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Adapting working practices during COVID-19 - Electronic signing in the UAE

  • UAE

    31-03-2020

    Amidst the numerous social distancing measures adopted by governments worldwide in response to the Coronavirus (COVID-19) pandemic and businesses and public bodies implementing homeworking practices, remote signing of legal documents has become a necessity and the use of e-signatures will need to be widely adopted.

    In the UAE, e-signatures have not been common practice. There is, however, legal authority for their use.

    UAE Federal, Dubai and DIFC laws recognise e-signatures as constituting valid and legally binding obligations on parties to contracts in the same way as handwritten signatures, subject to certain exceptions. E-signatures are also accepted for the purpose of court proceedings in the UAE Federal, Dubai and DIFC courts.

    What is an E-signature?

    At federal level, the E-Commerce Law No. 1 of 2006 (“E-Commerce Law”) regulates the use and admissibility of e-signatures in the UAE which defines an e-signature as:

    “any letters, numbers, symbols, voice or processing system in Electronic form applied to, incorporated in, or logically associated with a Data Message with the intention of authenticating or approving the same” (Article 1).

    For contracts governed by Dubai law, the Electronic Transactions and Commerce Law No.2/2002 (“Dubai Electronic Transactions Law”) may be applied, which reflects the definition of an e-lksignature in the Federal law in essence.

    The definition of e-signature under DIFC law in the Electronic Transactions Law No 2. of 2017 (“DIFC Electronic Transactions Law”) is marginally different but has largely the same effect:

    “an Electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record” (Schedule 1).

    Some commonly used e-signatures are represented by:

    • contactless transactions
    • ticking “I accept” or “submit” to terms and conditions online
    • typing a name at the end of an email
    • using biometric signatures (fingerprint and facial recognition)

    E-signatures can be used to execute documents in a commercial context and can expedite and simplify the signing process. The definitions of e-signatures also appear to include company stamps in line with common practice for a company stamp to be applied to each page of a contract, provided there is evidence of intention.

    UAE Federal law

    Generally, the E-Commerce Law provides that any form of electronic authentication is accepted unless prohibited by law. Further, an e-signature will satisfy requirements where the law prescribes the presence of a signature or provides consequences for an absence of a signature, provided the e-signature can be relied upon in accordance with Article 18, meaning it is deemed a “Secure Electronic Signature” under the E-Commerce law. Provisions in other Federal laws in the UAE such as those relating to civil procedure and evidence in civil and commercial transactions also validate the use of e-signatures provided they meet the requirements of the E-Commerce Law.

    E-signatures cannot be used for the following (Article 2):

    • Matters of personal law (for example, marriage, divorce, and wills)
    • Deeds or transactions relating to immovable property
    • Negotiable instruments
    • Notarisation
    • Any other documents or transactions that might be excluded by way of applicable law

    Reliance

    An e-signature can be relied upon if it is reasonable to do so. The factors which determine reasonableness are set out in Article 18. Some examples are:

    • Nature of the underlying transaction which was intended to be supported by the e-signature and its value if known;
    • Whether appropriate steps have been taken to determine reliability;
    • Whether the person relying on the e-signature knew or ought to have known that the e-signature had been compromised or revoked;
    • Dealings between the originator and party relying on the e-signature.

    Authentication Certificates

    A signatory may obtain an electronic authentication certificate (“Certificate”) through an accredited or authorised service provider (“Certification Services Provider”) to provide a more secure authentication method in order to give weight to the authenticity of the e-signature. The Certificate verifies the identity of the person or entity holding the digital tool used to sign the document electronically. The E-Commerce law also governs the form and content of Certificates and Certification Services Provider services.

    The relying party should also take reasonable steps to verify that a Certificate supported the e-signature in order to evidence reasonableness for the purpose of reliance under Article 18. Care should be taken to ensure the validity of the Certificate if reliance is to be placed. The E-Commerce law provides that it is for the relying party to take reasonable and necessary steps to verify the validity and enforceability of such Certificate in terms of its suspension, revocation or limitations and will bear the legal consequences of failing to do so (Article 18(2)).

    Admissibility as Evidence

    The E-Commerce Law recognises e-signatures as admissible evidence. There is a rebuttable presumption under the E-Commerce law that an e-signature which is classified as a “Protected Electronic Signature” can be relied upon, will represent the signature of the person and was affixed by that person with the intention of signing.

