Government authorities all across the world are strongly advising, and in many cases are even requiring, people to stay at home, socially distance from one another and avoid gatherings to help put an end to the spread of the COVID-19 pandemic. The current pandemic has also led most companies and employers to require or encourage their employees to work from home for the time being. As a practical way to overcome these new obstacles and adapt to the changes, businesses are forced to consider executing legal documents and contracts electronically using e-signatures, as opposed to signing physically on paper in wet ink.
This article focuses on the position of electronic signatures under Omani law, including its enforceability, the implications of cross-border transactions, best practice regarding storage and retention of such documents and our other recommendations and points of consideration.
Different types of e-signatures
Universally speaking, e-signatures can take many forms nowadays, including typing “/s/” in before the signatory’s name to indicate a ‘conformed’ signature in a legal form or document, clicking “accept” or similar confirmations in online agreements also imply a signature, as do emailing a scanned signature, faxing a signature, as well as sending an email with the statement: “I agree.”, The two most used types of e-signatures in Oman are electronic signatures and digital signatures, although both are generally uncommon in the Sultanate.
Electronic signatures, being the more common of the two, entail any electronic process that indicates the signatory’s acceptance of an agreement or document. Typically, electronic signatures are in the form of a scanned image or photograph of the respective signatory' ink signature, a mouse-created signature on a screen, a signature at the end of an email, or a typed name.
Alternatively, digital signatures require the use of a certificate-based unique digital ID for each signatory that is issued by a certificate authority, used to validate proof of signing. A certificate authority is a trusted third party that validates a person’s identity and generates a public and private key pair on their behalf. When a person digitally signs a document, they use such private key to sign, and then a system creates an encrypted digital signature. Digital signatures are also timestamped, and if changed after signing, they will be rendered invalid. DocuSign is a renowned example of a digital signature platform.
E-signatures under Omani law
E-signatures and digital signatures are permitted under Omani law pursuant to the Electronic Transactions Law (Royal Decree 69/2008 (as amended)) (the “ETL”). The ETL defines ‘Electronic Signatures’ to include digital signatures as follows:
“The signature on an electronic message or transaction in the form of letters, numbers, symbols, signs or others of a unique feature that allows others to identify the signatory”.
Therefore, for the purposes of this article, electronic and digital signatures will be referred to collectively as “e-signatures”.
It must be noted that while e-signatures are permitted in Oman, Article 3 of the ETL prohibits their use in: (a) transactions related to the Civil Status Law (Royal Decree 27/2013), including marriage and the dissolution thereof, inheritance, wills and endowments; (b) issuing court proceedings, judicial announcements, notices of subpoenas, search warrants, arrest warrants, judicial verdicts; and (c) any document of which the law requires to be ratified by the notary public.
Legal enforceability and admissibility of e-signatures
Article 7 of the ETL states that contracts that are e-signed in accordance with the requirements set out in the ETL and its regulations and decisions, shall have the same legal effect and be considered valid and enforceable as if they were signed by hand. However, there is no jurisprudence from the Omani courts / arbitral tribunals that assists with the interpretation of the enforceability of e-signatures and, as far as we are aware, no such cases / arbitral proceedings have been brought to date.
Under Article 22 of the ETL, in order for an e-signature to be valid, the following is required:
- the tool used for creating an e-signature such as a software electronic device (“E-Signature Tool”), in the course of its usage, such e-signature is limited to the signatory and no other person;
- the E-Signature Tool was at the time of signing under the control of the signatory and no other person;
- that any alteration to the e-signature after the time of signing is discoverable; and
- that any modification in the information related to the e-signature after the time of signing is discoverable.
However, any concerned person may produce evidence to prove that such e-signature is reliable or not.
The validity of the e-signatures is not affected by the location/headquarters of the respective parties signing, provided that the document in question is governed by Omani law.
Storage and retention of e-signed documents
Article 8 of the ETL sets out that where Omani law requires the retention of any document for any reason, such requirement may be met by retaining such document in its electronic form, provided that:
- such document is retained electronically in the form it was originated or sent or received or in a form capable of proving accurately that it is in its original form;
- such document remains retained in a way to render it accessible, usable and retrievable for subsequent reference; and
- it is retained in a way to enable the identification of its origin and destination and the date and time in which it has been sent or received.
In addition to saving the document electronically in accordance with the above, we would also advise retaining a hardcopy of the e-signed document for safekeeping.
Our recommendations and other considerations
The ETL provides that approved licensed authorities may issue electronic certificates that confirm the link between a signatory and the data of their respective e-signature. If a party receives an e-signature confirmed by such certificate, it is presumed that the party has verified the accuracy of the certificate and its enforceability and that it can rely only on the certificate.
Further, Article 23 of the ETL states that the following should be considered to confirm the reliability of an e-signature or the accuracy of the certificate:
- the nature of the transaction intended to be confirmed by the e-signature or the certificate;
- the value or the importance of the transaction (if known);
- that the party relying on the e-signature or the certificate has taken appropriate steps to decide whether such electronic signature or the certificate is reliable;
- any previous agreement or transaction between the originator and the approved party; and
- any other relevant factor.
When using an E-Signature Tool, for their signature to have legal effect, the signatory should:
- exercise reasonable care to avoid unauthorised use of their E-Signature Tool; and
- without undue delay, use all means made available by the certification service provider or use reasonable efforts to notify any person expected to rely on or provide services with reference to the e-signature where:
- the signatory knows that the E-Signature Tool was misused; and/or
- the circumstances known to the signatory will give rise to substantial doubt that the E-Signature Tool will be misused.
The use of e-signatures is relatively limited in Oman and across the world, especially for external and multi-jurisdictional transactions. Even though most transactions today can be negotiated and closed electronically, most businesses appear slow to take up e-signatures, and many parties still rely on wet ink original, physically signed hardcopy documents. This may be due to uncertainty with respect to the enforceability of e-signatures, the legal requirements for using them, as well as security concerns, or simply sticking to conventional industry customs. However, the COVID-19 pandemic appears to have encouraged people to rely on such pre-existing technologies in order to continue carry out business and adjust to the ‘new normal’ for the foreseeable future.
If you have any questions or concerns regarding the use of e-signatures, please get in touch with us.