsey Law provides that if a law, whether statutory or customary, requires a signature, a signature in electronic form satisfies the relevant law.

However, the provisions of section 8 of the Guernsey Law cannot compel a person to do or accept anything in electronic form or by electronic means. This is subject to any statutory requirement to use electronic form, such as an obligation to use electronic form for documents submitted to the GFSC under the Guernsey Ordinance (which provides that documents such as applications, returns, reports, notices and forms must be given in such electronic form or such non-electronic form as the GFSC requires).

In effect, the Guernsey Law recognises that an e-signature can be as valid as a wet-ink signature so long as all parties involved (including the recipient) consent to the use of an e-signature. It is therefore necessary to secure the other parties' consent prior to signing any documents with an e-signature.

Are there any exceptions?
Section 1 of the Guernsey Order lists a number of documents to which the provisions of sections 1 to 5 and 8 of the Guernsey Law do not apply, including:

(a) conveyances of real property or transfers of any interest in real property;
(b) leases of real property;
(c) wills, codicils or any other testamentary instruments;
(d) declarations of trust, powers of attorney or any documents required to be sealed;
(e) negotiable instruments; and
(f) affidavits or statutory or sworn declarations.

The "explanatory note" at the end of the Guernsey Order states that "At least for the time being, the transactions and other matters specified in [the Guernsey Order] must still be transacted and done without the benefit of making use of electronic means or electronic form". While not binding, this note provides useful guidance as to the intended application of the Guernsey Order.

Our view is that:

  • documents can be validly signed using electronic signatures, provided that they do not fall within the list of documents in section 1 of the Guernsey Order; and
  • where a document is one which falls within the scope of the Guernsey Order (which would include documents containing a power of attorney or declaration of trust) and where that document is subject to Guernsey law or signed in Guernsey or by a Guernsey entity, wet-ink signatures should be used.

Jersey
Relevant law
E-signatures are governed under the Electronic Communications (Jersey) Law 2000 (the "Jersey Law") and (to the extent that the Jersey Law does not apply) the customary law of Jersey.

The Jersey Law has recently been amended by the Electronic Communications (Amendment of Law) (Jersey) Regulations 2019.

What is recognised as an e-signature?
A key area of the Jersey Law focuses on the use of electronic communications to satisfy any statutory requirement for a signature.

An electronic communication is defined as "a communication of information transmitted – (a) by means of guided or unguided electromagnetic energy or of both; or (b) by other means but while in electronic form".

Information is defined as follows:

"information" includes data, text, sounds, images, codes, computer programs, software and databases.

When will an e-signature be considered valid?
As regards contracts which require to be signed by a Jersey statute, Article 12(1) of the Jersey Law provides as follows:

(1) A person required by an enactment to provide a signature is to be taken to have met that requirement in relation to an electronic communication

(a) in every case, if a method is used to identify the person and to indicate the person’s approval of the information communicated;

There are additional requirements under Article 12 where the party to the contract is a government entity.

As regards contracts which are outside the scope of Article 12 (i.e. general contracts), the customary law of Jersey would recognise the validity of an electronic signature provided that the person signing the document electronically intended to be bound by the contract. In addition, there are other provisions of the Jersey Law which support the use of electronic communications including the following:

  • As regards the formation of contracts, the Jersey Law provides that, unless the parties have otherwise agreed, the offer and the acceptance of the offer may be expressed by means of an electronic communication.
  • The Jersey Law also provides that information shall not be denied legal effect, validity or enforceability, solely on the grounds that it is in electronic form.

Are there any exceptions?
There are certain exceptions. These include:

  • There are certain court documents which may require wet-ink signatures.
  • Government agencies may still look for wet-ink signatures as regards certain documents, but we expect these requirements to be relaxed over time.

General practical considerations for all jurisdictions

There are some practical considerations that should be considered for all jurisdictions including the following:

  • Is the document governed by a law other than the jurisdiction of your organisation? If so, consideration should be given as to whether the relevant legal system recognises e-signatures as a valid form of execution.
  • Are you comfortable that the e-signature actually comes from the person purporting to sign?
  • Does the person signing the document have the authority to do so?
  • If a document requires several parties to sign, it is important to ensure that all parties have signed the correct version.
  • Do all parties need to execute the document in the same manner? As a general rule, the parties to a contract do not have to sign in the same manner. For example, it is possible for one party to sign using a wet-ink signature and for another party to sign using an e-signature.
  • While e-signatures are recognised and permissible under the laws of most jurisdictions, it is good practice to obtain the other contracting parties' consent before an e-signature is used.
  • If a document needs to be witnessed, it may not be possible for a witness to witness the signature of a document remotely.

Situations where e-signatures will not be appropriate
As highlighted in this briefing, there may be situations where e-signatures cannot be used under the laws of a particular jurisdiction and it should be considered whether your particular document falls within any of these situations. In particular, where a document needs to be filed or registered with a court, registry or government agency, then wet-ink signatures may need to be used.

If the physical location of a document is important for such matters as stamp duty, it may be preferable to use wet-ink signatures.

There may be situations where it is simply the preference of a party to require wet-ink signatures.

Recommended next steps
You should consider whether you are willing to accept electronic signatures. One size may not fit all and different approaches may be needed depending on the nature of the transaction.

You should also consider the other practical considerations listed above. These considerations will apply in most situations, regardless of the jurisdiction.

 

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