E-signatures – a Scottish perspective

In a rapidly changing world, where agile and remote working has become the norm and face-to-face meetings and the signing of documents in wet ink have declined, the business world has had to adapt. Some process changes aren’t glamorous but they can save cost, improve compliance and auditability, and simply make what would otherwise be time-consuming tasks much easier. The use of e-signatures is a good example. Types of electronic signature An electronic signature is defined as “data in electronic form which is attached to or logically associated with other data in electronic from and which is used by the signatory to sign”. The three main types of electronic signature are: Simple electronic signatures – the most basic form, but most widely used, includes using a finger or stylus to sign on a pad when accepting a delivery, clicking an on-screen button which says “I agree” or ticking a box which says “I accept the terms and conditions”; Advanced electronic signatures (AES) – more secure, as they are uniquely linked to the signatory, capable of identifying them and are created using means that the signatory can maintain under their sole control; and Qualified electronic signatures (QES) – the highest standard and most secure. This involves the signatory’s identity being verified by a qualified trust service provider before the signatory is issued with a QES. Under Scots law, a QES is the only type of electronic signature that is self-proving (ie probative). The Law Society of Scotland smartcard enables Scottish solicitors to apply a QES to documents, but the smartcard scheme has not proven popular with the legal profession, and cloud-based e-signing platforms such as Docusign and Adobe Sign are being more widely adopted – albeit at an additional cost. Legal validity and admissibility In 2012, the Requirements of Writing (Scotland) Act 1995 was amended to explicitly allow certain documents, which had to be written tangibly under section 1(2), to take electronic form as an alternative to a paper document. The amended 1995 Act did not contain an express statement of validity for electronic signatures; but it did give legal effect to documents signed electronically where they meet certain requirements. Section 1(2) documents include certain documents relating to land (such as missives, dispositions and leases), gratuitous unilateral obligations (except those undertaken in the course of business) and certain trusts. They must be signed with an AES to be valid and a QES to be self-proving. However, wills and testamentary writings and certain documents which are to be registered (eg dispositions and leases) must be created and signed in traditional form, using wet ink signatures. This differs to the approach in England and Wales, where an electronic signature is capable in law of being used to execute a document (including a deed) in electronic form and for that deed to be registered in the English Land Registry. This contrasting approach can cause issues on cross-border transactions.  Where a document is not required to be in writing under the 1995 Act, the law in Scotland permits the parties to a transaction to choose which form of electronic signature is appropriate for use in any particular case. Where the use of a digital signature is not a legal requirement, the respective risks and benefits of a simple form of electronic signature or a self-proving form need to be weighed up. The Law Society of Scotland’s Guide to Electronic Signatures contains some guidance on the risk assessment process that should be carried out in making this decision. Cloud-based digital signatures provided by e-signing platforms are being used in Scottish transactions, but their use is not yet widespread. Statutory presumption In Scots law, there is no requirement for a human to witness an electronic signature, as remains required for certain types of execution of English law deeds.  In this respect, the Scottish approach aligns more closely with the law of much of the rest of continental Europe than it does with that of England and Wales.  The 1995 Act makes a distinction between a document which is (merely) formally valid and one which has been signed in such a way as to benefit from a statutory presumption that it has been (properly) signed (“authenticated”) by the granter. In order to benefit from this statutory presumption (ie to be probative) the Act requires that the document be authenticated by means of a QES. The statutory presumption is important for two reasons: first, from an evidential standpoint, as it effectively means that the electronic document may be relied on in a contractual dispute over whether it was validly executed; in other words, any party founding on that document in court is relieved of having to lead evidence as to its validity.  Second, certain registries require a document to be signed in self-proving form for registration purposes, including the Land Register of Scotland (although at present some of these registers do not accept electronically signed deeds at all or only accept limited categories of electronically signed deeds).  What does the future hold? The Registers of Scotland (Digital Registration etc) Regulations 2022 were laid before the Scottish Parliament on 16 December 2021 and, subject to parliamentary approval, will bring into effect the following changes: The use of the digital submission service for the Land Register of Scotland and the Sasine Register applications will become the default method of submitting applications, subject to limited exceptions (for example, applications by private citizens); The registration of deeds in the Books of Council and Session will be opened up to true electronic documents (ie electronic documents authenticated by a QES). These regulations are expected to come into force on 1 October 2022. The Scottish legal profession is waiting with bated breath for these changes to come into effect to help align Scotland more with the approach currently being taken in England and Wales on the use of electronic signatures and the registration of electronic documents, which can’t come quick enough. Chris Rae is a partner, Gary Georgeson is a senior associate and Lindsay McAllister is a trainee solicitor at CMS