Introduction

In light of the COVID-19 pandemic and with many people now working remotely, companies are increasingly considering the use of digital contracts and electronic signatures. To help minimise disruption and ensure business continuity, this article summarises the legal position in the Cayman Islands and provides practical advice on implementation.

The enforceability of digital contracts and electronic signatures is governed by the Electronic Transactions Law (2003 Revision) (ETL). In summary:

  • communication of a contract through electronic means, including acceptance by way of a reliable electronic signature, is permitted under Cayman law, provided that such contract meets the general requirements of a legal contract; and
  • electronic signatures are acceptable and enforceable under Cayman law, provided that they meet the reliability criteria set out in the ETL.

The ETL does not apply to any document or signature relating to the creation, execution, variation or revocation of a will or other testamentary instrument.

Digital contracts under ETL

The ETL provides that, subject to any provision to the contrary, the following can be expressed electronically:

  • an offer;
  • the acceptance of an offer; and
  • information relating to payment and consideration.

In addition, the legal effect or validity of statements and declarations is not affected solely because they are in electronic form.

Therefore, provided that the relevant documents meet the general requirements of a binding contract under Cayman law, the use of digital contracts does not affect their validity or enforceability. This may include using online portals to negotiate, amend, upload or transmit contractual documents.

Electronic signatures under ETL

Under the ETL, electronic signatures have the same legal effect as written signatures provided that they and the method of creating them:

  • are reliable in light of their purpose and the circumstances (please see below for the reliability requirements under the ETL); and
  • otherwise meet the requirements of all relevant legislation, regulations, contracts or deeds with respect to such signatures.

An electronic signature is deemed 'reliable' if:

  • the means of creating the electronic signature are linked to the relevant signatory and no other person;
  • at the time of signing, the means of creating the electronic signature were under the control of the relevant signatory and no other person;
  • any alteration of the electronic signature made after the time of signing is detectable; and
  • where the purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable.

Under the ETL, any person relying on an electronic signature bears the legal consequences of a failure to take reasonable steps to verify its reliability.

Practical considerations The following practical considerations should be noted with respect to the use of and reliance on electronic signatures:

  • Similar to reliance on written signatures, any person relying on an electronic signature must ensure that the relevant signatory has been properly authorised.
  • The reliability criteria set out in the ETL will likely be satisfied if the signatory relies on a reputable digital signature service, such as DocuSign, Adobe Sign or eSign.
  • Parties should ensure that the email addresses of all signatories are authentic and familiar for the purpose of circulating electronic signing instructions.
  • Electronic execution instructions for different signatories should be circulated separately to ensure that the means of creating the electronic signature is under the sole control of the relevant signatory.
  • If a party does not wish to use third-party digital signing services, it should ensure that electronic signatures meet the reliability requirements. This may include:
    • ensuring that clear records are maintained (eg, filing relevant email correspondence) with respect to the creation and use of any electronic signatures; and
    • confirming that all electronic signatures cannot be amended without detection once created.

CIMA

The Cayman Islands Monetary Authority (CIMA) recently issued public notices in relation to electronic signatures and certification or notarisation of documents. To date, CIMA has adopted the following measures to lessen any challenges that its licensees and registrants may face:

  • CIMA will accept affidavits or other documents that have been notarised or certified via the DocuSign process or audiovisual technology (notably, DocuSign was the only service provider named in CIMA's notice).
  • For new fund registrations, in lieu of a notarised affidavit, CIMA will accept written confirmation from a fund operator authorising the registered office or another service provider to file the fund's registration or application on the operator's behalf.
  • For fund deregistrations, CIMA will accept uncertified resolutions that confirm the fund's deregistration or cancellation date.