Electronic signatures – a practical solution in times of COVID-19
The spread of COVID-19, the continuation of social distancing/self-isolation and the ever-increasing number of employees working from home, have unavoidably impacted the way people conduct their business operations, including those as essential as signing agreements and contracts. The legislation and regulations concerning electronic transactions/signatures, which have potentially been left unexploited in the past, are becoming a key element to respond to businesses’ changing needs.
In Mauritius, the main legislation relating to electronic signatures is the Electronic Transactions Act 2000 (the Act) which provides for the recognition of electronic signatures. The Act also makes a distinction between an electronic signature and a digital signature. Although they may sound the same and are often used interchangeably, they are different in many ways.
What is an electronic signature?
Electronic signatures or e-signatures, refer to different methods for signing documents electronically. Under the Act, an electronic signature is defined as an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record1.
An electronic signature is thus widely defined and by a strict reading of the law, also refers to a digitized version of a normal “wet” signature and “I accept” checkboxes, amongst others. Verbal electronic signatures, with affirmation/consent captured in a signer’s voice, are also recognized as equally valid and legal as an e-signature captured by digital means.
A digital signature is a category of electronic signature with a higher level of reliability which uses algorithms to create one unique “fingerprint” or private key (or secret key). When you apply a digital signature to a document, cryptography binds the digital certificate which proves the integrity and origin of each signature.
In accordance with the Act, the legal validity of a digital signature depends on the requirement for the creator of the digital signature to have a private key, which is needed to sign the message, and for the recipient of the message to have the signer's public key, which can be used to verify the signature. However, in order to be able to rely on a digital signature and guarantee its legitimacy, same has to be certificated by a duly recognised Certification Authority2 (local or foreign), such as eMudhra.
Digital signatures can thus be considered as the equivalent to adding a notarized signature to your physical documents, with a trusted third party - the Certification Authority, responsible for guaranteeing the origin and integrity of the signature. In line with section 37 (2) of the Act and section 18 (z) of the Information and Communication Technologies Act 2001, it is the ICT Authority (ICTA) which is the Controller of Certification Authorities in Mauritius.
What are the legal effects electronic signatures carry and are they fully enforceable?
The Act makes it clear that a signature cannot be denied legal effect, validity or enforceability solely on the ground that it is in electronic form3. The Civil Code has also been amended in its articles 1316-1 and seq. to allow for the production of electronic records and electronic signatures as proof therein. It is also worth noting that, under the Companies Act 2001, the term “signed” includes the signature of the person given electronically where it carries that person’s personal encryption.
In addition, the legislator has set-out a number of criteria for an electronic signature to be considered as a “secure electronic signature”, thus carrying legal effects similar to traditional paper-based signatures. At the time the electronic signature was made, it must have been4:
- unique to the person using it;
- capable of identifying such person;
- created in a manner or using a means under the sole control of the person using it; and
- linked to the electronic record to which it relates in a manner such that the electronic signature would be invalidated had the record been changed.
It is also important to point out that, in any event, it is presumed that (i) the secure electronic signature is the signature of the person to whom it correlates and that (ii) the secure electronic signature was affixed by that person with the intention of signing or approving the electronic record5. This provides an additional protection and enhanced security to B2B and B2C transactions. If challenged in court, it will be for the opposite party to adduce evidence to the contrary.
Although our domestic regulatory framework has been amended over the years to ensure that electronic signatures carry the same legal weight as paper-based signatures, our case law is relatively silent in this respect and the concept has rarely been tested by our courts. In addition, the Act is clear in that the creation of an electronic signature includes an element of intent. Electronic signatures seem to be valid only if the signatories’ intention to sign can be established.
On the basis of the above, it is thus still prudent to follow certain best practices. We understand that, in order to demonstrate a clear intention on the part of the signatory, some e-signature software request their users to confirm their consent to sign the document electronically prior to applying their signature.
To be on the safe side, parties could also execute a written agreement, include a specific clause in an already existing contract and/or pass a resolution authorising the use of electronic signature, although these alternatives remain subject to the type of transaction contemplated. The documents will have to specify, inter alia, (i) who has the authority to affix the signature, (ii) for which type of documents such electronic signature may be affixed, (iii) the electronic program to be used, if any, and (iv) that parties agree that any document signed electronically shall be fully binding upon the signatories.
Should you opt for e-signature or digital signature?
By a strict reading of the law, it appears that e-signatures and digital signatures may have the same value in the eyes of the law. However, some may consider the issue of unreliability of e-signatures as arguable as it seems difficult to verify the authenticity of e-signatures and confirm the identity of the person to whom the electronic signature is attributable.
From a practical perspective, it would not be surprising if e-signatures do not enjoy the same level of trustworthiness in case of litigation. The judge could consider that e-signatures will be used as evidence to support contracts but you may be required to adduce additional proof, such as written agreements to the use of electronic signatures (as specified above) and exchange of emails which usually surrounds the execution of agreements. This is, of course, subject to the type/format of e-signature implemented. For instance, in terms of verbal signatures, biometrics software can be used to record customers’ consent with the recording creating a unique voiceprint. We understand that there are also e-signature software (without digital signature) that can be implemented with audit trail to trace the signature process.
Many businesses may decide to opt for the convenience and streamlined process of e-signatures which some could consider as valid and enforceable as digital signatures, without the costs of digital certificates. On the other hand, other organisations and individuals would still prefer traditional handwritten signatures.
The implementation of digital signatures vs e-signatures will mainly depend on the sector/industry in which you are involved, the type of documents you need to sign as well as the level of authenticity you require. If you evolve in a highly regulated industry and you deal with private/personal information and finance or accounting records, then you might need to consider digital signature as a more secure option. It is nonetheless worth noting that in Mauritius, electronic signatures are not permitted for certain categories of documents, such as notarial acts and wills.
As mentioned previously, both e-signatures and digital signatures are legally recognized signatures. The decision to opt for an e-signature or digital signature solution is left to the discretion of each party, who will need to conduct a balancing exercise based on security, time and cost.
In any event, electronic signatures should be recognised as the future of business contracts and a driver of today’s modern marketplace. Existing businesses operating in these uncertain times are highly encouraged to accelerate the pace of their digital transformation. For modern entrepreneurs, it seems that they will soon have little choice but to adopt paperless system and catch up with the latest technology.