Hesham ElSamra

Senior Associate

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Hesham ElSamra

Senior Associate

Read More

11. September 2023

Electronic Transactions and Trust Services in the UAE – 1 von 6 Insights

Unlocking the world of electronic transactions and trust services in the UAE

  • In-depth analysis

The government of the United Arab Emirates has taken a significant step to keep up with technological advancements and modernize the legal system to meet the demands of the current times. On March 31, 2023, the cabinet decision No. 28/2023 was issued, which pertains to the executive regulations of Federal Decree Law No. 46 of 2021 regarding electronic transactions and trust services. This decision has become operational since the end of June 2023.

In this series, I will present a comprehensive guide that covers all the essential information about Electronic Transactions and Trust Services in the UAE. The guide will be released in multiple parts, with a new instalment coming out every Monday over the next several weeks.

The decision covers various aspects related to electronic transactions, including obtaining licenses for trust services, approved trust services, renewal, suspension, or cancellation of licenses. It also outlines the obligations of the licensee and the trust service provider. Additionally, the decision addresses matters related to qualified electronic signatures, electronic stamps, authentication of signatures and stamps certificates, archiving electronic documents, verifying the validity of an electronic signature or approved electronic seal, services for creating an approved electronic time stamp, approved electronic delivery, compliance rating, and inclusion in the Emirati Trust List. It also introduces the concept of the approved trust mark.

This leads us to quickly refer back to Federal Decree-Law No. 46 of 2021 concerning electronic transactions and trust services. By doing so, we can gain insights into various concepts and definitions that will be elaborated in the executive regulations.

The first chapter of the Decree-Law pertains to general provisions

Article 2 outlines the scope of its implementation, which includes individuals involved in transactions and services mentioned in accordance with this Decree-Law. This encompasses electronic transactions, electronic documents, trust services, and approved trust services, along with the necessary procedures for their completion. The Council of Ministers is granted the authority to add, delete, or exclude any transaction, document, or procedure mentioned in Paragraph B of Clause 1 of this Article. Additionally, it holds the discretion to exclude any party from some or all of the provisions of this Decree-Law.

Article 3 outlines the objectives of the decree-law, which are centred on several key goals. These include fostering trust, promoting and simplifying various electronic transactions, safeguarding customer rights, and adapting to technological advancements to bolster electronic transactions across all sectors. Additionally, the decree-law aims to incentivize digital transformation, encourage investment, and facilitate the provision of electronic services to the public.

Article 4 outlines the Competencies of the Authority, vested in the Telecommunication and Digital Government Regulatory Authority. These responsibilities include regulating the operations and activities of licensees, establishing rules, procedures, and standards for the electronic identification system, verification procedures, and digital identity, in consultation with relevant authorities. The authority is also tasked with creating regulations, procedures, and standards for trust services and approved trust services. It evaluates license applicants and existing licensees, either directly or through compliance rating bodies, and establishes controls and conditions for regulating these rating bodies.

Furthermore, the authority is responsible for compiling and publishing Emirati trust lists for licensees, ensuring they are regularly updated. It exercises supervision, control, and inspection of licensees and coordinates with the Central Bank for inspecting financial institutions under its license. The authority is also tasked with receiving and addressing complaints, taking necessary actions, and carrying out any additional responsibilities assigned by the Council of Ministers.

Chapter Two focuses on Electronic Transactions

Article 5 highlights the legal validity and enforceability of electronic documents. It states that the data within electronic documents retains its legal validity as long as it can be accessed within the information system of its origin. The article also allows for the inference of a person's consent to use an electronic document based on their actions or behavior that indicate approval. However, it is essential to note that a person is not obliged to use an electronic document unless they give their consent willingly.

Article 6 of the decree-law deals with the storage of electronic documents. It sets out specific conditions that must be met when any existing legislation in the country requires the saving of a document, record, or information in an electronic form. The document must be saved in the format in which it was originally created, sent, or received, or in a format that accurately represents the original information. It should remain saved in a way that allows easy access and reference at a later time.

Moreover, if there is any information through which the originator of the electronic document can be identified, along with its destination, date, and time of sending and receiving, it must be included in the saved document. However, the obligation to save documents does not extend to any information that arises automatically just to enable the sending or receiving of a document.

The decree-law also allows the use of services provided by another person to fulfil the requirements of document storage, as long as they adhere to the specified conditions. Government entities are given the right to add additional requirements for the purpose of storing electronic documents under their jurisdiction, provided that these requirements do not conflict with the provisions of the Decree-Law.

Article 7 of the decree-law addresses the requirement for information, statements, records, or transactions to be in writing. If any existing legislation in the country necessitates or indicates that such content must be in writing or specifies certain consequences for not writing, then this requirement is considered fulfilled when using an electronic document. As long as the information in the electronic document is securely saved and easily accessible for use and reference, it satisfies the same conditions as if it were in traditional written form.

And in Article 9 related to the Original document, the decree-law set some conditions that must be met in the electronic document in the event that any legislation in force in the country requires the submission or saving of any document, record, information or message in its original form, if there is technically reliable evidence to ensure that Integrity of the information contained in the electronic document since the time of its creation, if the electronic document allows displaying the information required to be submitted whenever requested, while giving the right to the government entity that supervises the submission or saving of records or information to impose any additional relevant conditions.

