Introduction
Driving e-commerce with e-signatures
Types of e-signatures
Effectively implementing e-signatures
One factor that has contributed to the global increase of e-commerce - and improved the commercial landscape in Cyprus as an EU member state in particular - is the introduction of e-signatures as a means of authenticating a person's identity and entering into a contract. Following the implementation of the EU Regulation on Electronic Identification and Trust Services for Electronic Transactions in the Internal Market (the Regulation)(1) and the enactment of Law 55(I)/2018 (the "E-signatures Law") as amended, Cyprus can now offer quick and efficient completion of transactions, without compromising the certainty that is required by the courts when a transaction is disputed.
The Regulation has established a comprehensive legal framework that covers:
- e-signatures;
- electronic seals;
- electronic documents; and
- regulates the wider electronic communications within EU member states.
According to the Adobe Digital Index, which included global numbers in its April 2021 report, it is predicted that global e-commerce sales will reach $4.2 trillion in 2021, with US consumers accounting for close to one quarter of that spending. Forbes reported that global e-commerce reached $876 billion in the first quarter of 2021, which represents a 38% year-over-year growth. As 2022 approaches, it is evident that the growth and need for e-commerce may be one of the few positive outcomes of the covid-19 pandemic.
Driving e-commerce with e-signatures
Facilitating e-commerce depends on online identity authentication. The E-signatures Law and the Regulation provide the impetus for Cyprus-based e-commerce to develop and grow. At the same time, these developments assist in the growth of the professional services sector. According to article 25 of the Regulation, an e-signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it was made in electronic form.
Although the new legislation has yet to be tested in the Cypriot courts, it is clear that the existence of at least one form of e-signature (equivalent to a handwritten signature) provides an added level of certainty in transactions that are solely closed by e-signatures. Further, e-signatures often do away with signing formalities similar to those provided by the leading case law from the United Kingdom, such as the signing protocol that became widely used by the case R (on the application of Mercury Tax Group and another) v HMRC.(2) In the Mercury case, wet-ink signatures were necessary before they could be electronically transmitted and accepted, if the signing protocol was followed as approved.
The Regulation provides for three types of recognised e-signatures:
- simple electronic signatures – data in electronic form that is attached to, or logically associated with, other electronic data and that is used by the signatory;
- advanced electronic signatures – which are:
- uniquely linked to the signatory;
- capable of identifying the signatory;
- created by means that the signatory can maintain under their sole control; and
- linked to the related data in such a way that any subsequent change of the data is detectable; and
- qualified electronic signature – which has the most significant judicial value as it is certified by a qualified trust service provider and can be used for submissions with public authorities. It is the only signature with the same judicial value as a wet-ink signature.
Effectively implementing e-signatures
The existence of the aforementioned legislative framework allows for the smoother facilitation of business and the growth of e-commerce. In a professional services framework and, more specifically, for the closing of legal transactions based on solely electronic signatures, the below factors should be considered.
Is a legally recognised e-signature being used?
This can be established by reference to the e-signature definitions in the Regulation and the E-Signature Law.
Is there the intention that the e-signature is binding?
A two-factor authentication will allow the signatory to adequately expresses their intention to be bound by the e-signature that they are providing. This is particularly relevant where a simple e-signature is being used.
Did the correct person sign the document in question?
This question goes beyond the identification of the person signing. It requires ensuring the person has actual authority to sign.
Are there any restrictions in the constitutional documents of the entity bound by the signatory's e-signature?
There is a requirement for the proper legal review of constitutional documents and any effective resolutions that may affect an individual's ability to enter into a contract.
Is there a specific form of signing that must be followed in order for the contract to be recognised by the relevant authorities?
Certain authorities may require a document with a wet ink signature, if they are unable to electronically file documents. For example, filings at the district lands offices currently require agreements to be signed in wet-ink.
For further information on this topic please contact Stella Koukounis or Chara Paraskeva at Solsidus Law by telephone (+357 22 007700) or email ([email protected] or [email protected]). The Solsidus Law website can be accessed at www.solsiduslaw.com.
Endnotes