Technology  Law 

The Electronic Signing of Documents: A Phenomenon in the Time of Digitization, but a Necessity in the Time of Crisis

Czech legislation permits companies, and their clients, to use several kinds of online communication, including those with the use of remote contract signing. Although it is not regulatory news, there are companies that have not yet embraced such digitisation, even in these times. During the coronavirus crisis, interaction without physical presence is not only an interesting bonus, it is an outright necessity. We have therefore summarised key information that will help companies avoid disruption in communication with their customers, continue entering into contracts, and still meet all the requirements of current measures.

Primarily, legislation can be found on the European level, specifically in the regulation on electronic identification and electronic signing (Regulation (EU) No 910/2014 of the European Parliament and of the Council) which has become better known under the abbreviation eIDAS. In Czech legislation, the rules related to signing are further elaborated primarily in two acts, specifically on trust services for electronic transactions (297/2016 Coll.) and on electronic transactions with the authorised conversion of documents (300/2008 Coll.).

Under eIDAS (and related regulations), we can see three principal elements (instruments) which play an important role in entering into contracts online, or in confirming the content of electronic documents:

  • An electronic signature – this is an expression of the will of a specific person to enter into a contract, and there are several levels that differ in the strength of authenticity and verifiability (higher strengths bear information on the identity of signatories and ensure the integrity of the document).
  • An electronic seal – this is used for the authentication of the origin of the document by a corporate entity, and to ensure the integrity of that document.
  • An electronic time stamp– using the time stamp, it is possible to match the specific document, or its content and signature, to a specific moment in time in an official and verifiable manner.

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As mentioned, the eIDAS regulation differentiates between several levels in electronic signatures; These levels escalate in terms of the requirements that must be met. The basic level is a simple electronic signature on which very low demands are placed and which are met by traditional signatures at the end of emails or check boxes on a web interface. A higher level is through an advanced electronic signature which provides, among other things, protection against changes as well as the identification of the signatory. This level can be ensured through commercial services of third parties or through the long-awaited bank identity (BankID).

The difference between the simple and the advanced electronic signature consists of the verifiability and probative value in a dispute, if any. While the first mentioned level is more difficult to prove from a legal perspective, the second level has attributes that may be verified in a potential legal dispute, and the existence and the content of the document therefore proven. The highest form is a qualified electronic signature, which is based on a qualified certificate issued by entities authorised by the state – the certification authorities. This level is considered to be the equivalent of a handwritten signature anywhere in the EU.

In the Czech Republic, in addition to qualified electronic signatures, a recognised signature enjoys a high level of trust, and this weight results only from Czech legal regulations. Signatures on these levels are based on qualified certificates granted by proven certification authorities (PostSignum, První certifikační autorita, and eIdentity in the Czech Republic). Companies should select the levels of electronic signatures to match the importance of the documents and they should not underestimate the risks of entering into contracts. Sometimes, strong certification may not be convenient for companies in less important interactions.

What documents cannot be signed electronically?

Although the legislation is accommodating on the issue of electronic signing and verification, there are certain constraints. For this reason, you cannot sign electronically for example the following:

  • Documents requiring signature verification
  • Notarial deeds
  • Shares, bills of exchange, cheques, and similar documents
  • Certain corporate deeds

In respect of electronic signing abroad, the eIDAS regulation applies to EU countries – it means that there are uniform basic rules throughout the states. Recognition of signatures from countries outside the EU may be defined based on contracts between the EU and third countries.

Still, it should be noted that a specific issue is the validity of electronic signatures in time. If a contract is signed for a longer time period (several years), the verifiability of the signatures, or the validity of the certificate, may gradually decline. This problem may be addressed for example by providing the specific document/signature with a qualified time stamp, archiving through special services of third parties, or conversion of the document into paper form.

Are you interested in electronic communication and online contract signing for your company and its clients? Watch our webcast named 2nd Lockdown – Electronic Signing in which Deloitte professionals will provide you with an introduction to remote document contracting.

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