    A Protected Electronic Signature is the most secure form of e-signature as it must be subject to secure authentication procedures agreed by the parties which enables verification that, at the time of signing, the e-signature was: (i) limited to the person using it, (ii) capable of verifying the identity of the person, (iii) under that person’s full control, and (iv) linked to the electronic message to which it relates which provides reliable assurance of its integrity.

    E-signatures obtained outside of the UAE

    The E-Commerce law recognises that e-signatures that meet the requirements of the laws of another state may be valid provided the laws of that state require a level of approval similar to UAE law. The same stance is adopted in relation to Certificates obtained by foreign Certification Service Providers.

    Dubai law

    The Dubai Electronic Transactions Law was implemented pursuant to federal law and largely reflects the same provisions. E-signatures are recognised as a substitute to handwritten signatures and can be relied upon subject to the same reasonableness criteria (Articles 10 and 21). The concept of Protected Electronic Signatures also applies (Article 20). Further, the Dubai Electronic Transactions Law allows for e-signatures to be admissible evidence in Dubai courts (Article 12).

    DIFC law

    The DIFC Electronic Transactions Law provides e-signatures are recognised where DIFC Law requires a document to be signed or provides for certain consequences if a document or a record is not signed (Part 5, Article 21).

    E-signatures cannot be used for the following (Article 2):

    • The creation, performance or enforcement of a power of attorney
    • The creation, performance or enforcement of a declaration of trust (with the exception of implied, constructive and resulting trusts) and any provision in the Trust Law 2005 (DIFC Law No. 11 of 2005, as amended) requiring information to be written or in writing
    • The creation and execution of wills, codicils or testamentary trusts
    • The creation, execution and use of affidavits or affirmations as evidence in court proceedings pursuant to rule 29 of the Rules of the DIFC Courts
    • Transactions involving the sale, purchase, lease (for a term of more than 10 years) and other disposition of immovable property and the registration of other rights relating to immovable property

    Parties can agree to exclude the application of e-signatures or impose additional requirements.

    Validity

    An electronic signature is deemed to identify the relevant person and indicate their intention under the DIFC Electronic Transactions Law provided the type of e-signature used is “as reliable as appropriate for the purpose for which the document or record was generated or communicated, in the light of all the circumstances, including any relevant agreement” (Article 22).

    Attribution and Effect

    The DIFC Electronic Transactions Law provides that an e-signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable. This can be determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement (Article 23).

    Admissibility as evidence

    E-signatures are admissible as evidence where evidence of a signature is required in proceedings (Article 24).

    Court documents

    The DIFC court rules allow for documents filed at court such as claim forms and application notices to be signed electronically – i.e. “printed by computer or other mechanical means” (RDC 6.3).

    Practical considerations

    Type of e-signature

    The parties must decide on an e-signature method which suits their authentication requirements and which is proportionate to the value and importance of the subject matter. Parties may elect to adopt more secure and protected authentication procedures by instructing a certification service provider which will provide greater assurances as to the integrity of the signature and therefore enforceability, reliance and evidential proof if required for proceedings at a later date. Secure authentication procedures can also provide certainty as to identification of the signatory to ensure that the signature can be attributed to that person.

    From a commercial perspective, it is sensible to agree secure authentication procedures which will:

    • identify the signatory with a high degree of certainty
    • limit the risk of 3rd party interference or fraud
    • limit the risk of subsequent amendment or revocation

    Contractual principles

    It is important to remember that contracts signed electronically are still subject to the usual contractual principles to effect legal and validly binding obligations including offer and acceptance and this should also be evidenced.

    Appropriate due diligence should be undertaken to ensure the signatory has the requisite capacity and delegated authority to enter into the agreement. It might be prudent to also obtain a certification that the agreement has not been varied.

    Evidence of intention

    Intention is an important consideration in the context of e-signatures where there is a risk of fraud or third party interference and would prove more difficult to evidence where there is no face-to-face interaction. Using secure authentication procedures, such as meeting the requirements of Protected Electronic Signatures under UAE Federal law and Dubai law, will assist in evidencing this. It is recommended a declaration of the parties’ intention to enter into the contract is included. It might also be prudent to expressly include an agreement to be bound by e-signatures in the contract terms.

    Review of contractual arrangements

    It is important to ensure that there is no provision to exclude e-signatures under DIFC law-governed contracts.

    In the context of standard customer / supplier type contracts, the contract terms might need to be adapted to allow for e-signatures.

    Disclaimer

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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