It is an accepted fact, that the current COVID-19 pandemic has urged and obligated the business and legal world to use all available tools in order to facilitate commercial transactions and maintain, to the extent possible, some sort of normality in the business affairs of corporations around the world. One of these tools, which has been extensively discussed and applied under the current circumstances, is the use of electronic signatures in the place of original handwritten signatures on agreements, resolutions or other types of documents. Their validity, admissibility and method of use is examined in this article.
The validity of e-signatures and their admissibility as evidence in legal proceedings is regulated by the EU Regulation 910/2014/EU on electronic identification and trust services for electronic transactions in the internal market (hereinafter referred to as the “Regulation”), which was incorporated into Cypriot law in 2018 through Law 55(I)/2018 (hereinafter referred to as the “Law”).
Three types of electronic signatures, each with different judicial value, are distinguished by the Regulation, as follows:
- an “electronic signature” is defined by the Regulation as “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”;
- an “advanced electronic signature” is “an electronic signature which is uniquely linked to the signatory, is capable of identifying the signatory, is created by using electronic signature creation data that the signatory can, with a high level of confidence, use under their sole control and is linked to the data therewith in such a way that any subsequent change in the data is detectable”; and
- a “qualified electronic signature”, which is an advanced electronic signature created by a qualified electronic signature creation device having the added comfort of being based on a qualified certificate for electronic signatures.
The Regulation indicates that an electronic signature cannot be denied legal effect or be deemed inadmissible as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures. However, it grants the “qualified electronic signature” the most significant judicial value deeming that it shall be equivalent to a handwritten signature.
The procedure of obtaining a qualified electronic signature under Cyprus law was announced in May, amidst the COVD-19 pandemic, by the Deputy Ministry of Research, Innovation and Digital Policy of Cyprus. At the moment, the Cyprus Stock Exchange has been authorised as a Certification Service Provider to issue qualified certificates on electronic signatures, though the Bank of Cyprus has also announced a similar procedure on certifying digital signatures for its clients. The validity period of such qualified e-signatures is currently set at one year from the date of issuance of the qualified certificate.
While electronic signatures and even advanced electronic signatures were occasionally used prior to the COVID-19 pandemic, an increase in their use is noticeable under the current circumstances. Such increased use of digital signatures has highlighted certain issues with their applicability and implementation. One such problem arises with documents that require witnessing. Common law provisions, applicable in Cyprus, require the physical presence of witnesses in the same location as the signatory. Therefore, a witnessing and attestation requirement is only satisfied in the case of an electronically executed document where the witness is physically present in the same location as the signatory. While the witness can still attest the document via a digital signature from the same location as the signatory, “remote” witnessing (e.g. by video link) is not permitted.
In addition to the above, it has been evident that local authorities and institutions have yet to become accustomed to digital signatures and in many instances, they have indicated their reluctance in accepting them.
In the absence of any judicial decisions in connection with the use and implementation of electronic signatures, it remains to be seen how will Cypriot courts interpret and apply the provisions of the Regulation and the Law and how will digital signatures be treated.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific circumstances before acting on any information provided. For any further information or advice, please contact Lorena Charalambous, Partner, at firstname.lastname@example.org