CORPORATE & COMMERCIAL

The Implementation of Electronic Signatures in Cyprus in a time of Social Distancing

It has become obvious that whilst COVID-19 epidemic has caused disruptions in certain industries, in other industries its effects can be moderated by technology. We would like to provide some information on the key legal aspects of the use of technology concerning electronic signatures under Cyprus Law and the reason why companies all over the world, including our law firm, is implementing Electronic Signatures.

WHAT ARE ELECTRONIC SIGNATURES?

An electronic signature is a method by which an individual or entity commits to a legal obligation electronically, in the absence of a physical, written, wet ink signature.
Electronic signatures may be created in various ways, including:

  • using an electronic execution platform;
  • signing a pdf on screen;
  • agreeing within the body of an email to an attached document;
  • or providing an electronic copy of a document with an image of your signature or just your typewritten name within the execution block.

 

THE LEGAL POSITION

Subject to some legislative and form requirements, a ‘signature’ (of any kind) is not actually necessary for a contract to be formed.

However, one of the requirements for forming a contract is that the parties demonstrate an intention to be legally bound, and traditionally, wet ink signatures give strong evidentiary support for that.

The requirement that parties demonstrate an intention to be legally bound is as relevant to electronic signatures. So the real question is – how good are they as evidence?

Within the European Union, Regulation 910/2014/EU (the “Regulation”) established a concise legal framework for e-signatures, e-documents e-seals, and in general, all forms of electronic communications with a direct effect on all member states. Thus, as European Union Regulations are directly applicable to all European Union Member States, including Cyprus, there is no need for implementation of further local legislation.

Cyprus nonetheless has embodied the provisions of the Regulation in the local legislation with the establishment of Law 55(I)/2018 “Providing for a legal framework for electronic identification and related issues” (the “Law”). The Law establishes the legal framework regulating electronic signatures and some certification that focuses on enabling their use and legal recognition.

According to Article 25 of the Regulation, an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it was made in electronic form.

As per Article 3.10 of the Regulation, the electronic signature is defined as data in electronic form which is attached to, or logically associated with, other electronic data and which is used by the signatory sign (i.e. “Electronic Signature”).

By virtue of Article 3.11 of the Regulation, an advanced electronic signature (i.e. “Advanced Electronic Signature”) is a signature that meets the following essential requirements:

  • it is uniquely linked to the signatory;
  • it is capable of identifying the signatory;
  • it is created using means that the signatory can maintain under his sole control; and
  • it is linked to the data to which it relates in such a manner that any subsequent change of the data is detectable.

Additionally, an Advanced Electronic Signature supported by a qualified certificate issued a Qualified Trust Service Provider (QTSP), and created by a qualified electronic signature creation device (i.e. a Qualified Electronic Signature) has the most important judicial value because it is being certified by a QTSP and may even be used for sensitive interactions with public authorities.

It is pointed out that although an electronic signature cannot be denied of legal enforceability solely because it is in electronic form, only a qualified electronic signature shall have the equivalent legal effect of a handwritten signature and when based on a qualified certificate issued in one Member State, it shall be automatically recognized as a qualified electronic signature in all other Member States as well.

The bodies responsible for certifying qualified electronic signature creation devices must comply with the European Commission’s standards and technical specifications.

The Department of Electronic Communications of the Ministry of Communications and Works of Cyprus has been appointed as the responsible authority for enforcing regulatory system for electronic signatures in Cyprus, including the supervision and regulation of all Qualified Trust Service Providers, which are intended to provide high-level security trust services and products under the applicable legislation.

Furthermore, section 9 of the Legislation specifies that if the Electronic Signature does not meet with the criteria of a qualified signature, it can still be considered as admissible proof in legal proceedings in Cyprus.

It is also interesting to note that the Cyprus government has recently signed a memorandum of understanding with commercial banks that would open the way for the introduction of e-signatures, a catalyst in the state’s long-delayed course towards modernization and digital transformation. Their introduction is expected to go online by the end of the year 2020 after the necessary legislation is put in place.

Lastly, it should be noted that any e-signatures executed in other jurisdictions outside the European Union and/or regulated by any jurisdiction outside the European Union would have to comply with local laws and/or regulations, depending on the nature of the document in question.  It is therefore advised that local legal advice is sought when dealing with Electronic Signatures within non-European counties.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.