Parties involved in international trade are eager to use technology to conclude and execute contracts more efficiently, hoping to save resources and accelerate trade flows. Electronic signatures are a key means of doing this (blockchain being the other major opportunity).
The term ‘electronic signature’ encompasses all of the following:-
- Typing a name: Typing one’s name, initials or another identifier at the bottom of an electronic document.
- Scanned manuscript signature: Pasting a scanned copy of a manuscript signature into an electronic document.
- Digital signatures: Using public key cryptography (also known as asymmetric cryptography) to produce a signature. The signature maker encrypts a document with a private key which can be decrypted by a counterparty using a public key. Each key consists of a very large, computer-generated number.
- Stylus: Physically signing using a stylus or fingernail on a touchscreen.
- PINs and contactless: Using a PIN or contactless technology to authenticate a transaction.
- Clicking on ‘I accept’: Clicking on an ‘I accept’ or ‘Submit’ button on a website.
- Biometrics: Attaching information about a physical characteristic (e.g. fingerprint, iris, face) to an electronic document to verify the signatory’s identity.
The position on legal validity of electronic signatures is not straightforward as it depends on a combination of regulations, statute and case law, and it varies from country to country. The comparison table below summarises the position under the laws of Brazil, England and Wales, Hong Kong, People’s Republic of China, the Russian Federation, Turkey and the United States of America – all popular choices of governing law in international trade contracts. The guidance is based on input received from colleagues practising in those jurisdictions.
As can be seen from the comparison table, in jurisdictions with relaxed validity requirements (e.g. England and Wales, and the USA) the courts will take into account the alleged signatory’s intention (or not) to authenticate the subject contract. This being so, we recommend investing in electronic signing technologies which provide a high level of assurance as to identification of the signatory and his/her intention to authenticate the document. Such technologies generally involve encryption and third party certification.