In September this year, the Law Commission published a report outlining the results of its consultation on the law governing the electronic execution of documents. The project's aim was to ensure that the law is sufficiently certain and flexible to remain fit for purpose in a global, digital environment.

With the rise of document automation and e-signing platforms in the legal industry and the increasingly paperless nature of legal transactions, it's crucial to ensure that businesses understand the implications and enforceability of electronic signatures and exercise appropriate caution.

It's clear that electronic signatures have the ability to increase efficiency (one study by the Association for Intelligent Information Management suggests a saving of up to 3.1 days on average per process), reduce the time taken for signature approvals and save paper, yet concerns still exist around data security (e-signing platforms are cloud-based) and the risk of fraud, their compliance with relevant regulations/audit requirements and the issue of intent. In particular, English court decisions have considered a name typed at the bottom of an email, an 'I accept' tick box on a website and the header of a SWIFT message to amount to valid signatures.

While the report confirms that electronic signatures are a valid alternative to the traditional handwritten signature and are capable of validly executing documents (including deeds), it also made a number of recommendations, including setting up an industry working group to consider how technology can provide evidence of identity and intention to authenticate in a secure and reliable manner. This includes considering virtual or video witnessing of documents, which could bring a whole new level of importance to your next video conference.

Cross-border implications

One complicating factor is the use of electronic execution in complex multi-party and multi-jurisdictional deals. The Law Commission's statement of law on the legal validity of e-signatures only relates to English law. If execution is by a non-English party, or a document is governed by the laws of another jurisdiction, you may need confirmation by local counsel that the other party has the authority to execute by way of electronic signature and that the electronic signature is an effective method of execution. Likewise, if litigation or enforcement based on an electronically signed document is taking place outside of England, it is not a given that an electronic signature will be held valid.

Registration issues

Of course, there are also still cases in which a manual signature is a necessity, for example if a document needs to be registered with a registry and the registry only accepts wet ink signatures.

Despite these areas of limitation, at Clifford Chance Applied Solutions we welcome any initiative that streamlines legal processes for our clients and we anticipate that this report - and the forthcoming conclusions of the industry working body - will assist in further cementing the future of electronic signatures.

If you're interested in seeing a global overview of electronic signatures in one of Clifford Chance Applied Solution's digital products, let us know here.

For a summary of how this impacts the syndicated loans market please read a briefing by Clifford Chance LLP here or for more information on the Law Commission's report, read the full briefing by Clifford Chance LLP here.