Volume 6, Number 24, Page 1
Electronic Commerce in the Western Hemisphere: An Ongoing Series
In this edition of the series, experts from the Americas discuss electronic messages and signatures, whether they satisfy existing legal criteria in their jurisdictions and how they relate to paper-based legislation and current contract requirements. For further information on this topic and e-commerce in general, contact Mariana Silveira (msilveira@natlaw.com) or Francisco A. Laguna (flaguna@natlaw.com).
Question: Does an electronic message constitute a writing in your legal system? Have any of your regulations adopted the notion of “records” rather than “writings?” Would an electronic signature, secured or not, be considered a signature in your legal system? What does your legal system understand by “authentication” of a message or signature? Are digital or other types of secured signatures enforceable?
Under current Argentine law, both in general terms and for contract law purposes, electronic messages do not constitute a writing pursuant to the applicable Civil Code rules. Our Civil Code discriminates among:
(i) Public instruments, including those contracts entered into before a notary and through a notarial deed;
(ii) Particular instruments: written documents that do not bear the signature of the parties thereto;
(iii) Private instruments: those particular instruments that bear the signature of the parties thereto. Article 1012 of the Civil Code provides that “the signature of the parties is an essential condition for the existence of any act under private form. [The signature] may not be replaced by signs or by the initials of the names or surnames [of the parties thereto]”. Article 1021 of the Civil Code stipulates that private transactions that contain bilateral or reciprocal obligations must be executed in as many original copies as there are parties to the transaction.
“Have any of your regulations adopted the notion of “records” rather than “writings”?”
The legislative adoption of “records”, as opposed to “writings”, is illustrated by Article 61 of the Commercial Companies Law. Such article contemplates that companies may apply for authorization to keep mechanical, electronic or magnetic registries to record the company’s transactions. The requisite authorization is issued by the Inspección General de Justicia. This article has been criticized by those who still consider mechanical, electronic or magnetic registries unsafe, unless such records are subsequently incorporated into a duly bound book with numbered and sealed pages.1
“Would an electronic signature, secured or not, be considered a signature in your legal system?”
No. Under current Argentine law, the signature of the parties to the transaction is required (Civil Code, Article 1012).
“What does your legal system understand by “authentication” of a message or signature?”
Under current Argentine law, the services of a notary public are required to authenticate the text of a contract or the signatures of the parties. In some cases, the federal or local government may authorize private individuals to notarize juridical acts, which individuals are referred to as “public officers.”
“Are digital or other types of secured signatures enforceable?”
Not under current Argentine contract law as a general rule.
Under the Argentine legal system, the concept of instrument/document is closely related to a physical, paper system; thus, an electronic document may not be considered a “writing.” Likewise, substantive legal provisions require handwritten signatures.
The concept of authentication/authentic/authenticity with regard to documents or signatures is distinct from network security. An authentic document is the result of the intervention of a public officer or notary. An authentic signature, on the other hand, is a signature whose authenticity is not in question and that does not require a subsequent acknowledgment.
A proposed amendment to the Civil Code establishes that the concept of a “writing” may apply to public or private instruments, signed or not, except in those specific instances where a certain type/form of document is required. These instruments may be recorded on any medium, provided it is possible to reduce the content thereof to text form, even if technical means are required to read such texts. Unsigned, personal documents (documentos particulares) include: print-outs, visual or audio recordings of things or events; word and information records, regardless of the recording medium; and most other non-signed documents. Private documents (documentos privados) are executed personal documents (Proposed Amendment, Articles 263 - 65).
With regard to signatures, the proposed amendment stipulates that a signature evidences a declaration of will or consent. It must be handwritten, and it should consist of the individual’s name or corresponding sign, executed in the usual manner. In the case of electronic documents, the signature requirement is fulfilled when an identification method that reasonably guarantees authorship and integrity is used. (Proposed Amendment, Article 266).
An electronic message does not constitute a writing in the Brazilian legal system. Brazilian law treats electronic messages as circumstantial evidence of a transaction or contract, but not as a writing in and of itself. In this regard, a party may prove the existence of a contractual relationship by means of circumstantial evidence that “records” an event: telephone records; related correspondence; etc.
In Brazil, there is no legislation that defines electronic signatures as legally binding. Documents signed electronically are considered to lack proper authenticity, regardless of whether they are secured.
A document is authenticated when a public notary validates the legality of the underlying act or document, which validation renders the document legally binding. Authentication can also mean that a document is an exact copy of an original, including all messages and/or signatures.
