Intellectual Property Law

Electronic Signatures in U.K.

By IBLS Editor

Electronic signatures are definitely an essential component of e-commerce contracts.  Even though most countries have adopted the UNCITRAL Model Law on E-commerce which includes a definition of e-signatures, there are some variations to this Model Law that are worth to explore when celebrating e-contracts with multiple jurisdictions.  This article provides an introduction to the basic principles of e-signatures in the United Kingdom (UK).

Electronic Communications Act 2000 ("2000 Act") and the Electronic Signatures Regulations 2002 (SI No. 318 of 2002) ("2002 Regulations") constitute the legal framework for e-signatures in the UK.  These two Acts implement European Union (EU) Directive 1999/93/EC.  Electronic signature in UK is defined as electronic data that is attached to or logically associated to other electronic data and that serves as method of authentication.  Not all countries define e-signatures as 'e-data'; yet this definition provides a broad scope of what an e-signature could be.  The 2002 Regulation also introduced the concept to 'Advanced Electronic Signature' (AES).  An AES is considered a more secure signature (is treated as a handwritten signature) and has four major characteristics: (1) it is capable of identifying the signatory; (2) is uniquely related to the signatory; (3) is under the sole control of the signatory; (4) is attached to the data in a way that subsequent changes can be easily detected.   AES are secured by a Certification Authority who provides 'qualified certificates;' these certificates must comply with requirements specifically set by the 2002 Regulation.  In UK, the Secretary of State is the government agency in charge of maintaining a list with the approved certification service providers. 

Regarding admissibility of e-signature, the 2000 Act establishes that e-signatures can be admitted as evidence in court proceedings provided that two requirements are met: (1) that the e-signature is certified; and (2) that it is incorporated into an electronic communication.  Likewise, e-signatures originated in other EU Member State are valid in UK if they meet the basic requirements of e-signatures established by the UK legislation. 

Since an e-signature in UK is any electronic data attached or connected to other electronic data, it could be inferred from this definition that e-signatures apply not only to e-mail communications but to any electronic communication.  For instance, in the UK case of PNC Telecom plc v. Thomas and another, ([2002] EWHC 2848 (Ch)), the court held that a fax transmittal and its incorporated signature were valid as shareholder notification under the Companies Act 1985 and the Electronic Communication Act 2000. 

Validity of e-signatures in e-commerce not only involves the traditional buyer/seller situation but sometimes more complex commercial situations.  For instance, the UK case of PNC Telecom plc v. Thomas involved the validity of a fax shareholder notification (requisition) under the s 368 Companies Act 1985.   The first analysis was to determine whether a fax is an electronic communication; second, whether this electronic communication was authorized by the specific set of law at hand, in this case, the Companies Law 1985. After the two above questions were answered, it is clear that the e-signature was valid.  In the above case, the court held that a fax was an approved electronic communication under the Companies Act 1985 according to its respective amendment incorporating principles of the Electronic Communications Act 2000. 

This case is an example of the multiple ramifications that a legal claim involving e-signature may take.  It is not only determining the validity of an e-signature and the proper certification authority what posts legal challenges; but also, the issue of whether the document incorporating the e-signature constitutes and electronic communication and whether the specific set of rules to be applied allow that precise type of electronic communication.    

Full post as published by IBLS Internet Law Blog on June 16, 2008 (boomark / email).