Since the onset of the COVID-19 pandemic, fundamental changes to working practices have occurred worldwide as the arrival of widespread virtual working transformed the expectations of businesses globally.
The Gulf is no exception, and the UAE has undergone significant reforms to its regulations surrounding electronic work, services, and data protection in recognition of this shift. In particular, regulatory changes have been brought in to address the validity of e-signatures and all electronic documents under local law.
The UAE has sought to bring its various regulatory regimes in line with international best practice, simplify the process of doing business, and reduce the energy, time and complexity in conducting transactions.
In this article we will explore the status of e-signatures in the UAE and the Abu Dhabi Global Market (ADGM), which have undergone significant changes in the past two years, and how the changes affect the enforceability of contracts and other evidentiary documents.
What is the current law?
Under Federal Law No 46 of 2021 On Electronic Transactions and Trust Services (the 2021 Law), which was issued on 20 September 2021 and has been in full effect from 20 September 2022, e-signatures may be accepted for all documents, and are now given equal weight as wet ink signatures. It completely abrogated the previous legislation on electronic transactions, Federal Law No 1 of 2006 Concerning Electronic Transactions (the 2006 Law).
The regulator is the Telecommunications and Digital Government Regulatory Authority (TRDA), whose remit expressly includes the creation and regulation of e-signatures and the verification of entities' identities when executing electronic documents and using electronic signatures.
Significant Departures from 2006
The 2021 Law has significantly expanded the scope of transactions and documents that can be covered by the regulatory framework. Whereas previously the 2006 Law has expressly stated that some documents and transactions were excluded from its provisions, including property transactions, civil status transactions (e.g. marriages, divorces and wills), or negotiable instruments such as bonds, now all documents and transactions are regulated unless otherwise exempted by provision of the law. Article 5 of the 2021 Law expressly states that electronic documents shall not lose their legal validity or enforceability even if they are in electronic form.
Where a signature is required on a document, an e-signature may be used provided it also satisfies the requirements of the 2021 Law. There are three categories of e-signature under the 2021 Law, which correspond to increasing levels of regulation and oversight by the TRDA and service providers (known as Trust Services and Approved Trust Services and their (Approved) Trust Services providers respectively):
- Electronic Signature
- Qualified Electronic Signature
- Approved Electronic Signature
Approved Electronic Signatures
The 2021 Law states that in order for an e-signature to qualify as an Electronic Signature (the minimum requirements under the 2021 Law), it must consist of letters, figures, code, sound, fingerprint etc., be attached to an electronic document (including emails), verify the identity of the person signing, and confirm that person accepts the content of the document they are signing. Under Article 28 of the 2021 Law, any form of Electronic Signature can be used unless excluded by legislation, and government entities will accept Electronic Signatures etc. provided they meet the standards that the TRDA determines.
However, an Approved Electronic Signature holds a special status due to its added security, having the same legal effect as a handwritten signature if it meets the conditions stipulated in the 2021 Law. In order to determine whether an Electronic Signature is an Approved Electronic Signature, the Electronic Signature must be created from a Qualified Electronic Signature, which essentially means it is a unique identifier which can identify if any modification to it has taken place.
In addition, it must be based on an approved authentication certificate (which are issued by an Approved Trust Services Provider, a list of which is maintained by the TRDA), created using an Approved Electronic Signature Tool, use data identical to that submitted to the party to prove the authenticity of the Approved Electronic Signature, and ensure that that data is properly submitted to that party, as well as comply with all other data protection rules and Implementation Regulations of the 2021 Law. Services like DocuSign clearly fall within this remit, and it seems apparent that the UAE intends for DocuSign and similar execution services to become much more widely accepted in business interactions across its jurisdictions.
The Electronic Signature Tool must itself ensure the data contained within it is confidential, protects it from use against third parties, is for a one-time use, should not be modified before the stamping process, be created by an Approved Trust Service Provider, and otherwise comply with data protection rules and Implementation Regulations of the 2021 Law.
The 2021 Law governs onshore UAE, but the free zones have their own regulations regarding e-signatures.
The ADGM Electronic Transactions Regulations 2021 (the ADGM Regulation) is more liberal in the validity of e-signatures, stating that they are valid if they are reliable and appropriate for the purpose for which the document was generated or communicated in light of all the circumstances including any relevant agreement between the parties; and does not need to stand alone as evidence of its validity. It too has the same legal effect as a handwritten signature.
The ADGM Regulation further permits electronic remote witnessing via audio-visual electronic means as long as their attesting the signature occurs in accordance with the requirements of the relevant ADGM legislation. Witnessing does not therefore need to be in person.
The position in the Dubai International Financial Centre (DIFC) under the Electronic Transactions Law 2017 is that in principle, electronic signatures can be relied upon, subject to certain excepted types of transactions.
How we can help
We worked closely with numerous businesses during the COVID-19 pandemic to help them adapt their internal and external processes to this 'new normal'.
As the world emerges from the pandemic, we have helped them acclimatise to new methods of conducting business across borders and newly accepted processes for corporate governance and contract negotiation worldwide.
Our dedicated team offers transactional and commercial expertise to help you achieve your business objectives. We would be pleased to clarify any queries or concerns relating to your corporate governance arrangements or the management and protection of intellectual property.
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