Companies introducing to Electronic Signatures to ensure business continuity under COVID-19’s lockdown

Written by: Andrew Aboukhater-Associate Attorney

November,2020

Due to the current situation with the COVID-19, and the measures imposed by the governments, companies all over the world are trying to find alternatives to physical presence in various business sectors, one of the alternatives is the use of electronic signatures.

The laws regulating e-signatures for the EU, UAE and Qatar are similar in their regulations and conditions. Worldwide, e-signatures are classified in three types: basic, advanced e-Signature and qualified advanced e-signature.

E-signatures were introduced to the EU with the Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 with ‘Community Framework for electronic signatures’, which is in force in thirty European countries (EU-27, Croatia, Turkey and Liechtenstein).

As for UAE, Electronic Signatures were recognized under Federal Law No.1 of 2006 Concerning Electronic Transactions & Commerce (the “E-Commerce Law”).

In this article, we will only address the conditions which shall be met by e-signatures in Qatar, as well as their enforceability under Qatari decree law No. 16 of 2010 Promulgating the Electronic Transactions and Commerce Law (the “Decree”); and the Supreme Council of Information and Communication Technology (the “Supreme Council”) Board of Directors' Resolution No. 1 of 2012 Issuing the Bylaw on the Accreditation of Foreign Certification Certificates and regulating the work of Certificates provider (the “Policy”) (together the “E-Signatures Laws”).

A- Conditions to be met by the electronic signatures

Under the E-Signatures Laws, an electronic signature shall have authentic proof if the following conditions are met:

• a-the signature creation information is identified by the signatory and no other person;
• b-the signature creation information was, at the time of signing, under the control of the signatory and of no other person;
• c-any alteration to the electronic signature, made after the time of signing, is detectable;
• d-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 such information after the time of signing is detectable.

Moreover, the Decree provides that where initiating an e-signature, the signatory shall:

• a-exercise reasonable diligence to avoid unauthorized use of its signature creation information;
• b-without undue delay, utilize means made available by the certification service provider pursuant to notify any person that may reasonably be expected by the signatory to rely on the electronic signature or to take the necessary measures in support of the electronic signature if the signature creation information has been compromised, or circumstances give rise to a substantial risk that the signature creation information may have been compromised; and
• c-where a certification certificate is used to support the electronic signature, exercise reasonable diligence to ensure the accuracy and completeness of all material representations made by the signatory that are relevant to the certification certificate throughout its life cycle or that are to be included in the certification certificate.

(the “Conditions”).

And it should be noted that according to the Decree, (i) an e-signature shall be deemed legally effective, regardless of the geographic location where the e-signature is created or used, or the geographic location of the place of business of the signatory; and (ii) an e-signature created or used outside the State of Qatar shall have the same legal effect in Qatar if the e-signature offers an equal level of reliability that is not less than the level of reliability required under the Conditions.

Thus, the use of e-signatures on commercial transactions has authentic proof; is valid and enforceable under the Qatari Law subject to complying with the Conditions.

As for the electronic signature processes and technologies which satisfy the conditions of the preceding provisions, it is for the Supreme Council to determine them.

However, parties to a commercial agreement may agree on the type of e-signature to be used provided that such agreement is valid under the Qatari law.

B- Contracts which can be signed electronically

According to the Decree, e-signatures apply in general to the commercial transactions and more specifically, the Decree provides that the provisions of the Decree shall apply to transactions between parties who agree to conduct transactions using electronic communications.

To the contrary of individuals, or private legal entities which consent may be inferred from their conduct, governmental entities shall give explicit consent in relation to electronic transactions of which they are a party. The competent governmental entities may, if so decided to carry out any of their duties by means of electronic communications, specify additional requirements or specifications.

Furthermore, according to the Decree the following documents and transactions may not be executed electronically:

• instruments and documents relating to family matters and personal status;
• instruments and documents related to real-estate incorporeal dispositions;
• instruments and documents that are required by law to be authenticated; and
• -negotiable commercial instruments in accordance with the provisions of the Trade Regulation Law.

