Overview of E-Signatures in Thailand
In Thailand, the legal validity of Electronic Signature (e-signature) has been officially recognized since 2001 by enactment of the Electronic Transactions Act, B.E. 2544 (2001) (“ETA”). However, the COVID-19 pandemic makes us realize more of the benefits of digitalization, including e-signature, as social distancing and working from home is becoming a new normal. E-signature has many advantages over wet ink signatures, in terms of speed, cost, convenience, and, in some cases, even in terms of security as well. In this article, we will revisit the topic of e-signature from a legal perspective.
What is e-signature?
According to the ETA, “electronic signature” means letters, characters, numbers, sound or any other symbols created in an electronic form and affixed to an electronics data for specifying the relation between an individual and such electronics data, for the purposes of identifying the owner of signatory relating to such electronics data. Further, it is also the prove that such person has accepted the information contained in such electronics data. As you can see from this definition, any kind of symbol, a simple click, or even voice or sound can be an e-signature as well, if it shows the intent of the signatory and make the signatory identifiable. In practice, e-signatures usually equipped with higher level of security, e.g. e-signature with OTP (one-time password) or biometrics signature (handwritten electronic signature that captures biometric information during signing, e.g. speed and acceleration of the writing, the pressure applied on the surface of a tablet, etc.) which makes the usage of e-signature to be more secure and reliable.
What transaction can be done by e-signature?
From a legal perspective, there are types of transactions that can be done by e-signature and those that cannot. In order to identify which transaction can be done by e-signature, we have to consider whether any laws and/or regulations require a written document, signature, or any specific form for that transaction.
- Transactions that can be executed with e-signature
We can largely divide transactions that can be executed by e-signatures into two types. First, transactions where written document or signature is not required by law in the first place, e.g. employment contracts. For this type of transactions, we do not have to worry at all whether the transaction should be executed in electronic form or other forms. However, even if a document or signature is not required by law, parties usually have reasonable grounds (e.g. operational reason) to document a consent, signatures, etc.
Second, transactions that are void or unenforceable unless there is a written document signed by the parties to the transaction or only party liable (depend on the nature of transaction), but registration is not required, e.g. lease of real estate with the period of not exceeding three years, hire purchase. The ETA provides that information shall not be denied legal effect and enforceability solely on the ground that it is in the form of an electronics data. The ETA also states that in the case where the law requires any transaction to be made in writing or evidenced by writing, if the information is generated in the form of accessible electronic data which is reusable without the change of its meaning, it shall be deemed that such information is already made in writing or evidenced by writing.
Nevertheless, it is still possible that the validity of these contracts and signatures which are made in an electronic form could be challenged. In the case where the law requires a person to sign a signature and it is done by an e-signature, according to the ETA, it shall be deemed that a data message in question bears a signature if these two conditions are met:
- use the method where the signatory is identifiable and able to prove that the signatory has approved that the information contained in the electronics data is belong to him; and
- such method is reliable and appropriate for the purpose for which the electronics data was generated or sent, considering to surrounding circumstances or an agreement between the parties.
In determining a “reliable” method under 2.,
(i) the security and strictness of the methods and equipment;
(ii) the nature, kind and size of the transaction, the number of occasions on which or the frequency at which transactions take place, trade customs or practice and the importance and the value of the transaction made; and
(iii) the strictness of communication systems.
Therefore, when you decide which type of e-signature is the right type for a transaction, if it is a high-stakes transaction where document and signature are both required by law for enforcement, to err on the side of caution, it might be preferable to use an e-signature with high level of security, authenticity, or integrity so that the validity of such transaction can be proved without difficulties and to avoid any questionable issues arising from the use of e-signature.
- Transactions that cannot be executed with e-signature
To date, the law explicitly disapproves the legal validity of e-signature and electronic document for transactions relating to family and succession (Royal Decree Prescribing Civil and Commercial Transactions which are Exempted from the Application of the Law on Electronic Transactions, B.E. 2549 (2006)).
In addition, the transactions which requires a registration with certain government authorities are generally cannot be done by e-signature. For example, the Civil and Commercial Code requires sale or mortgage of immovable property (e.g. land) to be registered with the Land Office. This type of transactions cannot be complete by using e-signature as the authority has not adopted the internal regulations to allow the registration by using electronic document and e-signature.
What are the obligations of signatory and relying party?
The ETA also imposes some obligations on signatory and relying party. In the case where signature creation data is used to create an electronic signature that has a legal effect, signatory shall, for example, exercise reasonable care to avoid unauthorized use of his signature creation data; notify any person that may reasonably be expected to act on the basis of the electronic signature when the signatory knows or should have known that the signature creation data has been lost, damaged, compromised, unduly disclosed or known in a manner inconsistent with their purpose, etc.
A relying party shall also take reasonable steps to verify the reliability of an e- signature. In the case where an e-signature is supported by a certificate, a relying party shall take reasonable steps to verify the validity, suspension or revocation of the certificate and observe any limitation with respect to the certificate.
E-signature has many advantages over wet ink signature, even in terms of security in certain cases, as e-signature could offer additional security measures to protect authenticity and integrity of the signature. However, from a legal perspective, it is important to consider which type of transaction is compatible with e-signature and which type of e-signature is suitable for that transaction, to prevent the issue of validity of that transaction.