Client COVID-19 INSIGHTS CENTER/ Newsflash
E-Signature in the COVID-19 Crisis: Adapting to the (Not So) New Normal
As the COVID-19 pandemic forces people to adopt homeworking and physical distancing, digital transformation is no longer a mere option. In the past few months, we have witnessed how most businesses have departed from the traditional in-person meetings to virtual meetings, working through online collaborations, and hosting seminars and forums through digital means.
The signing of legal, commercial, and transactional documents is no exception. While gathering all relevant parties in the same room for signing is unfeasible, it is also considered out of fashion and impractical to rely on delayed postal service to circulate hard copy originals to obtain a wet ink signature. Therefore, one of the ways to overcome this issue is for businesses, governmental agencies, and legal practitioners to adapt by transforming or replacing the conventional use of wet ink signature with technology having similar legal robustness to the traditional signing mechanism, while still ensuring that legal documents are executed properly and in a timely manner.
This is where e-signature presents a welcome solution to the challenges of being bound to work from home, which certainly will remain part of our (not so) new normal lives.
Although regulations governing implementation e-signature have been in effect for several years, until the beginning of the pandemic, the use of e-signature is still not commonly adopted in our day-to-day course of business. Now, with a drastic shift to a remote working environment, the use of e-signatures provides a way to enhance efficiency and simplify work. But what is an e-signature and how legitimate is it? Are we to embrace the use of e-signature in every legal document and business transaction?
We have compiled below frequent questions commonly arising on the implementation of e-signature in Indonesia.
- What is the difference between e-signature and the traditional handwritten (wet ink) signature? Will e-signature be legally binding?
E-signature is generally regulated under Law No. 11 of 2008 as amended by Law No. 19 of 2016 on Electronic Information and Transaction (the “EIT Law”) and Government Regulation No. 71 of 2019 on the Implementation of Electronic System and Transaction (“GR 71/2019”).
E-signature is defined as Electronic Information which is attached, associated, or related to another electronic information utilized as a means of verification and authentication. The current prevailing regulation recognizes various forms of e-signature, from electronically scanned signature, electronic handwriting font in the execution block or using a certified e-signature platform.
Despite its form, e-signature has the same legal standing as regular manual wet ink signature, provided that (i) e-signature data is related only to the signatory party; (ii) e-signature data is under the control of the signatory party during the signature process; (iii) all changes towards the e-signature occurred after the signing can be traced; (iv) all changes towards electronic information related to the e-signature occurred after the signing can be traced; (v) there are means to identify the signatory party; and (vi) there are means to demonstrate that the signatory party has consented to the relevant electronic information.
If all the conditions presented are met, e-signature is legally binding and has the same legal standing as regular manual wet ink signature, with its legal force and legal consequences.
- What types of e-signature are governed under Indonesian Law?
There are two types of e-signature, namely certified and non-certified e-signatures.
Certified e-signature is an e-signature through a process of unique code generation as generated and certified by an Indonesian electronic certification provider. E-signature certification system can detect any change to the document, assuring both the validity of the signature as well as the integrity of the document.
Meanwhile, non-certified e-signature is rendered without using the services of any Indonesian electronic certification provider. This category includes digitalized version of a wet ink signature (e.g. through scanning process).
Both types of e-signatures are valid and legally binding. However, certified e-signature has stronger legal enforceability in the eye of the Indonesian court, compared to a non-certified e-signature.
- Is it admissible in legal proceedings?
Yes, e-signature is admissible in legal proceeding. In fact, pursuant to Article 59 (3) GR 71/2019 in conjunction with Article 11 of the EIT Law, a document signed with a certified e-signature has valid legal force and legal consequences– equivalent to an authentic deed – when submitted as an evidence before a court. Meanwhile, submission of documents signed with non-certified e-signature as an evidence will require an authentication process through digital forensic examination. Once examined, the result will be conveyed in a forensic report and a digital forensic expert may also be called before the court to explain the result of the examination. Nonetheless, both types of e-signature are legally recognized by Indonesian courts.
As per July 2018, the Indonesian Supreme Court has also launched an e-Court application as an implementation of the Supreme Court Regulation No. 3 of 2018 on the Case Administrative Guidelines at Electronic Courts enacted in April 2018. The e-Court application accommodates parties to do e-Filing, e-Payment, e-Summons, and e-Litigation electronically. The Supreme Court has also collaborated with the Electronic Certification Agency (Balai Sertifikasi Elektronik – BsrE) of the National Cyber and Crypto Agency (Badan Siber dan Sandi Negara – BSSN) to secure the legality of the documents used in the proceedings, including in providing e-signature services.
