The Electronic Seal as a Solution to Prove the Intent of a Legal Entity

Abstract

Because the digital environment does not recognise national borders and with transactions increasingly taking place across them, an electronic environment that affords interoperability is important for the competitiveness of the European Union. Debate about whether the identification of individuals in the digital environment should be a norm and obligation or, instead, the digital environment should be available as a form of expression of our privacy and anonymity has not waned. Although legal entities act through natural persons, solutions are available whereby a natural person’s e-signature may be replaced in an electronic environment by an electronic seal, or e-seal, of a legal entity. Although the general requirements related to e-seals were established in Estonian legislation already in 2009 and on EU level with the eIDAS Regulation in 2016, the legal meaning of an e-seal has remained unclear in most EU countries, even Estonia, where the uptake of such solutions is widespread.

In light of this context, the article examines in which cases the e-seal of a legal entity could be equal in legal meaning to a hand-written signature or an e-signature of a natural person. Thus, the article addresses challenges visible in Estonian and EU-level legal acts that have left the legal meaning of the e-seal unclear. As some EU member states have declared a legal meaning for e-seals divergences among the regulatory approaches examined lead to issues that erode interoperability and the mutual recognition of e-seals in cross-border transactions, both of which would be expected from a genuine digital single market. From the examples of other Member States, a recommendation that the Estonian legislator amend the private-law acts is offered, with recommended wording that should eliminate the gaps in law.

In private-law transactions, non-compliance with the form requirements provided by law or agreed upon between the parties generally results in the nullity of the transaction. According to the law currently in force, failure to comply with a requirement for a hand written signature (written form) or with equivalent requirements connected with electronic form as provided for by law constitutes non-compliance with a formal requirement. Should the Estonian legislation be changed in accordance with the suggestions presented, paying attention to its level when using the e-seal remains crucial. At the same time, it is important to take into account the purpose of the formal requirement, the actual intention of the parties, and the principle of good faith when deciding on the consequences, whether of the current law or of potential changes. When one is using a tool other than the parties' agreement (be it an e-signature or an e-seal), it is important to consider the purpose of the agreement if wishing to determine the parties' actual intention and analyse the legal entity's behaviour and, hence, whether the transaction has been performed.