eSignature has enabled legal and commercial to agree terms without pen and paper. But what’s the state of play regarding recognition of eSigning around the world?

This is a chapter from our Modern Contract Handbook, featuring insights from expert authors on every stage of the contract process.

According to P&S Market Research, the e-signature global market will exceed $9bn by 2023. Despite this growth, there’s still a reluctance in some markets to fully adopt electronic signing.

eSigning has proliferated across much of the world, and many regulatory authorities have given it their blessing. According to Forbes, “businesses achieve 70 - 80% efficiency improvements after removing manual processes to adopt digital technologies like electronic signature solutions.”

At the highest level, eSignature provides the same legal standing as a handwritten signature as long as it adheres to the requirements of the specific regulation it was created under. These regulations vary across the world, from eIDAS (electronic identification, authentication and trust services) for the EU to the eSIGN Act & UETA framework in the US, amongst many others.

“Businesses achieve 70 - 80% efficiency improvements after removing manual processes to adopt digital technologies like electronic signature solutions.”

It’s important to note that despite eSignature’s growing popularity, it’s yet to become standard in every country. Several countries across the Middle East and Asia don’t currently support eSignature, either due to a reluctance to adopt, or because they follow a different legal structure that cannot account for the validity of e-signatures.

eSignature: advanced or qualified?

Various different levels of eSignature exist, and different jurisdictions pitch their regulatory requirements at different levels.

Advanced eSignature (AES)

At this level of eSignature:

• The signatory can be uniquely identified
• The signatory must have sole control of the key that was used to create an electronic signature
• The signature itself should be able to identify potentially-tampered data
• If the data has been tampered with, the signature must invalidate itself

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Qualified Electronic Signature (QES)

The QES has higher requirements introduced by the EU and Switzerland. It’s difficult to challenge the authorship of a statement signed with QES. Under this standard:

• The signature must be created using a QSCD (Qualified Signature Creation Device)
• Signing issues a qualified certificate, to validate the agreement

"eSigning has proliferated across much of the world, and many regulatory authorities have given it their blessing"

eSigning in the EU

eIDAS (electronic identification, authentication and trust services) is the regulation that sets out the standards for eSigning across the EU. It entered into force in September 2014. According to eIDAS:

• An advanced electronic signature (AES) shall “not be denied legal effect and admissibility as evidence in legal proceedings”
• The QES standard is defined as an even higher standard for eSignatures. Article 25 (2) states that a QES carries the same legal value as a wet ink signature

Electronic signatures can be considered to be in wide use and generally adopted in Europe. Some jurisdictions still have irregular requirements, but these tend to be the exception rather than the rule.

eSigning in the US

The two most relevant pieces of legislation regarding eSignature in the US are the Electronic Signatures in Global and National Commerce (ESIGN) Act and the Uniform Electronic Transactions Act (UETA).

ESIGN Act

The ESIGN Act sets out that electronic signatures and records should be accorded the same legal status as ink signature and paper records. The ESIGN Act applies to federal law and pre-empts inconsistent state law, unless the state in question adopted UETA without amendment.

UETA

UETA harmonizes state law with respect to the validity of eSignatures. It has been adopted by 47 states, with the exceptions being New York, Washington State and Illinois, who have adopted their own e-signing statutes to recognize eSignatures.

Electronic signatures are widely adopted and valid in the US, as long as certain core concepts are present, including intent to sign, consent to do business electronically, association of signature with the record, and record retention.

The rest of the world has a multitude of laws governing eSignature, but the direction of travel indicates widespread adoption both now and in the future. For more information on eSignatures and their validity and enforceability around the world, visit the IACCM’s website.

This is a chapter from our Modern Contract Handbook, featuring insights from expert authors on every stage of the contract process.