Cross-border transactions in the UK and EU

In this guide, a reference to eIDAS is to Regulation (EU) No. 910/2014 on electronic identification and trust services for electronic transactions in the internal market. eIDAS came into force in 2016 and established an EU-wide legal framework for electronic signatures and other trust services including electronic seals and time stamps. eIDAS was subsequently amended in May 2024 by Regulation (EU) 2024/1183 (eIDAS Amendment) to expand the range of trust services and create a new European Digital Identity Framework.

Following the UK’s withdrawal from the EU in 2020, eIDAS was incorporated (with minor modifications) into UK law by the European Union (Withdrawal) Act 2018 (UK eIDAS). UK eIDAS does not, as yet, take account of the eIDAS Amendment.

The starting point in determining whether an electronic signature is valid and enforceable is the Adobe jurisdictional legality guide (Adobe Legality Guide) (https://www.adobe.com/trust/document-cloud-security/cloud-signatures-legality.html).

This guide is aimed at customers domiciled in the UK and EU who are using Acrobat Sign to execute transactions with overseas companies and/or contract under the laws of an overseas jurisdiction (cross-border transactions). In cross-border transactions, it is vital that documents are executed in a manner that ensures their recognition, registration and potential enforcement in every relevant jurisdiction. A relevant jurisdiction is a territory in which the judgments or orders of a court may be enforced or executed.

In a perfect world, where a transaction involves (a) an overseas company and/or (b) transaction documents that are governed by overseas law(s), a customer will obtain a legal opinion from lawyers in each relevant jurisdiction confirming that:

an electronic signature is a valid method of executing the transaction.
the overseas company has the corporate capacity to enter into and perform its obligations under the transaction documents.
the authorised signatories have the authority to execute the transaction documents on behalf of the overseas company.
the transaction documents create valid, binding and enforceable obligations.

However, in the real world, it is often not feasible or cost-efficient to obtain a legal opinion for cross-border transactions.

We have created this short guide to assist customers evaluate the use of electronic and digital signatures in cross-border transactions under UK and EU law.

1. Does the governing law of the document permit electronic execution?

The Adobe Legality Guide will provide high-level advice on whether a document may be validly executed with an electronic or digital signature on Acrobat Sign. In some jurisdictions, including certain EU Member States, the governing law may also prescribe the type of electronic signature, such as an advanced electronic signature (AdES) or a qualified electronic signature (QES), that must be used in particular transactions. AdES and QES are digital signatures. For more information about the legal and technical characteristics of AdES and QES, and how they differ from simple electronic signatures, please see https://helpx.adobe.com/legal/esignatures/regulations/european-union.html.

The governing law is the primary factor in determining whether a document may be executed with an electronic signature. But it should be acknowledged that in some jurisdictions, the law of the forum in which a document is relied upon may also have a bearing on the validity of electronic execution. This is rare and beyond the scope of the guide.

2. Does the jurisdiction where the parties are incorporated permit electronic execution?

Once you have established that the governing law permits electronic execution of the relevant document, you should check that the jurisdiction in which the overseas company is incorporated also recognises electronic signatures as a valid method of execution. Again, we recommend you consult the relevant Adobe Legality Guide to verify this.

National law seldom precludes electronic execution altogether. If an overseas company is incorporated in a jurisdiction that does not permit electronic signatures either generally or for the specific transaction, then you should not execute the document electronically.

For illustrative purposes, let us consider a cross-border transaction in an English company and an overseas company from an EU member state are executing a document governed by English law.

Section 44(1) of the Companies Act 2006, as modified by the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (Overseas Companies Regulations 2009), provides that, as a matter of English law, a document (including a deed) can be validly executed by an overseas company if it is executed in any manner permitted by the laws of the territory in which that company is incorporated for the execution of documents.

Section 44(2) of the Companies Act, as modified by the Overseas Companies Regulations 2009, is also helpful. It provides that where a document which (a) is signed by a person who, in accordance with the laws of the territory in which an overseas company is incorporated, is acting under the authority (express or implied) of that company, and (b) is expressed (in whatever form of words) to be executed by the company, has the same effect as if it were executed under seal.

3. Are there any restrictions on electronic execution in the constitutional documents of the overseas entity?

Where possible, the constitutional documents of the overseas company should be checked for applicable signature requirements. This includes reviewing any restriction on the use of electronic signatures or an express requirement for an AdES or QES.

It is also prudent to verify that the signatories are authorised to execute the documents. For example, you may request to see the board minutes authorising the signatories to sign on behalf of the overseas company.

The identity of the directors may be confirmed by undertaking a search of the local companies registry (e.g. Companies House in the UK).

But customers will frequently not have the time or resources to investigate the constitutional documents of the overseas company and the authority of its signatories to sign the documents. In some jurisdictions, there are statutory protections for customers contracting with companies – overseas or otherwise. Section 40(1) of the Companies Act is one example in English law. It provides that, “In favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, is deemed to be free of any limitation under the company's constitution.”

