13 May, 2020
In the recent English case of Signature Living Hotel Ltd v Sulyok [2020] EWHC 257 (Ch), the High Court held that a deed of guarantee that was not executed properly due to absence of a witness’s signature could nevertheless take effect as a simple, binding contract.
On 3 March 2020, the UK Lord Chancellor and Secretary of State for Justice issued a written ministerial statement (Statement) in response to the UK Law Commission’s 2019 report on electronic execution of documents. The Statement confirmed that, in most cases, electronic signatures are legally capable of executing a document (including a deed) provided that intention to enter into contract and certain execution formalities (e.g. the requirement of a witness) are satisfied. The Statement also endorsed the Law Commission’s conclusion that electronic signatures can be used in confidence in commercial and consumer documents but noted that reforms regarding electronic signatures may be needed to ensure sufficient protection is afforded to vulnerable people. The English Law Society has also just issued an updated “note” on virtual execution and use of e-signatures:
In Hong Kong, documents can be executed by electronic means and this is often done by way of a virtual signing process or by electronic signature. The virtual signing process (often termed the “Mercury” process after the English case of Mercury Tax Group v HMRC [2008] EWHC 2721), which, if agreed by the parties, involves the “wet-ink” signing of a ‘hard copy’ paper document, and sending a scanned PDF version of that document with the signed signature page(s) by email to the other party will not always be feasible during the pandemic when people are working from home and may not have access to a printer and/or scanner. Some organisations may also have strict security policies to prohibit printing work documents outside their office. Subject to certain limitations, the Electronic Transactions Ordinance (Cap. 553) allows for the execution of documents (except for certain documents such as wills, powers of attorney, documents or deeds involving land interests, etc.) by affixing an electronic signature to an electronic record/contract. There are a number of uncertainties presented by this execution method. For security documents that are registrable with the Hong Kong Companies Registry (Companies Registry), a certified true copy of that document is required to be submitted. However, the Companies Registry has not published any official guidance on registration of documents that are executed by electronic signatures. Given that such documents technically only exist in electronic form, some practical issues e.g. whether a document bearing electronic signatures can be certified as a true copy, thus registered successfully, remain unclear.
In the light of the recent legal development in the UK, as well as the practical difficulties and uncertainties presented by the current regime, a reform and clarification of the laws governing electronic execution of documents in Hong Kong would be very helpful.
For further information, please contact:
Simon Deane, Partner, Deacons
simon.deane@deacons.com
