Electronic contracts and signatures

Electronic contract availability

Are electronic contracts legally valid in your jurisdiction? If so, what rules and restrictions govern their formation (including any mandatory or prohibited provisions and contract formats)?

Yes, Article 11(2) of the Luxembourg e-Archiving Act prescribes the principle of non-discrimination of electronic documents, meaning that such documents cannot be rejected by a judge solely on the grounds that they are in electronic form or do not comply with the authenticity and integrity/durability requirements set out in that act and its executing Grand Ducal regulations.

Electronic contracts will however have the same probative value as their written counterparts only when they meet the integrity and authenticity requirements set out in the e-Archiving Grand-Ducal Regulation of 25 July 2015. Furthermore, to the extent that a so-called ‘certified dematerialisation’ or ‘e-archiving services supplier’ (which has to comply with more advanced requirements as set out in the Grand-Ducal Regulation Implementing Article 4 of the Luxembourg e-Archiving Act) is being relied upon, there is the additional benefit of presumption of equivalence.

Lastly, the following requirements must be taken into account when concluding an electronic contract:

  • in the context of both business-to-business (B2B) (Article 51 of the Luxembourg e-Commerce Act, as modified) and business-to-consumer (B2C) (Article L-222-3 of the Luxembourg Consumer Code, as modified): prior information requirements; and
  • in the B2C context: the formal requirements as set out in Article L-222-4 of the Luxembourg Consumer Code and the prohibition to include any unfair clauses – that is, any clauses that create a mere imbalance between the parties to the detriment of the consumer.

Are there any limitations or restrictions on transactions that can be concluded through electronic contracts?

Yes, pursuant to Article 50 of the Luxembourg e-Commerce Act electronic contracts are excluded for:

  • contracts that create/transfer real estate ownership (for now, this requires an authentic act with a wet-ink signature before the notary, but an imminent law proposal may change that in the near future);
  • contracts requiring by law the involvement of courts, public authorities or professionals exercising public authority;
  • contracts of suretyship granted and on collateral securities furnished by persons acting for purposes outside their trade, business or profession; and
  • contracts governed by family law or by the law of succession.

Data retention

Do any data retention requirements apply to electronic contracts?

Yes, electronic contracts have the same probative value as their written counterpart only when they meet the integrity/durability and authenticity requirements set out in the e-Archiving Grand-Ducal Regulation of 25 July 2015.

The storage terms prescribed by Luxembourg law moreover apply mutatis mutandis to electronic contracts (eg, supporting documents to accounting documents must be stored for 10 years (Article 16 of the Luxembourg Commercial Code) and the general limitation period is 10 years (Article 189 of the Commercial Code).

Remedies

Are any special remedies available for the breach of electronic contracts?

No. On a general note, we must point out that for consumers, Articles L411-1 and following of the Luxembourg Consumer Code, as modified, provide however for an extrajudicial dispute settlement mechanism via the Consumer Mediator.

Electronic signatures

Are electronic signatures legally valid in your jurisdiction? If so, what rules and restrictions govern their use?

Yes, in accordance with Article 1322-1 of the Luxembourg Civil Code, as modified. Pursuant to Article 18(3) of the Luxembourg e-Commerce Act, as modified, no person may however be obliged to sign electronically, so that a co-contracting party is entitled to refuse to sign electronically.

Not all electronic signatures will however have the equivalent probative value of a hand-written signature. A differentiation has to be made between the (simple) electronic signature (eg, electronic copy of a handwritten signature on a document), the advanced electronic signature and the qualified electronic signature, whereby only the qualified electronic signature is regarded as the equivalent of a handwritten signature and, thus, has a binding probative force towards a judge that can be disallowed only via an exceptional and burdensome procedure of verification of signature.

A ‘qualified electronic signature’ is defined as an advanced electronic signature that is based on a qualified certificate and is created by a qualified electronic signature creation device.

An electronic signature will in turn qualify as an advanced electronic signature where it:

  • can be uniquely linked to the signatory;
  • is capable of identifying the signatory;
  • is created using means that the signatory can maintain under his or her sole control; and
  • is linked to the data to which it related in such a manner that any subsequent change of the data is detectable.

It stems from the above that, where the signature is not a qualified electronic signature, it does not benefit from such presumption of equivalence and is not binding upon the judge who has a wider margin of discretion to appreciate whether to accept the signature or not. This margin of discretion is not unlimited. Indeed, Article 18(2) of the Luxembourg e-Commerce Act, as modified, provides for a principle of non-discrimination whereby an electronic signature may not be discarded by a judge simply due to being in electronic form or not satisfying the conditions of equivalence as set out by the law. This principle of non-discrimination means in practice that the burden lies with the person that contests the validity of an electronic signature (which is not a qualified electronic signature) and that it is upon the latter to prove that the electronic signature solution does not provide for sufficient guarantees in terms of integrity and authenticity.

Furthermore, a non-qualified electronic signature can always constitute a "beginning of written proof", which must be then supported by other means of proof (eg, testimony, presumptions).

Click here to view full article.