E-signatures for executing deeds and the case for clarifying the law in Northern Ireland

Unfortunately, a recent report by an expert working group has created more uncertainty in this area by expressly stating that deeds in Northern Ireland cannot be signed electronically. It appears that this view was adopted based on case law dating back nearly 450 years. It is a view we disagree with.

However, with no immediate prospect of the Northern Irish courts intervening to clarify the law, there is a real risk that the desire of businesses to complete transactions digitally end-to-end – which has never been greater given the increased adoption of technology and remote working during the pandemic – will be defeated.

There is an opportunity for the expert group, and for others such as the Law Society of Northern Ireland, to make important interventions that can avoid a situation where a judgment from 1584 is seen as a barrier to doing business in Northern Ireland the way businesses in England have become accustomed.

The uncertainty over the law on e-signatures and deeds

Digital technology provides businesses with the ability to enter into binding transactions with other parties remotely at a distance, but the law often places strict requirements on the validation of contracts, including in relation to their signature and, specifically in the case of deeds, that signatures be witnessed.

In England and Wales there is no unequivocal piece of legislation or case law that confirms e-signatures can be used to execute deeds. However, the issue has been considered by the Law Commission for England and Wales, which advises the UK government on matters of legal reforms.

In early 2018, the Law Commission began a project to explore the formalities around the electronic execution of documents in a bid to address underlying uncertainties. It looked particularly at the use of e-signatures to execute documents where there is a statutory requirement that a document must be “signed”; and the electronic execution of deeds, including the requirements of witnessing and attestation and delivery.

In its final report in September 2019, the Law Commission confirmed that there is scope for using e-signatures for executing many documents, including deeds, in England and Wales. The view that this is feasible was endorsed by the UK government in its response to the report and it is also conveyed in the Land Registry practice guide in specific relation to deeds. As we have explained in our e-signatures guide, we agree with the Law Commission too.

The Law Commission also thought that while an e-signature can be witnessed, the requirement under the current law in England and Wales that a deed must be signed “in the presence of a witness” necessitates the physical presence of that witness.

The working group’s view

In a bid to provide further clarity on issues around electronic execution of documents, and in response to a recommendation made by the Law Commission, the government set up an industry working group.

The group comprises representatives from the legal and business sectors and is tasked with producing among other things, best practice guidance for the use of e-signatures in different commercial transactions, focusing on procedural steps to be followed, evidence, security and reliability where documents are executed electronically, as well as potential solutions to the practical and technical obstacles to video witnessing of electronic signatures on deeds and attestation.

In its recent interim report, the group explored the different forms of e-signatures and the various mechanisms and platforms through which e-signatures can be executed.

A simple e-signature (SES) is one of the three levels of signature recognised in UK law through the Electronic Identification and Trust Services (eIDAS) Regulation. The group described SES as “the most basic form” of e-signature in wide use in the UK. They “take many forms, such as ‘writing’ using a finger or stylus, attaching a text or digital image, typing a name or symbol, or using a recognised signature software platform”, it said.

The group has also looked at the concepts of advanced e-signatures and qualified e-signatures – the other two levels of signature – from the eIDAS Regulation. Those forms of e-signature must meet higher standards to be valid. While the signatories’ identity does need to be verified in the case of advanced e-signatures and qualified e-signatures, this is not the case with SES.

The group said that the use of SES for deeds in England and Wales is “valid if witnessed correctly”, highlighting that there are “some challenges practically” in that regard. However, it said SES for deeds should not be used in Northern Ireland. We do not agree with this assessment.

The position in Northern Ireland

Though the reasons given by the working group for its view are light on detail, the group did state that “Northern Ireland has uncertainty” and cited a 1584 case, known as Goddard’s case, as being at the root of that uncertainty.

Goddard's case established that deeds must be in writing and cannot be made orally and that, to create a valid deed, the deed must be written on paper or parchment, sealed and delivered.

While the requirement that a deed be written on paper or parchment was expressly abolished in England and Wales by Section 1(1)(a) of the Law of Property (Miscellaneous Provisions) Act 1989, it has not been expressly disapplied in legislation in Northern Ireland. Nor has Goddard's case been substantially considered by the courts of Northern Ireland.

Our view

Our reading of Goddard’s case is that the case was deciding a point about delivery of deeds, not about the medium on which they are written. In any event, we consider that senior Northern Irish courts at least would interpret the case purposively – that deeds need to be capable of being read and for the medium on which they are written to be reasonably well suited to be read – and accept that deeds may be executed in an electronic format.

We believe there is support for our view in UK legislation, including from the eIDAS Regulation and Electronic Communications Act 2000, both of which govern use of e-signatures, as well as in provisions concerning execution formalities outlined in the Companies Act.

We also think the law of England and Wales on the issue, that deeds can be executed electronically, is likely to be persuasive to the courts of Northern Ireland.

Executing a deed electronically will not be possible in every circumstance. This includes where registries such as the Land Registry of Northern Ireland and the Intellectual Property Office require certain filings to be delivered as wet ink originals. However, the Land Registration (Electronic Communication) Order (Northern Ireland) 2011 sets out limited circumstances in which the Land Registry of Northern Ireland will accept an “electronic document” – that being a document created as an electronic communication within the Land Registry computer system – with a digital signature for the creation, transfer, variation or extinction of an estate or interest in land.

Given the uncertainty and before the issue gets to court, it would be welcome if the Law Society of Northern Ireland could provide a steer on this important issue to help make doing business in Northern Ireland easier. The hope is that this would act as a catalyst for change to the Land Registry of Northern Ireland’s systems to modernise their approach to electronic signing, as has been the case in England.