Admissibility of e-Contracts in Courts: UAE

‘The E-contract documents and records hold the weight of its physical counterparts as long as the contract is formed in the proper authentic way’ – stated the Dubai Court of Cassation 35 in 2008. In the present scenario of the E-world, every business person prefers to communicate online officially. Nowadays, arranging a meeting to make a legally binding contract, the electronic medium is used. Thus, this trend is growing fast around the world. The communication through e-mails and other applications eventually lead to the formation of E-contracts or ‘electronic contracts’. Generally, a standard contract is an agreement between the two parties agreeing upon the terms and conditions made by them. Thus, there must be an offer and acceptance along with a consideration to form a contract. The contracts are usually the result of the negotiations between the party. The parties elect the same to a document to avoid further confusion on their agreed terms. Today, all such negotiations are steered through e-mails, and it continued until their difference in opinion is narrowed down. They come up with an amicable term favorable for both of the parties.

Even though the e-contracts are formed online, they are treated like any other ordinary contract. All such online made agreements are made with the help of special computer programs or maybe through agents who are explicitly programmed concerning this matter. Let’s discuss the concept of e-contracts in the United Arab Emirates.

Legislation

 In UAE, e-contracts are governed by the laws and legislation made by the UAE government. According to the UAE Federal Law, Number 5 of 1985 concerning Article 125 of the civil code explains the contract. It states that a contract is formed when a party and an acceptance make an offer by another contracting party indicating that they are intended to enter into a contract. Thus, a contract consists of three elements, such as:

1. Offer of the contracted party
2. Acceptance of another contracted party
3. Intention to enter into the contract

The laws state that the contract must be in writing to be valid. For example, the sale or purchase of a ship, the legislation of the UAE says that agreement must be in writing and applies to the sale or purchase of land. Thus, the e-contracts have to be in writing to be valid according to the civil code of the UAE. Concerning the e-contracts, under the virtue of Article 132 of the UAE civil code, it expounds that the intention could neither be in writing nor could be verbal. The law does not prohibit even if the electronic mode carries out the same.

Electronic Signature

Like the standard contracts, the parties’ signatures are mandatory to acknowledge the approval of the parties to enter into the contract. Like regular contracts, the E-contracts also need signatures for approval and maintain the contracts’ validity. An electronic signature is defined in chapter I of the Electronic Transactions and Commerce Law Number 2 of 2002. It expounds that the signatures comprise symbols, numbers, letters, voice, or any such kind of processing system in an electronic form. The form must be linked to electronic communication along with stamped with the intention of validation.

Admissibility of the E-Contract

Under the virtue of law provided in the UAE legislation, clarify the admissibility of the e-contracts in the UAE. With some of the supporting laws that govern the implementation of contract law, let’s examine the admissibility of the e-contracts in the UAE,

1. All the electronic transactions are administered by the Electronic Transactions and Commerce Law Number 2 of 2002. It states that it is acceptable for a contract to electronically perform the offer, acceptance, and intention. 
2. Under chapter III of Article 13 and Article 13(1) expounds that all such contracts performed electronically are valid. 
3. Article 13(2) also specifies that the contract’s validity should not be questioned if the same is carried out electronically. 
4. Under the virtue of Article 14, it further adds to the law that even if the contract is made through the electronic medium to perform a specific task even without communication between real people also considered as legally enforceable.
5. Under Article 14(2), the law also specifies that if the contract is made through the electronic medium with a natural person, the contract will only be valid if the natural person knows that the agreement is created electronically.

How The E-Signature Can Be Carried Out

Under virtue of Article 10 of chapter I, the e-signatures are equally reliable and admissible as the standard hand signature as long as all the parties are fully aware of their actions. Ergo, the reliability of these signatures must be reasonable reasons and steps should be taken to recognize the signatory’s identity. The party should also check for evidence on the contracting party if e-signatures cause any rejection.

 The surroundings and other conditions concerning the contract must the electronic signatures could be carried out through specific ways, and such ways are as follows,

1. Just clicking a agree button on the terms and conditions specified in the applications, software, updates meaning approving to enter the contract.
2. Just entering their legal name at the end of the contract in a specified box shows their willingness to enter the contract.
3. Usage of the cryptographic signatures. The cryptographic signature is an idea that is similar to the bank PIN or PIN-protected documents in the bank.
4. Another commonly used signature is XML-based signature which always involves digitally verified fingerprints.

