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ADGM's Electronic Transactions Regulations

30 March 2021
The Abu Dhabi Global Market ("ADGM") enacted the Electronic Transactions Regulations 2021 (the "Regulations") on February 25, 2021 with the Regulations coming into force as on the date of enactment.

Aim of the Regulations

The objective of the Regulations is to endorse electronic signatures, contracts, records and documents. All such electronic documents will be legally enforceable in the ADGM and hold the same effect as physical, non-electronic, tangible versions of documents, subject to the requirements and conditions of the Regulations. 

Key Features

Provision of Information and Electronic Records: The Regulations permit the use of e-signatures (unless expressly prohibited in the Regulations) if the information that is provided / sent / delivered in an "Electronic Communication" is capable of retention once received.  Additionally, the Regulations also provide for electronic witnessing.

Retention and Reliability of Electronic Records: The Regulations include conditions for the retention of electronic records and reliability standards. Conditions for retention of electronic records are satisfied when an electronic document: (i) preserves the information contained therein; (ii) is retained in the same format in which it was generated; and (iii) the information in such electronic document is retained in such a manner where it allows for identification of the source of the document. 

In accordance with the Regulations, reliable methods must be used in relation to electronic documents. Such methods may include evaluating the security of hardware and software involved, and in particular, data integrity must be kept in mind. 

Cross-Border Recognition: Electronic documents, electronic signatures, and electronic transferable records have legal effect, validity, and enforceability even if they are produced, or implemented outside of ADGM. An electronic record may be used as evidence of a record in any ADGM court proceedings. 

Time and Place of Despatch and Receipt: Unless agreed upon by the concerned parties, the time of despatch of a document is the time it enters an information system. The time of receipt occurs when the data message enters the designated information system or when the same is retrieved by the addressee. 

Validity of E-Signatures:  An electronic signature is valid provided that the type of electronic signature used is reliable and suitable for the purpose which the electronic document was created. The Regulations lay out conditions that are to be satisfied in order for an electronic signature to be deemed reliable and valid such as ensuring that the signature was under the control of the signatory and no other person (at the time of signing) and any modification made to such signature is evident.

Transferable Documents (1): An electronic document may be deemed to be a "Transferable Document" if such document contains the necessary information that should be in a Transferrable Document. Furthermore, a reliable method must be used to (amongst others) identify the document and retain its integrity. 

Exclusions: The Regulations are not applicable to documents where the document itself or the signature on such document is in relation to: 

  • creation / performance / enforcement of a power of attorney; 
  • creation and execution of wills, testamentary trusts or codicils; 
  • transactions which involve sale / purchase / lease / disposition of immovable property and the registration of rights relating to immovable property; or 
  • any document which is to be notarized before a notary public. 

Next Steps

Companies and organisations that wish to rely on the Regulations need to ensure that they are compliant with the conditions and requirements set out therein, especially in the current environment where physical signing due to COVID-19 restrictions is comparatively difficult. 

Entities should take advantage of the innovative legislation to facilitate electronic dealings within the ADGM and for e-commerce. 

References

(1) Transferable Document means a document or instrument capable of being created on paper that entitles the holder to claim the performance of the obligation indicated in the document or instrument and to transfer the right to performance of the obligation indicated in the document or instrument through the transfer of that document or instrument.

This Client Alert provides a very brief summary of a law. It does not constitute legal advice and should not be used as a substitute for competent legal advice from counsel.

For further details please contact any of our lawyers below. 

Further Reading