Document execution in the Kingdom of Bahrain - The use of Electronic Signatures
The prevalence and shift towards the use of digital documents in day-to-day transactions is both timely and relevant, particularly given current global circumstances which may render the physical signing and execution of key contracts and documents impossible or difficult to achieve.
Legality and Enforceability of Electronic Signatures in Bahrain
Pursuant to Legislative Decree No.(54) of 2018 on Electronic Transactions and Communications (the "Law"), Bahrain's digital technology framework is now in line with international market standards. The Law repeals Legislate Decree No.(28) of 2002 on Electronic Transactions and sets forth provisions governing transactions and dispositions of all types, including the legality and enforceability of electronic signatures in the formation of contracts. It must be noted though that the Law's implementing regulations have yet to be issued, currently leaving a number of issues as a matter of interpretation.
Under the Law, electronic records (the "Record") in the context of civil and commercial transactions, are afforded the same level of evidential weight as paper documents and are therefore valid and enforceable. Where a document requires information to be in writing, such requirement will be met by codifying the information in electronic form provided that the information is accessible in the same way that a paper document is accessible.
In assessing the weight of a Record, consideration will be given to the reliability of the following:
- the manner in which the Record was generated, stored or communicated;
- the manner in which the Record was signed (please see below);
- the reliability of the manner in which the integrity of the information was maintained; and
- any other relevant factors pertaining to the integrity of the Record.
Article 6 of the Law permits the use of electronic signatures provided that a method is used to identify that party and to indicate that party's intention to bind itself to the Record in question. Consent must therefore be obtained from a counterparty either expressly or through positive conduct. The signatory must also ensure that strong data protection regulations (including the security of hardware and software systems) are put in place. A declaration by a supervisory or accreditation body may also be required as a means of confirming the reliability of the method used to identify the signatory and the intention for the signed Record to be binding.
To create a digital signature, a signing certificate is required which proves identity. This certificate is usually issued by a public body or trust service provider, who itself should be authorised by the MOICT. There is a presumption under Article 7 of the Law that the signature on the Record is the signature of the person to whom it correlates by virtue of the certificate; that the date and time of the Record is accurate; and that the Record has been sent using a secure electronic delivery service provider and therefore the subsequent safe delivery and receipt of the Record by the recipient at the date and time of delivery. An accredited trust service provider shall not be liable where the person who relied on the certificate knew or ought reasonably to have known in the normal course of events that the certificate has expired or has been revoked or that the accreditation of the relevant trust service provider has been withdraw.
Given the current restrictions regarding physical proximity to one another there are various other provisions and techniques that can be implemented to avoid issues with the execution of documentation, namely:
- Counterparts – counterpart provisions are fairly common boilerplate provisions in most agreements, but remain more essential than ever given that the effect of such a clause is that separate copies of an agreement may be executed by different parties and each copy with be considered an original;
- Powers of attorney – existing powers of attorney provide an alternative solution to executing documents. However, executing new powers of attorney will present the same issues faced with executing other agreements; and
- Witness provisions – guidance states that for documents that require execution in the presence of a witness, such witness needs to be physically present; the witness cannot observe execution by electronic means. A workaround would be to execute the document in a venue with internal glass partitions, so that the individual can witness the execution and also maintain social distancing.
When it comes to executing documents electronically, it is essential that the method of execution will be regarded as valid, should such method ever be questioned. This should be discussed and agreed between the parties and professional advice sought as to the correct method of execution in the relevant jurisdictions.
Charles Russell Speechlys advises shareholders of eCommonSense on sale to ECI Software Solutions
eCommonSense is a technology solutions provider focused on the construction and building materials supply sectors.
Resilience vs. Recovery - How the Facebook outage highlights important lessons
The recent Facebook outage disrupted all of its key global platforms, including Instagram and WhatsApp.
Charles Russell Speechlys wins best Legal Services: Private Equity at the Africa Global Funds Awards 2021
We are delighted to announce we have been awarded the Legal Services: Private Equity award at the AGF Service Providers Awards 2021.
Charles Russell Speechlys acts for Cmostores Group Limited on its acquisition of JTM Plumbing Limited
CMO Group Plc, UK’s largest pureplay online retailer of building materials which recently listed on AIM.
The United Arab Emirates Joins the Madrid System
It was another exciting year at the Arabian & African Hotel Investment Conference (AHIC) .
Charles Russell Speechlys advises the founders of Compandben on the sale of the business to TopSource Worldwide
Compandben is one of the longest established international providers of employment solutions.
The importance of anticipating the restructuring of State Guaranteed Loans
Denis looks at the importance of anticipating the restructuring of State Guaranteed Loans
Supply chain going flat
Victoria Younghusband, Jessica Arrol Caws and Giulia Brunello write for The Bahamas Financial Services Board 's GATEWAY Magazine on the role of IFC's in the post-Brexit environment
Victoria and Jessica consider the changing role for IFCs following the approval of the Trade and Cooperation Agreement.
Paula Boast, Glenn Bull, Anna Hackworth and Sarah Alaiwat write for CDR - Essential Intelligence: The Belt and Road Initiative
A useful reference for BI disputes in project finance, investment and construction.
Patrick Gearon FCIArb
Patrick Gearon, Georgina Munnik, Sam Saunders and Simone Sancandi produce the Chambers Global Practice Guide on the enforcement of judgments in Bahrain
Phase out of temporary restrictions on use of winding up petitions
Hannah takes a look at the recent UK Government announcement on statutory demands and the presentation of winding up petitions
Preparing your company for sale
We set out here some initial steps to consider in anticipation of a sale.
Overhaul of London's stock market listing regime set to significantly boost capital raising opportunities for founder led UK tech businesses
Charles Russell Speechlys advises discoverIE on its acquisition of Antenova
discoverIE is a leading international designer, manufacturer and supplier of customised electronics to industry.
2020: Influencer, 2021: Creative Director – what could go wrong?
Patrick Gearon FCIArb
Patrick Gearon and Haleema Wahid write for The Oath on the rise of litigation
Patrick and Haleema consider some of the litigation funding options available in the UAE, with a particular emphasis on third-party funding.
Coded messages for landlords and tenants
“What does the code of practice mean for landlords and tenants? Read more here”
Gareth Mills writes for Lexology Getting The Deal Through on technology disputes in Bahrain
The most common disputes occur following perceived or actual failures to deliver required technology services an lack of clarity.