We should note that letters to banks, which are not excluded from the E-Signatures Laws, and whichare considered under the commercial transactions’ category may be signed electronically, however, the bank’s approval shall be express and banks may demand that the e-signature must be in conformity with the signatures included in their database; to register the e-signature with the bank; or to approve the e-signature’s certification service provider.  

As per the governmental documents, the consent of the governmental entities shall be explicit without any doubt.

C- Electronic Signature Certification Service Providers

E-Signatures Laws define the certification service provider (the certifier) a person (and by person we mean including legal entities) licensed to maintain an infrastructure of public keys, to issue certificates and to provide services related to e-signatures.

However, according to the Decree, the Supreme Council shall issue decisions to determine which e-signature processes and technologies satisfy the provisions of the preceding provisions. Thus, any new e-signature technology is subject to regulatory approval, which means a company wanting to adopt e-signature would need to have any proposed new technology signed off by the appropriate government department.

Additionally, according to the Policy, the General Secretariat at the Ministry of Communication and Technology (the “General Secretariat”) may approve e-signature certificates issued by foreign certification service provider, provided that any of the following conditions are met:

1. The foreign entity issuing the certificate shall comply with the rules and requirements set out in the Policy for licensing the practice of certification service provider's activity;
2. The foreign entity issuing the certificate must have an agent in the State of Qatar licensed by the General Secretariat to issue electronic certification certificates and must meet the necessary requirements and prerequisites to deal with electronic certification certificates;
3. The foreign entity must be among those entities which have been approved by the General Secretariat, pursuant to an effective agreement, as a competent foreign authority authorized to issue electronic certification certificates; or
4. The foreign entity must be one of the approved or licensed entities authorized to issue electronic certification certificates by the certification authority in its native country; provided that there is an agreement to this effect between the foreign licensing authority and the General Secretariat.

As per the approval of a foreign authority granting certificates for e- signature, it shall be granted upon a request submitted thereby, or by concerned parties.

Additionally, the Ministry of Information and Communications Technology in Qatar (the “ICT”), the ICT advised as follows:

• There should be a license/ratification certificate to be secured for the electronic signatures and the validity of such certificate is for 5 years.
• The company wishing to use a foreign certification service provider shall submit for approval before the ICT.
• Once such foreign certification service provider obtains such license/ratification certificate, it would be able in turn to provide its customers/contracting parties with sub-certificates to authorize them to use electronic signatures.
• There may be certain exemptions from some of the requirements if the service provider has the ISO certificate 2700.

   

  A service provider of electronic signatures shall obtain the necessary license in accordance with the above provisions, and the company that wishes to introduce electronic signatures has the option to submit a request to the ICT in order to obtain such license rendering it able to use electronic signatures.

  However, it should be noted that parties to a commercial transaction may, without prejudice to the Conditions, agree to use identified types of electronic signatures provided that the agreement is valid under the applicable law.

  Further, It should be noted that in the event a company opts to use electronic signatures without obtaining the license (or the service provider), it shall have the express consent of the other contracting party for using the electronic signature and on the service provider which the company wishes to use, otherwise, the following risks may be raised:

• The counterparty or a third party may argue that there is no contract because an electronic signature is not a valid method of entering into a contract;
• The counterparty or a third party may argue that the simple electronic signature platform cannot meet the formalities required to execute a deed;
• The counterparty may argue that it did not in fact sign the contract, someone else did it fraudulently, without authority or by mistake.

In such event, the court will have a discretionary power to decide on the authentical proof of the e-signature.

In conclusion, one cannot deny the importance of e-signatures in facilitating business transactions across the globe rendering the physical barrier obsolete in signing agreements. COVID-19 is encouraging the use of e-signatures due to the inability of physically signing agreements and therefore, more and more countries are regulating e-signatures and encouraging it.