4. Where is the document likely to be enforced in the event of a legal dispute?

The law of the jurisdiction where a document is relied on or enforced, and the rules of admission in evidence, may also be relevant.

Article 25(1) of eIDAS (and UK eIDAS) provides that an electronic signature shall not be denied admissibility in evidence solely on the grounds it is in electronic form. Thus, in a cross-border transaction, any document bearing an electronic signature will be admissible in legal proceedings before a UK or EU court to determine the authenticity or integrity of that document. But it is for the court to decide what evidential weight should be given to the signature. A QES will carry more evidential weight than other types of electronic signature.

Whether a document has been validly executed will, however, depend on the governing law. Article 2(3) of eIDAS (and UK eIDAS) allows EU member states and the UK to lay down any formalities for documents as they see fit: “This Regulation does not affect Union or national law related to the conclusion and validity of contracts, other legal or procedural obligations relating to form, or sector-specific requirements relating to form.”

This means national law may prescribe use of a specific type of signature such as an AdES, QES or a handwritten signature in certain transactions.

5. Is there a requirement to notarise the document?

Certain documents – particularly in civil law jurisdictions – may require notarisation. A notary’s chief function is to authenticate the execution of a document (such as a power of attorney) or to verify some fact or thing done. The notary adds their notarial certificate to the notarised document. The notarial certificate is then signed by the notary and sealed with their official seal.

Some UK notaries now offer electronic notarisation to e-sign and seal the document, instead of notarisation in paper form. But this is misleading: the parties still have to sign the document manually in the presence of the notary. The notary then affixes their electronic signature and seal to a scanned copy of the document.

Moreover, for overseas usage, many UK notarial documents must be legalised with an apostille. This is added to the notarial certificate to certify the authenticity of the notary’s signature and seal. In the UK, the apostille is issued by the Legalisation Office of the Foreign, Commonwealth & Development Office. Until recently, the Legalisation Office only issued an apostille in paper format which was affixed to a physical document. It is now possible to get an electronic apostille in limited use cases if the document has been electronically signed by a UK notary or solicitor. This is a very welcome first step. However, electronic notarisation and legalisation as the norm in the UK (and EU) is still some way off.

6. Does the document have to be filed in a public registry?

You should consider whether any documents - such as land or security documents – are to be filed in a public registry.

In response to the COVID-19 pandemic, many public registries in the UK and EU relaxed their requirements for handwritten signatures and will accept electronic signatures for registration purposes. See for example Adobe’s guidance on submitting deeds signed electronically to HM Land Registry (https://helpx.adobe.com/sign/using/adobesign-hmlr-requirements.html).

If a registry only accepts handwritten signatures, you will not be able to execute documents electronically, regardless of the legal status.

7. How does a QES facilitate cross-border transactions?

Cross-border transactions pose a far greater challenge than domestic transactions. Customers and their legal advisers understandably struggle to navigate the conflict of laws.

QES offers a partial solution. It possesses several advantages over electronic signatures in cross-border transactions between parties domiciled in the UK and in EU Member States. Article 25 of eIDAS (and UK eIDAS) provides that a QES has the highest level of admissibility in court and has the equivalent legal standing of a handwritten signature. Moreover, a QES based on a qualified certificate issued in one EU member state benefits from mutual recognition across the whole of the EU and in the UK (Article 24A, eIDAS and Article 25 of UK eIDAS).

If there is no legal requirement to notarise the document or sign with a handwritten signature for registration purposes, you should consider using a QES in cross-border transactions involving UK and EU entities. This is increasingly common in more regulated industry sectors such as financial services and healthcare, and in higher value deals.

QES offers more assurance as to the identity of the signatory and the integrity of the document. This is because the signatory’s identity is verified by a qualified trust service provider (QTSP) whose activities are stringently regulated under eIDAS (and UK eIDAS). The QTSP issues a qualified certificate to authenticate that the signatory is who they claim to be, and which links the signatory to a key pair of public and private cryptographic keys.

The integrity of every document signed electronically can be certified by a tamper-evident seal. But QES provides a higher level of document integrity because cryptographic signatures – generated and validated by the key pair - protect the integrity directly. The public cryptographic key cannot validate the QES if anyone has attempted to tamper with or modify the document.

The creation and validation of QES is depicted in the diagram below.[1]

A flow chart showing the creation and validation of QES.

QES is optimized for executing cross-border transactions under UK and EU laws.

[1] Reproduced from the Interim Report on the Electronic Execution of Documents by the MoJ’s Industry Working Group published on 1 February 2022.

Note:

Disclaimer: Information on this page is intended to help businesses understand the legal framework of electronic signatures. However, Adobe cannot provide legal advice. You should consult an attorney regarding your specific legal questions. Laws and regulations change frequently, and this information may not be current or accurate. To the maximum extent permitted by law, Adobe provides this material on an "as-is" basis. Adobe disclaims and makes no representation or warranty of any kind with respect to this material, express, implied or statutory, including representations, guarantees or warranties of merchantability, fitness for a particular purpose, or accuracy.

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