Legality and enforceability of electronic signatures in the Onshore United Arab Emirates & Dubai International Financial Centre*

The UAE legal and regulatory system is dynamic and subject to frequent changes in application and interpretation. In addition, as the UAE is a civil law jurisdiction, in contrast to common law jurisdictions, there is no binding system of judicial precedent to rely upon. There is also, on occasion, some divergence between the strict legal position and “accepted” practices.

UAE

The principal law underlying the use of electronic signatures in the UAE is the Law No. (1) of 2006 On Electronic Commerce and Transactions (“UAE Electronic Transactions Law”). Other relevant laws include the following:

• Minister of Economy Resolution No. 1 of 2008 issuing the list of the Electronic Certification Services Providers, which regulates Certification Service Providers (“CSP Resolution”)
• Federal Law No. 10 of 1992 concerning Law of Evidence in Civil and Commercial Transactions (as amended by Federal Law No. 36 of 2006) (“Evidence Law”).

A contract may not be deemed invalid or unenforceable solely because it is in electronic format. Further, the Evidence Law states that electronic signatures as defined under the Electronic Transactions Law have the same evidential authority as handwritten signatures so long as they meet the legal standards.

DIFC

The Dubai International Financial Centre (“DIFC”) was launched in accordance with UAE Federal Decree No. 35 of 2004 as a part of Dubai’s strategic vision to diversify its economic resources and attract capital and investments in the region. Article 3 of Federal Law No. 8 of 2004 states that all Free Zones are subject to Federal laws “with the exception of Federal Civil and Commercial Laws”.

The DIFC, therefore, operates as an independent jurisdiction within the UAE, empowered to create its own legal and regulatory framework for all civil and commercial matters.

The DIFC has implemented its own electronic transactions law, the DIFC Law No. 2 of 2017 (“DIFC Electronic Transactions Law”). The law states that “where any provision set out in any other DIFC law requires the signature of any person…that provision set out in the other DIFC law is satisfied if an Electronic Signature is used”. Further, “information shall not be denied legal standing, validity, or enforceability solely on the ground that it is in the form of an Electronic Record”.

The UAE Electronic Transactions Law defines an “electronic signature” as “any letters, numbers, symbols, voice or processing system in electronic form applied to, incorporated in, or logically associated with an electronic message with the intention of authenticating or approving the same”.

It defines a “secure electronic signature” as an electronic signature that, through the application of a prescribed or commercially reasonable secure authentication procedure, to which the parties agree to, can be verified that an electronic signature was, at the time it was made:

• unique to the person using it;
• capable of identifying such person;
• was, at the time of signing, under the sole control of the signatory in terms of the creation data and the means used;
• linked to the electronic record to which it relates in a manner which provides reliable assurance as to the integrity of the signature such that if the record was changed the electronic signature would be invalidated.

The UAE Electronic Transactions Law does not require that parties use a secure electronic signature for any transactions. So long as not prohibited by law, parties can in principle agree to use either an electronic signature or a secure electronic signature.

DIFC

The DIFC Electronic Transactions Law defines an “electronic signature” as an “electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”

The DIFC does not have a “secure electronic signature.” Further, the DIFC does not impose specific electronic signature requirements on certain transactions.

An airSlate electronic signature meets the definition of an “electronic signature,” but not a “secure electronic signature.”

DIFC

An airSlate electronic signature meets the definition of an “electronic signature.”

While current use cases of electronic signatures in the Onshore UAE and the DIFC are not voluminous, except as provided below, the laws generally allow parties to contract and use electronic signatures. With that said, due to the lack of certainty and clarity in the relevant legislation, caution should be exercised around relying on electronic signatures to execute high value or business critical agreements where there is a potential for dispute in the future.

• Title deeds of real estate;
• Transactions and issues relating to personal law such as marriage, divorce and wills;
• Bonds in circulation/Negotiable Instruments;
• Transactions concerning the sale and purchase of real estate, its disposition and rental for periods in excess of ten years and the registration of any other rights related to it;
• Any other documents or transactions to be excluded by a special legal term;
• Any document required by law to be executed before a Notary Public.

Further, certain governmental departments may require a wet ink signature.

The DIFC Electronic Transactions Law does not apply to, by way of example:

• The creation, performance or enforcement of a power of attorney;
• The creation, performance or enforcement of a declaration of trust (with the exception of implied, constructive and resulting trusts);
• The creation and execution of wills, codicils or testamentary trusts;
• The creation, execution and use of affidavits or affirmations as evidence in court proceedings pursuant to rule 29 of the Rules of the Dubai International Financial Centre Courts 2014;
• Transactions involving the sale, purchase, lease (for a term of more than 10 years) and other disposition of immovable property and the registration of other rights relating to immovable property.

Notably, the DIFC Electronic Transactions Law does not include Negotiable Instruments in its list of excluded instances or transactions.

Private parties cannot be compelled to transact electronically, but no formal consent requirements must be met. A person's consent to use or accept information in electronic format may be inferred from his affirmative conduct . Governmental entities must give explicit consent to transact electronically.

DIFC

No.

A person may rely on an electronic signature to be valid and enforceable to the extent such reliance is reasonable. Absent proof to the contrary, a party relying on an electronic signature or secure electronic signature assumes the risk that the signature was forged if reliance was not reasonable under the circumstances.

DIFC

An electronic signature is valid if it is deemed to identify the relevant person and to indicate the person's intention with respect to the information contained in the electronic record provided that the electronic signature used is as reliable and appropriate for the purpose for which the document or record was generated or communicated, in light of all the circumstances, including any relevant agreement or proven in fact to have fulfilled the functions by itself or together with further evidence.

Last updated: May 2021