Digital or other types of secured signatures are not enforceable per se; however, they can be used as circumstantial evidence to establish the authenticity of a document and, in turn, facilitate its enforceability.
Electronic documents are currently governed in Brazil by the general provisions regulating documentary evidence, principally the 1973 Code of Civil Procedure. At present, there is no specific regulation governing electronic documents or contracts. Consequently, courts tend to decide cases involving electronic documents by analogy. A high level of uncertainty surrounds this issue, since parties claiming rights based on electronic documents are not protected by applicable authenticity provisions. Parties must provide the courts with proof of the authenticity and integrity of the electronic document in order to enforce such related rights.
Brazilian law encompasses a broad definition of evidence. Parties can substantiate their claims with all available evidence, including electronic documents. However, qualifying an electronic document as evidence can be considerably difficult, depending on the level of secured technology involved and whether the judge is satisfied that the document is authentic.
Based on the foregoing, it is clear that Brazil should address two issues: the lack of specific regulations governing electronic signatures; and the impossibility of notarizing an electronic document. A series of draft bills2 governing electronic commerce, electronic signatures and notarization of electronic documents is pending before the Brazilian Congress. Special attention should be given the 1999 Brazilian Bar Association Draft Bill for two reasons. One, it is based on foreign/international regulations or prototypes, such as: the 1996 UNCITRAL Model Law on Electronic Commerce; the recommend-ations of the 1997 Bonn conference, Global Information Networks: Realizing the Potential; and the Digital Signature Act enacted by the State of Utah, USA. Secondly, it is well received by members of the Congress.
The Bar Association Draft Bill seeks to regulate three basic issues: a) electronic commerce; b) the validity of electronic documents; and c) digital signatures. Items (b) and (c) are addressed below.
The Draft Bill would effectively advance e-commerce by facilitating the enforcement of electronic contracts and by defining the probative value of electronic documents. Article 15 of the Draft Bill provides that statements contained in an electronic document, electronically signed, are attributed to the signing party, provided the electronic signature is: a) exclusively related to the signed document; b) verifiable; c) generated under the exclusive control of the signing party; d) linked to the document in question so that any alteration thereof invalidates the signature; e) not generated after the expiration, revocation or suspension of the authorization to issue such signature3.
With regard to digital signatures, the Draft Bill seeks to adapt the need to certify private/public keys to the old-fashioned, archaic institution of public notaries in Brazil. Pursuant to Article 236 of the Brazilian Constitution, notary and registry services are rendered by individuals appointed by governmental authorities. Such appointments are lifelong. Moreover, only a limited number of appointments is granted to each locality, so that cities like Sao Paulo, with more than ten million inhabitants, are restricted to thirty notaries. Consequently, notarial services do not respond to market demands.
The Draft Bill’s conciliatory approach provides for the creation of Public and Private Certification Authorities. Notaries will be responsible for Public Certification: the authenticity, deposit and general control of public key certificates. The notary shall certify the authenticity of public keys presented in person by the owner, duly identified; the certification request shall be made by the party in an appropriate, executed paper form, which shall contain sufficient information to
identify the public key certificate in question.4
The Draft Bill assigns a secondary role to Private Certification Authorities. Private certifications will not enjoy the same status as public certifications. Specifically, electronic documents certified by Private Certification Authorities are not afforded statutory presumptions of certainty. Services rendered by Private Certification Authorities are eminently commercial and private, and do not enjoy the same effects of the Public Certification Authorities5. Currently, there is only one certification authority in Brazil, a private entity located in Rio de Janeiro. Considering the Bar Association Draft Bill provisions, the development of a competitive market for electronic certification services in Brazil is highly unlikely.
In short, for an electronic document to be introduced into evidence, it must be electronically signed in accordance with the provisions above. However, such signatures must be authenticated by means of public keys certified by Public Certification Authorities.
While many related issues have yet to be decided in Canada, it is anticipated that the courts would recognize electronic records, documents and signatures as they satisfy the Statute of Frauds in force in most provinces. (The Statute of Frauds generally requires a party to introduce in evidence a written and signed memorandum in order to enforce a contract). However, the exact legal status of electronic documents and electronic signatures, digital, secure or otherwise, is uncertain. Some Canadian statutes refer to “records”, and courts do accept electronic records as evidence upon proof of the reliability of the computer system that generated the same. However, the use of the term “record” is not a term of art that automatically includes records in electronic form. The new Civil Code of Quebec, which came into force in 1994, was drafted to accommodate electronic means of communication and record keeping. The Canada Evidence Act, a number of provincial evidence statutes and the Civil Code of Quebec have specific evidentiary provisions governing electronic records.
