Are electronic signatures legally valid internationally?

Electronic signature law is gaining on its importance. With the number of mobile devices increasing around the world, the need for a secure method of digitally signing documents in a legally valid manner is growing. The advantages offered by digital signatures are obvious: above all, they save time, resources, and money. But are electronic signatures legally valid internationally? Lawyer, Daniel Schätzle, takes a closer look at the issue.

Electronic Signatures make it possible for companies to sign their documents more quickly, complete transactions more swiftly, and, depending on the signature procedure used, make processes clearly and digitally traceable. The Regulation on electronic identification and trust services for electronic transactions in the internal market of the European Union (eIDAS regulation for short) has uniformly regulated the exchange of digital signatures across the EU since 2016. the eIDAS regulation entered into effect on August 8, 2014 by way of publication in the Official Journal of the European Union. Companies can use the advantages offered by digital signatures within the EU; however, only qualified electronic signatures (QESs) are recognized for reciprocal legal communication. That means digital signatures performed in compliance with eIDAS are valid in all member states of the European Union.

So far, so good, as far as legal validity within the European Union is concerned.

Digital signature servers users often ask this question. However, digital signatures are nothing more than a technical procedure used to unambiguously identify the sender of a digital document. When the procedure is legally recognized, lawyers refer to it as an electronic signature.

By now, digital signatures are legally recognized in many countries around the world. In each case, the national law of the respective country demanding the legal validity of an electronic signature is definitive. There is no internationally accepted standard like there is for the EU member states. Companies that do business internationally therefore need to address the pertinent legislation in the destination countries concerned.

A differentiation is generally made between generous, two-tier, and restrictive legislation. Some of the provisions are structured in a very open manner. That means in some countries with very generous legislation, such as Australia and Canada, standard digital signatures enjoy the same status as handwritten signatures. In some cases, however, both parties must agree to the use of digital signatures in advance, and this must be done in the traditional manner. When restrictive national legislation is in place, all forms of digital signature are subject to strict country-specific legislation that often does not recognize standard digital signatures as legally binding. In Brazil, for example, only the signatures that use the country’s own national infrastructure and that are acknowledged by the government are recognized.

National legislation is frequently based on internationally recognized models

National legislation is frequently based on internationally recognized models. Thus, numerous countries (such as Malaysia and Hong Kong) base their regulations on the UNCITRAL model law on electronic signatures. The United Nations developed the model law in order to provide international guidelines for electronic signatures.

Countries whose legislation is based on this model have two-tier legislation, within which qualified electronic signatures have the same significance as handwritten signatures. Standard electronic signatures are also legally enforceable, however. AS far as this concept, which also encompasses the eIDAS regulation, is concerned, it is important to emphasize that contract partners are granted considerably latitude with regards to concluding contracts with other states.
Last, but not least, the eIDAS regulation also has an exemplary effect for some legislatures, for example, in Israel.

The USA has enacted the ESIGN law, which uniformly regulates the recognition of electronic signatures for all of its states. The standards stipulated by this law can also be considered generous when compared to the European standard: essentially, they state that a contract may not considered to be invalid because it was signed electronically.

It is always necessary to differentiate among the types of signature selected

The eIDAS regulation was conceptualized based on the standards for electronic signatures in existence around the world, and it regulates far more than is internationally required. That is why a qualified digital signature pursuant to eIDAS is generally internationally recognized as well. Currently no precedence cases for non-recognition are known. The final recognition of the electronic signature is based on national state law, however, and should be legally examined in advance in cases of doubt.

No special requirements are placed on standard digital signatures. They can be used without further ado. When advanced digital signatures are used, personal data must be provided so that the signatory can be designated and identified. Before users can use qualified digital signatures, they must identify themselves by way of a one-time process using VideoIdent or on-site identification. In Europe, this generally works with a valid passport or a national identification document (such as ID cards in Germany).

If you want to be covered 100%, we recommend one of two options:
have a solution checked by an accredited inspection authority in the relevant country (the best option in Germany is the chamber of industry and commerce)
obtain recognition of the signature from the customer and supplier in a one-time process by way of a confirmation (form).

If there are special national requirements from countries outside of the EU that cannot be covered by the trust services pursuant to eIDAS, there is the option of involving additional trust service providers in these countries. Qualification as a trust service provider can be achieved by means of an appropriate agreement with the third country that fulfills the requirements of Art. 238 of the TFEU. Furthermore, the provider from the third country can earn qualification as a trust service provider if it can fulfill the requirements eIDAS places on electronic signatures. For this to happen, the provider must successfully go through the qualification process with the responsible authority (in Germany, this would be the Federal Office for Information Security, for instance). The providers then receive a trust seal that they can use to prove their qualification.

Concluding contracts with electronic signatures is unproblematic if the contract partner from the third country is a trust service provider. If this is not the case, the contract partners have the option of agreeing to permit the use of standard electronic signatures to conclude the contract. Qualified electronic signatures are required only in exceptional cases, primarily in instances relating to fundamental transactions (such as founding a company).

Apart from that, the legislature expressly grants the contract partners private autonomy. The agreement stating their desire to use a standard electronic signature as a signature can be stipulated in a form provision, for example. Both the form provision and the documentation of all steps that have resulted in the electronic signature can prove the actual contract conclusion in court.

Where international contracts are concerned, chances for legal certainty can be improved by locating the place of jurisdiction in the nation placing less strict requirements on contract conclusion via electronic signature.

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This document contains information about the legal framework conditions for using digital signatures at your company. However, it does not constitute binding legal consultation. Furthermore, legislation may change. These guidelines do not replace consultation with a lawyer.