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February 7, 2022
The expert Industry Working Group on Electronic Execution of Documents has published its interim Report, which sets out its analysis of the current situation in England and Wales, identifies simple best practice guidance based on existing technology, including for vulnerable individuals, and makes recommendations for future analysis and reform.
The expert Working Group was set up following the Law Commission’s 2019 report, “Electronic Execution of Documents”, in which it was recommended that a multi-disciplinary group of business, legal and technical experts should be convened to consider the practical and technical issues involved and to identify potential solutions.
In its analysis of the current situation, the Working Group’s interim Report notes that under the eIDAS Regulations (910/2014/EU) there are three levels of electronic signature: (i) Simple or Standard; (ii) Advanced Electronic Signature (AES); and (iii) Qualified Electronic Signature (QES). The limited uptake of AES and QES in this jurisdiction is addressed. The Report aims to de-mystify electronic signatures and demonstrate how they can be incorporated into transactions of all kinds, including those involving vulnerable individuals. It finds that the foundations necessary for a cultural shift in document execution are already present but finds that several catalysts are required to ensure the change happens.
As for best practice guidelines, the Report identifies five principles for legal professionals and businesses to facilitate the widespread adoption of the right electronic signature for the right document:
- agree as early as possible that a document is to be executed electronically and the procedure for doing so;
- use a signing platform that provides a minimum set of security/safety/functionality with a strong audit trail that demonstrates an intention to sign by the signatories;
- consider whether additional evidence to record the fact that the signatory is approving the document is necessary and/or appropriate;
- where possible, provide multiple options to vulnerable consumers or counterparties so that these groups can adopt a method of signing that suits their needs; and
- authentication should be easier for those with secure digital identities, but this should not be essential.
Finally, the Report sets out recommendations for future analysis and reform:
- QES, particularly if underpinned by a regulated digital identify trust framework, is capable of fulfilling the same objectives as physical witnesses and attestation of documents, such as deeds;
- increased use of automated or “smart” contracts, which often necessitate the use of an electronic signature, will lead to a greater uptake of electronic execution practices;
- a cross-border database of permissible regulatory and execution modes should be established, starting with major trading partners; the database could be maintained by government or a not-for-profit industry organisation offering subscription access;
- current Government work to set up a trust framework will facilitate the use of electronic signatures in future;
- the Government should take steps now to adopt the use of electronic signatures in its transactions with third parties, whether providers of goods or services to government or the public, to encourage the widest possible use of electronic signatures within society;
- standardisation is likely to facilitate the use of electronic signatures; and
- the temporary provision allowing remote witnessing of wills should be extended permanently.
The Report concludes that both legal reforms and technological advances will be far more effective if they are developed in step with one another. The Group’s clear view is that electronic signatures can and should be used today on a wide scale, and that society should have confidence in using them. To achieve this widespread adoption requires an increase in the awareness of what can already be done, how it can be done, and the advantages of doing so. The Group says that it is committed to doing everything it can to facilitate this transformation. To access the full Report, click here.