Admissibility Of The Evidence Of E-Contracts In The Courts

The shreds of evidence in the UAE are governed and administered by the Federal Law Number 10 of 1992 on Evidence in Civil and Criminal Transactions. The definition of the electronic signature is widened by Article 17, section 1, which was added by Federal law Number 36 of 2006, dated Oct 9, 2006. The definition expounds that the signs or letters have an exclusive feature that helps to distinguish them from the ordinary symbols, characters, and letters. Section 2 of the law explains the electronic document. It expounds that receiving, sending, storing of signs, symbols, pictures, or voices or all such information concerning the contract formed through the IT medium will be considered as a document under the section. Under the virtue of sections 3(1) and 4(2), it must be noted if documents have authenticity as per the law prescribed in legislation. However, it is clearly stated that an electronic document cannot be refused just because on the ground that the record is made electronic. If such rejections happened, then the validity of the same should be testified. The authenticity, credibility, legitimacy, trustworthiness of the e-contract must be checked, along with careful analysis of the whole process. Thus, the legislation and the supporting facts expound that the e-contracts are admissible and valid in the courts of the United Arab Emirates.

Restricted Subjects Related To E-Contracts

E-contracts are widely used in varied categories and the fast-growing across the world. Still, some of the subject matters are not accepted for the electronic copy as there may be chances that the document is exposed to misuse or exploitation. The following subject matters are not taken, and they are explained as follows,

1. Documents concerning the personal status such as marriage, divorce, child marriage, etc.
2. Documents about the wills and trusts.
3. All the deeds of title to the immovable property.
4. All the dealings concerning the purchase, lease or sales, or any other testimony of the immovable assets.
5. Registration of any rights connected to the immovable assets.
6. All the documents are compulsory to be attested before the Notary Republic.
7. The provisions of laws exclude all other forms.

DIFC And E-Contracts

As the Dubai International Finance Centre (DIFC) always has its respective authorities and courts to deal with their matters and disputes, all the transactions corresponding to the e-contracts and e-signatures in the DIFC are governed by DIFC Law Number 2 of 2017. As per section 10(13), the laws expound that contract cannot be denied on the sole ground that they are e-contracts. It means all such e-contracts are valid in the DIFC and are considered admissible in the competent courts of DIFC. In DIFC, the e-contracts follow similar principles like in the UAE Federal Law and can be found in parts four, 15, and 16. In section 19 it states that, on the ground that the e-contracts have a lack of personal involvement of the competent parties, it cannot be rejected by the system.

In section 5(22), the e-signatures are considered valid only if the signatures in the contracts are in the appropriate form and satisfy all its elements prescribed in the legislation. According to section 24, all the e-signatures in the e-contracts are considered valid evidence. The laws in DIFC free zones concerning the e-contracts seems to be different compared to the UAE laws. So even if contracts are electronic contracts or standard contracts, every contract will be valid and admissible in the court as long as the contract is made with the proper consideration of all the competent parties satisfying all the elements prescribed in the legislation. With the help of well-experienced lawyers, you can make your contracts valid by satisfying all the needs in the legislation.

ADGM Legislations And E-Contracts

The Abu Dhabi Global Market (ADGM) has also introduced guidelines to enable electronic transactions, records, and signatures. Even though electronic contracts are widely used in the UAE, ADGM often receives inquiries regarding the legal position of the e-contracts. The legislation in the ADGM addresses such matters, including the protection under the virtue of English common law on the formation of the contracts and Companies Regulation 2020 on the acceptance of documents carried electronically. 

ADGM considers that implementing specific legislation concerning the e-contracts will helps to bring a regulatory framework more in line corresponding to the best international practice in e-commerce. The ADGM has benchmarked legislation to ensure that the bill developed by the ADGM is consistent with best practices internationally. As per the ADGM law, the electronic document has the same effect as the regular agreement. The electronic record is legally and enforceable, and valid. The e-contracts should be in writing as it contains some legal consequences if it’s not in writing. The electronic records must be retained and should satisfy all the essentials in section 4(1) for the enactment.

Admissibility Of The E-Contracts In ADGM Courts

Any electronic record formed in electronic communication has the same legal effect as a regular contract and is legally enforceable in the courts. Electronic signatures are required for the enactment, and without signing it, the contract would not be valid. For the electronic signature in the contract to be valid, it must satisfy certain essentials as follows,

1. The signatures must be reliable and appropriate for the purpose for which the electronic record was formed.
2. The signatures must fulfill the elements prescribed in section 13(1)(a) along with the evidence.

If the competent party satisfies the following essentials, such electronic signatures will possess the same effect as any other handwritten signatures in other regular contracts. The electronic contracts formed satisfying all such legislations will be admissible in any court. Like any other standard contract and its signature, the electronic signature in the electronic contract is taken as admissible evidence in any court proceedings.

As we mentioned above, as with every contract, the e-contract is also governed by three essential elements: offer, acceptance, and intention. As long these elements are satisfied by all contracts upholding the legal requirements corresponding to it, it is valid and admissible whether the contract is electronic or in standard form. So far, if competent parties come into an agreement to enter the electronic contract with sufficient understanding and acceptance of both parties’ intentions, the contract is wholly enforceable and valid. With the current growth in e-commerce day by day, the legal system of the United Arab Emirates should have to develop together to handle all the future challenges and risks of the economy.