- What documents can be signed electronically?
In general, any document can be signed electronically, and the signature will be deemed valid if it fulfills certain legal requirements. However, the foregoing may not apply in certain cases where certain formal requirements are needed. Pursuant to the provision of Article 5 (4) of the EIT Law, generally there are 2 (two) types of document that cannot be executed electronically, as follows:
- documents that, by law, should be made in a written form (hardcopy), for instance, commercial papers, marriage and birth certificates, etc.; and
- documents that, by law, shall be made in the form of notarial deed or by deed-granting officials, for instance, company’s acquisition deed or pledge of shares deed – both of which are required to be made in the form of notarial deed.
- If the other party is from a different jurisdiction, can they sign electronically?
In general, if a document is not subject to any specific regulatory requirements, it is possible for a party from another jurisdiction to sign such document electronically. Please note, even if the e-signature is generated by a foreign certified e-signature provider, it will still be recognized in Indonesia as “uncertified e-signature”. An e-signature will only be considered as a “certified e-signature” under Indonesian law if it is certified by an Indonesian electronic certification provider by using a certified e-signature producing device. However, the lack of certification thereof does not affect the validity of the e-signature itself.
One important note, e-signature may not be applicable for document that needs to be notarized and consularized in foreign countries.
- Would a legal document governed under a foreign jurisdiction be valid if it is electronically signed using an Indonesian e-signature provider?
It varies over different jurisdictions. The validity of e-signature on legal document will depend on the laws and regulation respective to e-signature applicable in the relevant jurisdiction.
In Indonesia, for instance, while all e-signatures are legally valid, an e-signature will only be considered as a “certified e-signature” if it is particularly certified by an Indonesian certification company. On the other hand, in the United States, this will depend on the laws of each state. To the best of our knowledge, while some state laws in the United States acknowledge the validity of any type of e-signature, others require some form of security, and some will only acknowledge the validity of e-signature that uses encryption, depending on the types of transactions covered.
- Is express language by the parties that consents to electronic transacting and acknowledges intent for the electronic signature to be binding necessary for the e-signature to be valid?
There is nothing in the current prevailing Indonesian laws and regulations that requires party to expressly state their intent to be bound by the provisions contained in a document signed electronically. The stipulation of Article 11 of the EIT Law is deemed to have provided sufficient ground for such e-signature to have the same legal force and consequences as wet ink signature and therefore will equally bind the parties in the transaction, regardless the existence of specific language in the document expressing the parties’ consent to be bound by the e-signature.
- How does e-signature affect the meterai (stamp duty) requirement for certain legal documents?
E-signature can co-exist with meterai requirement. In essence, the obligation to affix meterai is related to a tax obligation, as opposed to the validity of such document. The signature in the document will still be legally enforceable and valid as long as it fulfills the requirement set forth by EIT Law and GR 71/2019. One may affix the meterai at a later stage in case the document is going to be submitted as an evidence in a court proceeding (Nazegeling).
The above, however, only applies when there is no formal procedure which requires affixation of meterai to conclude the document – for instance, submission of statement letter/document for certain license/application purposes.
- The rise of e-signature certification amidst the COVID-19 pandemic
We have witnessed the pandemic to have served as a wake-up call for government and businesses to embrace digital transformation in carrying out their activities. It has brought a drastic shift to our way of doing business and we are seeing such changes becoming the “new normal”. We have seen various business associations pleading regulatory agencies to adopt e-signature, and in response, more initiatives have been launched by several governmental institutions to embrace the use of e-signature to minimize disruption in the course of business during the pandemic. The Financial Services Authority (Otoritas Jasa Keuangan – OJK), for instance, now allows e-signature to replace wet ink signature on insurance products. We are hopeful that the current situation will encourage more and more parties, from lawmakers to business players, to adopt the use of e-signatures.
The following is the list of current certified e-signature providers in Indonesia registered with the Ministry of Communication and Informatics:
- Digisign – PT Solusi Net Internusa (certified);
- PrivyID – PT Privy Identitas Digital (certified);
- Perusahaan Umum Percetakan Uang Republik Indonesia (Peruri) (certified);
- VIDA – PT Indonesia Digital Identity (certified);
- BSrE BSSN (registered);
- Badan Pengkajian dan Penerapan Teknologi (BPPT) (registered).
May 29, 2020
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