N. Pirilides & Associates LLC


Offering high-quality and effective legal advice



Electronic signatures: a hindsight to future dealings

One of the many lessons that the Covid-19 pandemic has taught us is that we shall always be prepared for the unexpected; businesses are no exception to this ‘survival’ rule. In fact, if there was something that the pandemic outbreak has highlighted is that businesses, and even governments, can either keep pace with the needs of an ever-changing digitized market or they can be left behind in ‘anachronism’.

On the bright side, technological advancement leaves no much room for strict adherence to an old-fashioned model of conducting business since the market’s demands may now be accommodated to a great extent through various innovative tools which are designed to facilitate commercial dealings in the long-run. Electronic signatures are such tools, which may be used not only to keep business running ‘as usual’ during crises, but even better, they keep business running productively under ‘unusual’ circumstances.

What’s the legal framework in place?

The legal framework of electronic signatures - amongst other forms of electronic identification - is provided by Regulation 910/2014/EU on electronic identification and trust services for electronic transactions in the internal market (hereinafter the “Regulation”). Although the Regulation is directly applicable within the EU, Cyprus has further enshrined its provisions into domestic law through the law No. 55(I)/2018 regulating the Electronic Identification and the Trust Services for Electronic Transactions in the internal market (hereinafter the “Law”); the Law regulates the way electronic documents and some certification services are used and their legal recognition upon any challenge to their validity and/or authenticity.

Which is the relevant authority?

The Department of Electronic Communications of the Ministry of Communications and Works is the competent authority for the implementation of the provisions of the Law and the Regulation and it is responsible, inter alia, for the monitoring and control of Qualified Trust Service Providers (QTSPs).

What are e- signatures?

Electronic signatures are, by definition (as per Art. 3.10 of the Regulation), data in electronic form which are attached to or are logically associated with other data in electronic form and which are used by the signing signatory to sign.

How are they being used?

Counterparties may complete electronic transactions through various online platforms by using any electronic device from anywhere they live or work from. Upon completion of the signing process, a document may be stored electronically, diminishing distance as well as any need to use printers, scanners or store hard copies.

Which different kinds of electronic signatures exist?

There are three types of electronic signatures introduced and provided for in the Regulation and the Law, namely:

  • the e-signature, as defined above;
  • the advanced e-signature, which is (i) uniquely linked to the signatory, (ii) capable of identifying the signatory, (iii) created using means that the signatory can maintain under his sole control and (iv) is linked to the data to which it relates in such a manner that any subsequent change of data is detectable; and
  • the qualified e-signature, which is an advanced electronic signature created by a qualified electronic creation device and which requires a qualified certificate for electronic signatures, that is issued by a QTSP.

The sole QTSP which is currently listed in Cyprus’ Trusted List Browser and which is authorized to issue a qualified certificate for e-signatures is the Cyprus Stock Exchange.

Are e-signatures valid and/or admissible in Court?

The validity and admissibility of electronic signatures as evidence in legal proceedings is confirmed by Art. 25 of the Regulation which provides that an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it was made in electronic form or on the grounds that not all requirements of qualified electronic signatures have been satisfied.

A qualified e-signature is the one amongst all electronic signatures which carries the most significant judicial value, since it has the equivalent legal effect of a handwritten signature, according to Art. 25 of the Regulation. Nonetheless, even if an electronic signature fails to meet the conditions of a qualified e-signature it may still be admissible as evidence in legal proceedings in Cyprus, according to Section 9 of the Law (subject always to the applicable evidence laws); essentially, the Court may exercise its discretion on whether such evidence is admissible in Court and what evidential weight it may attach to it, based on the circumstances of the case.

A hindsight to future dealings?

Although there has been no relevant case before Cyprus’ Courts up to date - given the recent enactment of the Regulation and the Law – and it therefore remains to be seen what would the Cyprus Courts’ approach be in relation to the legal effect of electronic signatures, there should be no reason, whatsoever, for Cyprus Courts to take an approach that would hinder the very same objectives that the use of electronic signatures was aimed to achieve, including – inter alia - the elimination of bureaucratic procedures, the uniformity on the rules on electronic signature amongst the EU, the provision of a secure electronic interaction between citizens, businesses and public authorities, the greater confidence on cross-border online transactions and the building of trust in the online environment, which is key to economic and social development.

Of course, the benefits arising from counterparties’ physical presence when concluding transactions and the relations that are built up through establishing rapport, shall not be disregarded. We do, however, live in an era whereby the 5G installation is more than imminent, therefore the shift towards operating business through an electronic forum is inevitable in an increasingly digitized and connected world.

In conclusion, e-signatures can be seen as one of the silver linings to the pandemic cloud floating around the first half of 2020 as well as one of the most valuable tools inside the key market players’ survival kit. The question is, do the market players want to adapt to change and survive, or embrace change and strive?