How to ensure the validity of esignatures in EU transactions

The rise of electronic signatures in international transactions has simplified global business operations, making contracts and agreements faster, more efficient, and less reliant on paper-based systems. However, ensuring the validity of these signatures across different jurisdictions requires careful consideration of international laws, regional regulations, and security protocols.

Below is a detailed guide to ensure the validity of electronic signatures in international transactions, covering international recognition, cross-border considerations, and the eIDAS regulations in the European Union (EU).

1. International recognition of electronic signatures

Many countries have adopted laws recognising the validity of electronic signatures, often influenced by global frameworks such as the United Nations Commission on International Trade Law (UNCITRAL). These frameworks aim to create consistency in how electronic signatures are treated across borders. Here are key aspects of international recognition:

• UNCITRAL Model Law on Electronic Signatures (2001): This model law serves as a foundation for countries looking to establish electronic signature regulations. It recommends that electronic signatures should be considered legally valid if they meet the same requirements as handwritten signatures, such as identifying the signatory and proving their intent.
• United States (ESIGN Act): The U.S. Electronic Signatures in Global and National Commerce Act (ESIGN) ensures that electronic signatures are legally valid for domestic and international transactions, provided both parties agree to their use.
• Electronic Identification and Trust Services (eIDAS) Regulation: The EU’s eIDAS regulation establishes a standardised legal framework for electronic signatures across all EU member states, ensuring their recognition and enforcement.
• Bilateral and Multilateral Agreements: Many countries have entered into mutual recognition agreements that affirm the validity of electronic signatures across borders. For example, the EU and the U.S. recognise electronic signatures used in transactions between the regions under specific conditions.

Despite this recognition, the specific standards required for electronic signatures to be deemed valid can differ significantly across jurisdictions. So, take the time to really check what’s required of your signature before signing anything.

Read also: Electronic signature: The benefits and how it works

2. Considerations for using electronic signatures in cross-border transactions

When using electronic signatures in cross-border transactions, businesses must ensure they comply with both local and international legal requirements. Below are some key considerations:

• Legality of Electronic Signatures: Before initiating an international transaction, it’s essential to verify that the countries involved recognise electronic signatures as legally binding. While many jurisdictions have laws similar to UNCITRAL’s model, others may impose different standards for specific types of transactions (e.g., real estate, wills).
• Level of Electronic Signature Required: Different countries recognise various types of electronic signatures, ranging from simple too advanced and qualified electronic signatures. For example, eIDAS distinguishes between three types:
  1. Simple Electronic Signatures (SES): Basic form of electronic signatures.
  2. Advanced Electronic Signatures (AES): These signatures must uniquely identify and authenticate the signatory.
  3. Qualified Electronic Signatures (QES): The highest level of security, requiring a digital certificate from a trusted provider. QES carries the same legal weight as a handwritten signature.
• Cultural and Legal Specificity: Some countries require specific types of documents, such as notarised agreements or real estate contracts, to be signed in person or with a wet ink signature. Ensure that electronic signatures are acceptable for the particular type of transaction in all involved jurisdictions.
• Jurisdiction and Dispute Resolution: Parties should agree in advance on the applicable jurisdiction and dispute resolution mechanism in case any issues arise regarding the validity of the electronic signature. It is advisable to include specific clauses addressing this in the contract.
• Security and Data Privacy: Security standards vary by country. Cross-border transactions involving electronic signatures should employ encryption and authentication measures to prevent fraud. It is also important to ensure that these measures comply with local data protection laws, such as the General Data Protection Regulation (GDPR) in the EU.
• Trusted Service Providers: It is advisable to use a trusted service provider that is recognised internationally or within the jurisdictions of the involved parties. These providers offer secure digital certificates that can meet the advanced and qualified signature requirements set by many countries.

Read also: All you need to know about Oneflow electronic signatures and the eIDAS regulation

3. eIDAS regulations across the EU member states

The Electronic Identification, Authentication, and Trust Services (eIDAS) regulation is the EU’s legal framework for electronic signatures and trust services across its member states. It was established to provide legal certainty and standardisation for electronic transactions throughout the EU. Below are key elements of the eIDAS regulation and its application across member states:

• Types of Electronic Signatures: eIDAS recognises three types of electronic signatures, each with varying levels of legal recognition:
  1. Simple Electronic Signatures (SES): The basic level of electronic signatures that may not provide identity verification.
  2. Advanced Electronic Signatures (AES): These are more secure, ensuring that the signature is uniquely linked to the signatory and can detect any subsequent changes to the signed data.
  3. Qualified Electronic Signatures (QES): These signatures require a digital certificate from an EU-approved provider and are legally equivalent to handwritten signatures across all member states.
• Mutual Recognition: One of the key features of eIDAS is the cross-border recognition of qualified electronic signatures and trust services. A QES issued in one EU member state must be recognised and accepted in all other member states, ensuring seamless transactions across borders.
• Qualified Trust Service Providers (QTSPs): Under eIDAS, only qualified trust service providers can issue the digital certificates necessary for QES. These providers must be certified by national supervisory bodies and are subject to strict regulation to maintain the highest level of security and trust.
• Legal Certainty and Non-Discrimination: eIDAS mandates that electronic signatures, regardless of their form, should not be discriminated against or denied legal effect solely because they are electronic. However, to obtain the highest level of legal recognition, QES is preferred, particularly in sensitive transactions like public tenders or high-value contracts.
• eIDAS for Non-EU Companies: Companies outside the EU doing business with EU entities must comply with eIDAS if they wish to ensure that their electronic signatures will be recognised. This may involve using an EU-recognised trust service provider.

The key takeaways

To ensure the validity of electronic signatures in international transactions, businesses must navigate a complex array of laws and regulations. Key steps include understanding the international frameworks like UNCITRAL, ensuring compliance with local laws, selecting the appropriate type of electronic signature, and using certified trust service providers. For transactions in the EU, the eIDAS regulation provides a robust framework for mutual recognition of electronic signatures, ensuring legal certainty across all member states. By taking these steps, companies can mitigate risks and ensure their electronic signatures hold up in legal disputes or enforcement actions.