Which countries accept digital signature on B2B contracts?
Companies are doing business with foreign companies from around the world on a daily basis. The problem with B2B contracts is that legislation might often be completely different in other countries.
It's just not enough to know legal regulations regarding digital signatures in your country as you do business with other countries and the regulations mey be different.
The law of your country might not always apply, especially when it comes to cross-border situations.
When two entities from separate countries sign contracts, the rules on conflict of laws shall determine applicable law in instances of disputes.
Are digital signatures in other country allowed? Under what circumstances? What happens with B2B contracts if digital signatures aren't allowed? Is the contract still valid?
Those are commonly the most pressing issues companies encounter when doing business around the world.
This article will hopefully help you to resolve some of them. Even though digital signaturesrepresent the way how companies will sign contractsin the future, some countries still subject them to a less benevolent regime.
What are digital signatures?
Digital signatures are basically encrypted numbers that represent the authenticity of a document or other digital message.
A valid digital signature tells the recipient that the document was created by the authenticated sender, that this sender definitely sent the message, and that the message couldn't be altered.
Digital signatures are regularly used to implement electronic signature. Electronic signature represents a broader term which includes an electronic data that is dedicated to represent the intent of a signature.
Electronic and digital signatures are therefore completely legally binding and are practically uniform with physical signature in many jurisdictions around the world.
But this is not always the case. In fact, legal regimes concerning digital signatures differ substantially from one jurisdiction to another.
Types of digital signatures
Three types of digital signature can be identified from the legal perspective:
· Simple/Basic/Open digital signatures
Any technology or electronic form is accepted as long as the digital signaturerepresents the intent of the signer and is made by the person who ought to be the signer.
· Advanced digital signatures
Combined with previous requirements, digital signature should also identify the signer, be uniquely linked to him and be under his sole control, as well as be able to detect any changes to the document.
· Qualified digital signatures
This is a digital signature that uses a digital certificate issued by an accredited central authority. Such digital certificate is completely unique and represents a personal electronic identity credential.
Types of digital signatures laws
Like previously, three types of digital signature laws can be identified. Each type describes the country's attitude towards digital signatures in general.
Digital signatures, barring few exceptions, are enforceable and have the same legal status as analogous signatures.
Some of the most important countries with this permissibletype of law are the United States, the United Kingdom, China, Canada, and Australia.
Digital signatures are accepted as admissible and enforceable, but a stronger emphasis is placed on authenticated digital signatures as they have a greater probative value.
Some of the most important countries with this type of law are Germany, Brazil, Spain, Italy, Mexico, Switzerland, Indonesia, and many others. In fact, this is a predominant type of digital signatures law.
Specific technical methods to digitally sign a document are prescribed and in some cases even which digital signature platforms are acceptable is prescribed as well.
As a result, very few countries have adopted this type of digital signatures law.
Digital signatures law by country
· The United States
Digital signatures and their admissibility is well established in the United States.
Both the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN) explicitly prescribe that a contract or any other commercial transaction shall not be denied legal effect solely because it is in electronic form.
As a result, all digital signatures are considered of equal status as physical signatures.
· European Union
The EU Directive 1999/93/EC on Electronic Signature prescribes that a qualified electronic signature is the equivalent of a handwritten signature.
Article 1 further specifies that the Commission in no way prevents member states from accepting any type of electronic signatures – whether it be normal, advanced, or qualified.
As such, electronic signatures are legally binding and enforceable in a court of law. Furthermore, an electronic signature shall not be denied any of the previously mentioned effects just because it is in an electronic form or doesn't meet the requirements for electronic signature.
Legislation in the European Union is thus pretty diverse. For actual effects of digital signatures in a particular member state, a specific national legislation has to be reviewed.
In India, digital signatures have been recognized for almost 20 years, since the adoption of the Information Technology Act.
The Act distinguishes between two types signatures. Simple electronic signatures, which can be used as evidence in a court of law and digital signatures, which are recognized as valid electronic signature.
Therefore, although electronic signatures are admissible as evidence in a court of law, only digital signatures have full legal authority.
Which countries therefore accept digital signature on B2B contracts
The answer to question which countries accept digital signature on B2B contracts is, as has been previously established, pretty complex.
Several factors have to be taken into consideration. Countries namely don't equally govern digital and electronic signatures.
Some requirements that make a digital signature valid are more strict in some jurisdictions than in others.
In addition, many countries established several tiers of legality structure according to which only some digital signatures have the potential to be fully valid in all circumstances, including digital signatures on contracts.
As legislation of each particular country might be pretty fragmented and hard to understand, the following countries seem to have the most permissive legislation when it comes to digital signatures:
The United States, China, the United Kingdom, Canada, Australia, New Zealand, and Sri Lanka.