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What it means to use electronic signatures

By William Maema and Imelda Anika

As the COVID-19 daily statistics continue to point in the direction of a flattening curve in Kenya, it might not be idle to ask if anything good could possibly have come out of this pandemic.

Despite the misery that the COVID-19 crisis has visited upon humanity in the better part of 2020, probably one of its most positive and memorable legacies in Africa will be the demystification and resultant exponential popularization of the use of technology as a tool of doing business across most sectors of the economy.

Following the blacklisting of paper as a purveyor of the dreaded coronavirus, the Kenya Government moved swiftly to issue directives to tame the spiralling spread of the highly lethal but invisible enemy.

Key among these measures was the directive encouraging employers to allow employees to work from home. By and large, this directive was predicated on the premise that employees could, by means of technology, work efficiently from home without handling any paper except, of course, where documents needed to be signed. In such cases, direct contact with paper and the attendant risk of infection, would be inevitable.

Rather providentially, a few days before the onset of the pandemic Parliament had enacted the Business Laws (Amendment) Act, 2020 which came into force on 18 March 2020. The primary objective of this law was to facilitate the ease of doing business in Kenya by providing for the use of advanced electronic signatures in place of the traditional pen signature. In assenting to this law, the President had, by the stroke of a pen (no pun intended) ushered in the era of paperless business transactions in Kenya.

This law did away with the need for wet-ink signatures in virtually all legally binding documents except for wills and negotiable instruments such as cheques. By the guillotine method, it amended several business-related statutes, including the Law of Contract Act in which the definition of “sign” was amended to include signing by means of an advanced electronic signature. The upshot of this amendment is that contracts no longer require wet-ink signatures provided that they bear a valid advanced electronic signature.

It is, therefore, important to understand what, under Kenyan law, constitutes a valid advanced electronic signature and what does not. A scanned image of a person’s signature is not a valid advanced electronic signature. Therefore, contractual documents bearing such images are not properly signed and would be unenforceable in the event of litigation.

The Kenya Information and Communications Act (KICA) defines an electronic signature as data in electronic form affixed to or logically associated with other electronic data which may be used to identify the signatory in relation to the data message and to indicate the signatory’s approval of the information contained in the data message.

On the other hand, KICA defines an advanced electronic signature as an electronic signature which meets all the following requirements, namely, it is uniquely linked to the signatory; it is capable of identifying the signatory; it is created using means that the signatory can maintain under his sole control;  and it is linked to the data to which it relates in such manner that any subsequent change to the data is detectable.

A valid advanced electronic signature can only be issued by a Certification Service Provider (CSP) who is duly licensed by the Communications Authority of Kenya (CA) pursuant to the Kenya Information and Communications (Electronic Certification and Domain Name Administration) Regulations 2020.

These Regulations contain stringent measures to ensure the authenticity, security and reliability of the CSP and its services in order to protect the privacy and secrecy of the electronic signatures.

At present there are only 2 licensed CSPs in Kenya which, however, are yet to start issuing advanced electronic signatures.

Accordingly, advanced electronic signatures are not yet available in Kenya and, therefore, the benefit of the ease of doing business envisaged in the Business Laws (Amendment) Act is yet to be realised.

Electronic signatures issued by foreign electronic certification providers such as Docusign may be recognised in Kenya if the issuers are duly licensed by the relevant regulator in their home country, comply with internationally accepted standards and the requirements of Kenyan law.

Foreign electronic certification providers are required to appoint a local agent to provide certification services in Kenya. In this regard, the CA issued a public notice on 1 September 2020 requiring all foreign electronic certification providers to apply for recognition within 30 days from the date of the notice.

Advanced electronic signatures issued in Kenya by electronic certification providers which are neither licensed nor recognised by the CA are invalid. However, where the electronic signature is applied outside Kenya in a country where the service provider is duly licensed, such document may be deemed to have been validly signed and therefore enforceable in Kenya.

The article was published in the Business Daily and can be accessed here