Working group on e-signatures calls for easing of laws on execution of deeds

The Law Commission should consider reform of the law relating to deeds - in particular the formalities surrounding their execution - including easing the position of local authorities.

That call has come from the Industry Working Group on Electronic Execution of Documents, whose Final Report has been published by the Government.

Its interim report on the use of e-signatures dealt with all but two of its terms of reference and the final report covers only cross-border transactions and the risks of fraud.

Members questioned whether the rules surrounding deeds now served any useful purpose.

While a company could execute a deed by affixing its common seal, local authorities were still covered by the Local Government Act 1972, which had not been updated to reflect technological change, the working group said.

HM Land Registry will accept execution where a local authority also certifies that it is able validly to execute a deed and a certificate must be lodged with the application, signed by an individual conveyancer employed by the authority, which states that the deed has been duly and properly executed in accordance with the council’s constitution.

The report said: “There is a view that the formal execution requirements for deeds adds complexity and cost to their execution but without any, or any sufficient, resulting benefits, particularly with electronic execution of documents now an increasingly (if not dominant) form of execution.

“The ideal solution would be to abolish any rule of law that requires an act to be done by way of a deed and, at the same time, to consider what, if any, replacement measures are appropriate for those transactions that can at the moment only be done by deed.”

An electronic signing platform in the deed authentication process “has several significant advantages over its paper and wet ink signature counterpart.

“The provision of advice and guidance to signatories can be both carried out by that platform and recorded and stored as evidence that the provision occurred. Similarly, the signing process itself can be recorded and video and audio evidence of it stored for future reference, thereby providing a record that is both more accurate and longer lasting than the testimony of a human witness.”

Among the group’s recommendations were a set of minimum standards to bolster the integrity of the e-signing process, together with consideration of whether certification/self-certification should be introduced for significant transactions.

Whichever governmental body was given oversight should develop a set of signing platform ‘basic performance standards’ and publish a list of signing platforms that submit self-certifications, the report said.

On cross-border challenges the group said the uncertainty around the interpretation of different jurisdictions’ electronic execution laws, and the formalities involved, “can give rise to challenges of increased costs, delay and uncertainty, all of which can hinder adoption of e-signing”.

It said significant trading states should adhere to some international code and recommended the UK to consider adopting the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Signatures.

The group explained: “Article 12 of the Model Law is particularly instructive on the point of cross-jurisdictional recognition, and UK movement on this point, given its significance as an international commercial hub, would send a strong signal, and perhaps act as an incentive, to other jurisdictions.”

Mark Smulian