Article 10 addresses the creation and validity of contracts. It states that offers and acceptances can be expressed electronically for the purpose of forming a contract. Moreover, electronic documents are considered valid and enforceable as evidence in contractual matters.

Article 11 of the Decree-Law addresses automated electronic transactions. It states that contracts can be formed between electronic systems that are pre-programmed to do so without any direct involvement from individuals. These contracts are considered valid, enforceable, and legally binding. Additionally, a contract can be formed between an automated electronic system owned by one person and another person if the latter knows or is expected to know that the system will automatically conclude or execute the contract.

Article 12 of the Decree-Law discusses the attribution of electronic documents. An electronic document is considered issued by the originator if the originator himself sent it. It is also considered issued by the originator in the following cases: if sent by a person authorized to act on the originator's behalf or if sent by an automated electronic system programmed by or on behalf of the originator.

The recipient has the right to assume that the electronic document is issued by the originator and act based on this assumption in certain cases: if the recipient follows a previously agreed procedure with the originator to verify the document's authenticity, or if the document is a result of actions by someone with access to the originator's verification method.

However, there are exceptions: if the recipient receives a notification from the originator stating that the document is not issued by them and had enough time to act on this information, or if the recipient knew or should have known that the document was not from the originator. The recipient cannot rely on the assumptions if they knew or should have known that the document is a duplicate or if there was a technical error during transmission.

In the context of their relationship, the recipient can consider the electronic document as intended by the originator and act accordingly. Each electronic document is treated as separate, and the recipient is not allowed to act based on the previous assumptions if they knew or should have known that the document was a second copy or if there was a technical transmission error.

Article 13 of the Decree-Law addresses the acknowledgment of receipt for electronic documents. If the originator and the recipient haven't agreed on a specific form or method for acknowledgment, it can be done through any message or behaviour from the recipient that indicates they received the electronic document. This could be via electronic or automated means, or any other way.

However, if the originator has made receiving an acknowledgment of receipt a condition for the electronic document, it will have no legal effect until the acknowledgment is received. If the originator requested an acknowledgment without specifying a deadline, they can send a notice to the recipient stating that they didn't receive the acknowledgment and provide a reasonable time for it to be received. If the acknowledgment is not received within that specified time, the originator can consider the electronic document as if it was never sent.

When the originator receives an acknowledgment of receipt, it is assumed that the recipient received the electronic document, unless evidence suggests otherwise. The acknowledgment of receipt does not imply acknowledgment of the document's content. If the acknowledgment states that the electronic document meets technical conditions agreed upon or specified in applicable standards, it is assumed that these conditions have been met, unless proven otherwise.

These provisions do not apply if the originator and the recipient have a different agreement regarding acknowledgment of receipt for the electronic document.

Article 14 of the Decree-Law deals with the time and place of sending and receiving electronic document. If there is no specific agreement between the originator and the recipient regarding the time and place, sending the electronic document is considered to have occurred when it enters an information system that is not under the control of the originator or the person sending it on their behalf.

The time of receiving the electronic document can be determined as follows: If the recipient has designated a specific information system to receive the document, the receipt is considered to have occurred when the electronic document enters that designated system. If the recipient has not specified a system, the receipt is considered to have occurred when the document enters any information system owned by the recipient, regardless of its location.
In the absence of any other agreement, the electronic document is considered sent from the location of the originator's headquarters and received at the location of the recipient's headquarters. If either party has multiple headquarters, the one closest to the relevant transaction is considered. If there is no relevant transaction, the main headquarters is used. If neither party has a headquarters, their usual place of residence is considered. For legal entities, the main headquarters or the place of establishment is considered as the usual residence.

According to Article 18 of the same Decree-Law, electronic evidence and trust services hold the same validity and legal acceptance in any legal proceedings. Moreover, paper copies of the official Electronic Document are recognized as having legal effect for all, provided they accurately match the original document.

Additionally, the Approved Electronic Signature carries the same legal weight as a handwritten signature if it satisfies the conditions outlined in Article 19 of the Decree-Law and its Implementing Regulation. These conditions are as follows:

  • The Approved Electronic Signature is exclusively associated with and under the control of the Signatory.
  • It possesses the ability to identify the Signatory.
  • It is linked to the signed Data in a manner that allows any modifications to be detected.
  • It is created using technical and security techniques that comply with the technical requirements specified in the Implementing Regulation of this Decree-Law.

Article 8 of this Decree-Law addresses the use of signatures and stamps on electronic documents. If any existing laws in the country require a signature or stamp on a document or record, or specify conditions for not signing or stamping, those conditions are considered met in the following cases:

  • Using a means of identifying a person and indicating their intent regarding the information contained in the Electronic Document.
  • If the means used meets any of the following conditions:
    It is approved for the purpose for which the Electronic Document was created or sent.
    It meets the requirements stated in paragraph (a) of Clause (1) of this Article, either by itself or with other proof.
    Any person is allowed to use any form of electronic authentication unless the law states otherwise.

To be continued on Monday 18th September, stay tuned.

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