“Authentication” is a term used almost exclusively in relation to the law of evidence. There, authentication of a message or signature implies that there is sufficient evidence to prove that the message is what it purports to be. There are some specific statutes that authorize the use of electronic signatures for their particular purposes.
Does an electronic message constitute a writing in your legal system?
At first glance, it would seem that electronic contracts do not constitute a writing and, therefore, would have no evidentiary value. Arguably, however, it is possible to accommodate electronic documents within the definition of a writing, particularly considering the definition of publication. The Copyright Law protects intellectual work in any published form: the reproduction of the work in a tangible manner at the disposal of the public in a direct manner through the use of media of some kind. This interpretation, together with current legislation, causes one to question the need for the formality of traditional writing.
Have any of your regulations adopted the notion of “records” rather than “writings?”
Several Chilean regulations adopt the notion of “records.”
Law No. 18.680 of 1988, which replaced Book III of the Commercial Code on ocean trade, establishes that a vessel’s log book or navigation journal may be kept through mechanical or electronic means, provided such means guarantee the accuracy and permanency of the data. Likewise, it sets forth that the signature on the bills of lading may be handwritten, printed via facsimile, perforated, stamped in symbols or registered through mechanical or electronic means.
Law No. 18.876, which contains the legal framework for the establishment and operation of private securities depositories, provides that certain transfers of deposited securities may be authorized by written communication or through electronic means.
Presidential Decree No. 380 of 1982, which enforces the United Nations Agreement on International Multimodal Transport of Goods and the Annexes thereto, establishes that multimodal transport documents may be signed mechanically or electronically, provided such signatures satisfy the laws of the country in which such documents are issued.
Presidential Decree No. 81 of 1999, governs the use of digital signatures and electronic documents for internal public administrative purposes as a cost saving measure. The Decree makes specific reference to electronic documents.
Would an electronic signature, secured or not, be considered a signature in your legal system? What does your legal system understand by “authentication” of a message or signature? Are digital or other types of secured signatures enforceable?
Currently, a proposed law on electronic signatures is pending before Congress. In addition, certain legislation specifically recognize electronic signatures.
Presidential Decree No. 81 of 1999, discussed above, recognizes digital signatures for internal public administrative purposes. The decree, however, requires the issuance of special regulations for the use of such signatures by each public sector entity; these regulations have yet to be promulgated.
Order of Regulation No. 914 on Payment of Social Security Payments through Electronic Transmission of Information and Funds (January, 1996) stipulates that electronic signatures shall replace, for all purposes, the handwritten signatures of the legal representative of the employer or of the independent worker for purposes of social security payments.
Order of Regulation No. 032 on Electronic Data Transmissions establishes that messages shall identify the originator thereof by means of the electronic signature of an authorized officer of the company.
According to Law 527 of 1999, electronic messages are as legally enforceable as written documents. In fact, Article 6 establishes that “where the law requires information to be in writing, that requirement is met by a data message if the information contained therein is accessible so as to be usable for subsequent reference.” Furthermore, Article 10 provides that an electronic message is a “document” for purposes of the Code of Civil Procedure.
Legal effects of digital signatures
Article 2 of Law 527 defines a digital signature as “a numeric value affixed to the data message and where, by implementing a known mathematical procedure, is linked to the code of the originator and the text of the message, allowing to determine that the above value has been obtained exclusively with the code of the originator and that the initial message has not been altered after conducting the transmission.”
Similarly, Article 7 provides that “Where the law requires a signature of a person or prescribes certain consequences in the absence thereof, that requirement shall be deemed met in relation to a data message if:
(a) a method is used to identify the originator of a data message and to indicate that person’s approval of the information contained therein; and
(b) said method is as reliable and as appropriate for the purpose for which the data message was generated or communicated, in the light of all the circumstances, including any relevant agreement.”
Furthermore, the last paragraph of Article 28 of Law 527 establishes that “the use of a digital signature shall have the same enforceability and produce the same effects as a handwritten signature, provided the following conditions are satisfied:
a. It is unique to the person who utilizes it.
b. It may be verified.
c. It is under the exclusive control of the person who uses it.
d. It is affixed to the corresponding information or message in such a manner that if the information or message is modified, the digital signature would be invalidated.
e. It complies with the rules prescribed by the National Government.”
