In the wake of the COVID-19 health crisis, working-from-home has become the new normal, however, it does present a number of practical challenges, including how to execute legally binding documents. It has long been common practice for deal documents to be signed in counterpart, on different days, by signatories in different corners of the globe, but with our freedom of movement curtailed and home printing capabilities limited, feasible options are often restricted.
Electronic contract execution offers a convenient solution but their penetration in the Middle East is lower than in some other parts of the world, notably North America and Europe. In this alert, we consider the key practical considerations for businesses thinking of adopting an electronic execution process, including when it is appropriate to do so, and how to improve the enforceability of contracts signed in this way.
This alert provides high-level guidance on the issues raised by electronic contract execution and is not a substitute for tailored legal advice, which takes into account the facts specific to your business and its need.
|In summary, the key steps that businesses should take when executing documents electronically are:
1. Confirm that exchanging signatures electronically and maintaining an electronic record are permitted under the law governing the contract.
2. Confirm that the parties have agreed to exchange signatures electronically and maintain an electronic record of this – the simplest approach may be to include language to this effect in the contract or in the execution instructions.
3. Confirm that the type of document is not one that is exempted from being validly executed electronically (e.g. power of attorney, negotiable instrument, or document that requires notarisation).
4. Confirm that the constituent documents of the signing organisations do not restrict the use of e-signatures, or dictate mandatory requirements to authorise their use (e.g. board resolutions).
5. Choose a desired method for exchanging signatures, which satisfies the requirements of the law.
The laws in the Middle East generally recognise the validity of e-signatures and tend to be technology neutral (i.e. not prescriptive regarding the form of the e-signature). However, in some jurisdictions, certain types of electronic signatures are presumed valid if they comply with a certain set of requirements imposed by local laws. Generally, for an e-signature to be relied upon, it must be capable of accurately verifying the identity of the signatory. Once an e-signature has been affixed to a document, it should be date stamped and incapable of being amended. Only an e-signature solution which satisfies this threshold will be enforceable if the validity of the e-signature is challenged.
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For further information on the above, please feel free to contact one of the lawyers below or your usual Baker McKenzie contact.
This alert is prepared by Kellie Blyth (Head of IT & Communications, Dubai); Sandeep Puri (Head of Banking & Finance, Dubai); Farah Abed (Associate, Banking & Finance, Dubai); Hani Naja (Partner, Corporate, Abu Dhabi/Dubai); Tala Shomar (Associate, Corporate, Dubai); Eby Oligboh (Trainee Solicitor, Dubai); Zahi Younes (Partner, Corporate, Riyadh); Ghada El Ehwany (Partner, Corporate, Cairo); and Moataz El Sherbini (Associate, Corporate, Cairo).
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