knowledge 6 April 2020 |

COVID-19:  Signing Documents from Home

“Wet ink” and “Virtual” Approach

Electronic signatures have been available for a number of years but have not generally been used in complex high value transactions as they raise their own challenges.  Where possible, “wet ink” signatures are still preferable.  If the traditional approach of printing the entire set of documents for signing is not feasible, there are some “virtual” options that can be used. 

These allow the person signing to print, sign and scan the signature page only.  Once signed, the signature page can be returned as evidence of execution of the document, provided the signatory carefully follows a prescribed email process.  These “virtual” options have the benefit of already being in use and the endorsement of the Law Society.

Electronic signatures

Unsurprisingly, there has been a recent surge in interest in electronic signatures.  While electronic signatures are a very useful option to have available, they are not without their complications or limitations. 

As a general rule, Irish and European legislation is permissive of electronic signatures.  Their use does, however, require careful consideration of a number of matters that do not arise in the context of traditional wet ink signatures.  Some of the most noteworthy are:

• Registrations:  despite a recent trend towards online registrations, a “wet ink” original is still required for many typical registrations.

• Interpretation and Types of Documents:  some statutory interpretation is required when considering whether electronic signatures can be used for certain types of documents.  The following are the most typically relevant documents of this type: 
  • “Section 10” Documents:  section 10 of the Electronic Commerce Act 2000 (the “2000 Act”) provides that the majority of its enabling provisions are “without prejudice” to (amongst other matters) the laws governing:
    • affidavits and statutory or sworn declarations. 
    • dealings with interests in real property, including leasehold (other than contracts in relation to such dealings); and
    • trusts.

  
  In our view, the “without prejudice” wording in section 10 does not go so far as to exclude the use of electronic signatures in relation to such documents but it does require a close analysis of all applicable laws (including the Statute of Frauds 1695).  There also isn’t always consensus across all relevant persons (lawyers and public registers) on the most appropriate interpretation of section 10.

  • Documents requiring a Witness or Seal:  the 2000 Act¹ also raises questions of interpretation in relation to the type of electronic signature that can be used where signing of a document is required to be witnessed (eg where a deed is signed by a natural person) or, less relevantly in practice, where the document requires a seal.  Electronic signing also tends to raise the question of whether the witness needs to be physically present to witness the use of the electronic signature.  While the position has not been determined as a matter of Irish or EU law, the recommended view continues to be to require the physical presence of the witness. 

• Legal Opinions:  many transactions, particularly cross-border financing transactions, require the provision of “due execution” legal opinions.  Where electronic signatures are used, the addressee of the opinion will need to be comfortable with additional assumptions and reservations that the use of an electronic signature gives rise to.

• Consent:  under Irish law, all parties must consent to the use of electronic signatures for a number of matters, including, the execution of documents and the storage of electronic originals.  This consent does not have to be expressly given but it is advisable to include it in the document being signed.

• Real estate:  even beyond the legal interpretation and registration points mentioned above, many important aspects of real estate practice are predicated on there being one original set of title deeds.   Coupled with the fact that the Property Registration Authority of Ireland is likely to continue to require wet ink originals for registration purposes (at least for some time), this renders electronic signatures of limited use for real estate transactions (other than entry into contracts for sale and similar contracts).

• Deeds:  despite the EU’s eIDAS Regulation² making provision for electronic seals, these may not be the equivalent of a company seal used by companies in Ireland (and even if they were, there could be a technical issue under the Companies Act 2014 in relation to their use). A company can still have a deed executed electronically by granting a power of attorney in favour of a natural person (such as a director).  The attorney can then execute the deed in the usual way ie by signing in the physical presence of a witness who attests the signature.

• Cross-border:  where a transaction involves other jurisdictions (eg where non-Irish law documents or parties are involved), the use of e-signatures should be considered with local counsel in each jurisdiction.

Types of Electronic Signature

The 2000 Act, which includes the majority of the enabling provisions in relation to electronic signatures, defines an “electronic signature” as: 

“data in electronic form attached to, incorporated in or logically associated with other electronic data and which serves as a method of authenticating the purported originator, and includes an advanced electronic signature”. 

The eIDAS Regulation includes a similar definition.  These definitions are quite broad and are neutral with regard to the technology and form used.  While there has not yet been any definitive guidance from the courts or legislature, examples of such signatures could include:  a pdf scan of a signature page; inserting a saved image of a handwritten signature into a document; an express confirmation in an email; the signatory typing his or her name into the document at the appropriate signature block; the use of a cloud-based electronic signature platform.

This type of signature is often referred to as a standard electronic signature (or “SES”).  The legislation also recognises two further types of signature:

• an advanced electronic signature (“AES”), which, is an SES that meets additional criteria aimed at ensuring the authenticity of the signature and that the integrity of the signed document.  The integrity of the document is particularly helpful in the context of the 2000 Act, which requires a reliable assurance as to the integrity of information in its final form where signed documents are intended to be treated and stored as electronic originals;

• a qualified electronic signature (“QES”), which is an AES that meets a further set of criteria aimed at authenticity and integrity.  This is the most secure form of electronic signature and requires authentication of the signatory by a qualified trust service provider.  This is the only form of electronic signature that is expressly recognised by the eIDAS Regulation as having the equivalent legal effect of a handwritten signature.³

The use of an AES or QES will generally require the involvement of a third party electronic signature provider.

Comment

Completion logistics, which have always played a significant (if mundane) part in transactional work, have recently been thrust centre-stage.  The physical separation required by COVID-19 has given a much greater focus to electronic signatures.  While electronic signatures will be of use in a great number of situations, their use does require careful consideration, particularly while a new market practice develops.  The focus, as always, should be on finding the best tool to complete the task, whether that continues to be traditional wet ink signings, “virtual” closings, or the newest addition to the box, electronic signatures.