Although the definitions and requirements of “writings” and “signatures” as formalities for the existence or validity of legal acts or their enforceability are mostly issues determined by domestic law (sometimes subject to public policy restrictions), ICC instruments have progressively equalized electronic records to “writings” and electronic authentication methods to signa-tures. (See, e.g., the Uniform Commercial Practices 500 (UCP500 (1993)); the General Usage for International Digitally Ensured Commerce (GUIDEC (1997)).) However, the final determination of legal equivalence to signatures or writings and their enforceability remains a matter of domestic law.
Article 20 of UCP500 equates electronic signatures to handwritten signatures: “A document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol, or by any other mechanical or electronic method of authentication”. Similarly, Article 11 equates electronic records to writings by allowing letters of credit to be issued and amended by way of authenticated transmissions.
Other more recent instruments have dealt with these issues more directly. The GUIDEC provides a basis upon which “ensured” electronic communications can furnish a factual and potentially legal equivalent to traditional signatures. It also serves as a basis for determining the probative value of electronic records in jurisdictions where they are admissible in court.
Finally, the Uniform Rules on Electronic Trade and Settlement (hereinafter URETS (Draft 08/1999)) attempts to provide a model agreement which can be used by parties to avoid the use of master agreements and to perform the contractual process 100% electronically (including pre-contractual communications). The validity of this approach is something that will vary between jurisdictions, especially in cases where certain formal requirements must be met to establish the existence, validity or enforceability of a contract.
The Mexican Civil Code does not consider an electronic message a valid document for enforcement purposes. In addition, an electronic signature is absolutely invalid for any legal purpose. Under our legal system, such messages and signatures may only be authenticated if a Notary Public verifies that the message was indeed received and printed in his or her presence. This is obviously a major obstacle: the only manner of meeting this requirement is to use the computer of the Notary Public and to have all other persons involved sign before the Notary.
In Spain, an electronic message may constitute a writing, depending on its characteristics. If the message is secure and the sender and receiver may be positively identified, the message may be considered a writing.
There are specific regulations that permit electronic communications between judges, between judges and citizens, between public administrative entities, and between such entities and citizens. The general norms are: 1) Article 230 of the Organic Law of the Judicial Power, amended November 8, 1994; and 2) Articles 38 and 45 of Law 30/1992 on the Juridical Regime of the Public Administrations and the Common Administrative Procedure, amended by Law 4/1999.
The Supreme Tribunal has accepted the validity of electronic signatures on two occasions.
As for authentication, the aforementioned laws stipulate that an electronic message is “authenticated” when the identity of the sender and recipient is known, and the integrity of the content is not in question.
Under the common law of most United States jurisdictions, an electronic message would be considered a writing, and an electronic signature would be considered a signature. However, individual statutes may also require a writing or a signature, and in such contexts, the issue would be whether the legislative body that enacted the statute intended to encompass electronic writings and electronic signatures. For this reason (as well as others), many U.S. states have passed statutes clarifying the status of electronic writings and electronic signatures under their laws, and other states are currently considering doing the same.
New statutes adopted by individual US states typically deal with the issue of authentication. In this context, authentication generally refers to providing some level of certainty that the originator of a message is who he or she claims to be and that the message has not been altered in transmission. Some state statutes provide that electronic or digital signatures, accompanied by a requisite level of authentication, are presumptively valid and enforceable.
In the U.S., the common law of most jurisdictions has accepted that an electronic message constitutes a writing, and an electronic signature constitutes a signature. Problems arise when a statute specifically demands a signature, or that certain information be provided in writing. Here, in contrast to contract law, the results are more uncertain. Many states have passed laws affirming that electronic messages are writings and electronic signatures are signatures. These laws generally contain exceptions for what might be called “public legal acts” – documents that are not notices or contracts but have a special legal status, such as deeds, wills, and powers of attorney.
Authentication of a message is simply a determination, to some degree of certainty, of the identity of the originator of a message, and whether such message has been altered in transit. In most jurisdictions, it is a sliding scale: the better the technology is at fulfilling the above two requirements, the greater the evidentiary reliability of the message. The benefit of this approach is that for low-cost transactions where a high degree of reliability is not needed, less expensive technologies can be used, and the underlying message may still be admissible into evidence, although perhaps given less weight. For high-value transactions, more secure technologies can be used, which will have a greater evidentiary effect.
1 See Aranovich, Fernando “Las Registraciones Documentales y la Informática”, Rev. La Ley , July 23, 1999
2 Draft Bill 22 (1996); Draft Bill 3.173 (1997); the Brazilian Bar Association Draft Bill (1999).
3 Informal translation.
4 1999 Draft Bill, Article 25, Informal translation.
5 1999 Draft Bill, Article 24, Informal translation.
