Businesses turn to electronic / digital signatures as remote working becomes the order of the day

Singapore
This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

As workplace closures and social distancing have rendered physical signing of documents logistically challenging, if not impossible, many businesses are turning to technologies such as DocuSign or applying signatures created from other programmes such as Adobe in ensuring the wheels of contract implementation and management keep turning. Navigating the logistics is one step, but the second step is understanding whether all electronic signatures are reliable and enforceable at law. 

In business parlance, the terms “electronic signature” and “digital signature” are often used interchangeably, however, from a legal perspective there is a distinction between them in terms of, amongst others, the level of security, and certain statutory presumptions in terms of its authenticity that may become relevant.

In this article, we examine the legal position in Singapore on the use of electronic and digital signatures.

Electronic signatures generally comprise of data in electronic form that can be associated with other data in electronic form and which is used by the signatory to sign; in short, it is an electronic version of the written signature and can be a mere reproduction of it. A common example is an image of a signature appended to the signing box of a document.

Digital signatures appear in the form of a coded message which securely associates a signer with a document in a recorded transaction. A standard and accepted format known as Public Key Infrastructure (PKI) is also used to provide the highest levels of security and universal acceptance. The usage of DocuSign is a common example of a digital signature.

Digital signatures and electronic signatures are permitted in contracts governed by Singapore law

In short, Singapore law governed contracts which are signed by electronic / digital signatures are legally enforceable and are admissible in court and arbitration proceedings, to the same extent as if they were signed by hand, save for certain exceptions (which are described below).

Generally, digital and electronic signatures are permitted under the Electronic Transactions Act (Chapter 88) of Singapore (“ETA”), save that the provisions of the ETA shall not apply where any rule of law requires (actual) written (or wet ink) signatures in any of the following matters:

  • the creation or execution of a will;
  • negotiable instruments, documents of title, bills of exchange, promissory notes, consignment notes, bills of lading, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money;
  • the creation, performance or enforcement of an indenture, declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts;
  • any contract for the sale or other disposition of immovable property, or any interest in such property; and
  • the conveyance of immovable property or the transfer of any interest in immovable property.

Ensuring an electronically signed document is a “secure electronic record” and an electronic signature is a “secure electronic signature”

If a specified security procedure, or a commercially reasonable security procedure agreed to by the parties involved, has been properly applied to an electronic record to verify that the electronic record has not been altered since a specific point in time, such record shall be treated as a “secure electronic record” from such specific point in time to the time of verification. This is important because in any proceedings involving a secure electronic record, it shall be presumed, unless evidence to the contrary is adduced, that the secure electronic record has not been altered since the specific point in time to which the secure status relates.

Whether a security procedure is commercially reasonable shall be determined having regard to the purposes of the procedure and the commercial circumstances at the time the procedure was used, including:

  • the nature of the transaction;
  • the sophistication of the parties;
  • the volume of similar transactions engaged in by either or all parties;
  • the availability of alternatives offered to but rejected by any party;
  • the cost of alternative procedures; and
  • the procedures in general use for similar types of transactions.

An electronic signature is treated as a “secure electronic signature” (which generally includes digital signatures) if it can be verified (through the application of a specified security procedure, or a commercially reasonable security procedure agreed to by the parties involved) that it was, at the time it was made:

  • unique to the person using it;
  • capable of identifying such person;
  • created in a manner or using a means under the sole control of the person using it; and
  • linked to the electronic record to which it relates in a manner such that if the record was changed the electronic signature would be invalidated.

Statutory presumptions applicable to secure electronic signatures and secure electronic records

In any proceedings involving a secure electronic signature, it shall be presumed, unless evidence to the contrary is adduced, that:

  • the secure electronic signature is the signature of the person to whom it correlates; and
  • the secure electronic signature was affixed by that person with the intention of signing or approving the electronic record.

Unless evidence sufficient to raise doubt about the presumption is adduced, where a device or process is one that, or is of a kind that, if properly used, ordinarily produces or accurately communicates an electronic record, a Singapore court shall presume that in producing or communicating that electronic record on the occasion in question, the device or process produced or accurately communicated the electronic record.

Unless evidence to the contrary is adduced, a Singapore court shall presume that any electronic record generated, recorded or stored is authentic if it is established that the electronic record was generated, recorded or stored in the usual and ordinary course of business by a person who was not a party to the proceedings on the occasion in question and who did not generate, record or store it under the control of the party seeking to introduce the electronic record.

As stated above, in any proceedings involving a secure electronic record, it shall be presumed, unless evidence to the contrary is adduced, that the secure electronic record has not been altered since the specific point in time to which the secure status relates.

Other considerations

Whilst the ETA does not differentiate the recognition of electronic signatures based on the geographical locations of contracting parties, where contracting parties are located outside of Singapore, the recognition of the ability to sign by electronic signature under the signatory’s laws of incorporation and constitutional documents remains highly relevant.

Even if electronic and digital signatures are permitted under a counterparty’s laws of incorporation and constitutional documents, it is also important to check whether in practice, such non-physical signing methods are indeed widely used in the relevant jurisdiction. If usage of electronic and digital signatures is practically non-existent in the counterparty’s jurisdiction, contracting parties are advised to seek further advice before proceeding in order to avoid any unexpected or practical difficulties in terms of enforceability and recognition.

For documents that are to be executed as deeds, to avoid the practical difficulty of having an electronic signature ‘witnessed’, it is recommended that these be executed either by either two directors; or a director and a company secretary, rather than having a director signing it in the presence of a witness

The above is intended as a general guide only and is not to be taken as legal advice or an exhaustive statement of the applicable laws. We hereby disclaim any and all liability for any reliance or use of the above information. If you require specific legal advice, please contact us directly.