With the advent of a new virtual world after this global pandemic, there is a significant rise in the electronic transactions. In UAE, all the electronic transactions were previously governed by the Federal Law No. 1 of 2006 concerning e-transactions and e-commerce. However, the old law was not sufficient to meet the changing demands, and a lot of uncertainty was prevailing there. Thus,to meet the changing business requirements, the UAE government has recently promulgated the Federal Law No. 46 of 2021 on Electronic Transactions and Trust Services. The new law has completely replaced the existing legal provisions.
Highlights of the new law
1. Competent Authority
Since the new law deals with 2 concepts, namely electronic transaction and federal trust, there are 2 regulators for the same. The Telecommunications and Digital Government Regulatory Authority (TDRA) regulates all the electronic transactions, whereas the Federal Authority for Identity and Citizenship regulates all the trust services.
2. Electronic identification
Electronic identification enables the businesses and the consumers to identify and authenticate the persons whom they are transacting with. As per the new law, the TDRA will prescribe rules, regulations, and procedures relating to electronic identification system after coordinating with other concerned and relevant authorities.
3. Trust services
The term ‘trust service’ refers to those electronic services which are dedicated toward enhancing the confidence of the customers and the business entities in the safety and security of electronic transactions. In the new law, there are mainly four kind of trust services are provided.
- Electronic signatures:it refers to the authentication or approval of a person in an electronic format over a document or a set of data.
- Electronic seals: It can be understood as a stamp, which is affixed on a document to authenticate its origin and integrity.
- Electronic time stamps: These stamps are used as evidence to demonstrate that a particular document was in existence at a particular point of time.
- Electronic registered delivery services: It is an electronic proof of sending and receiving the data.
4. Exemption and license requirement
In the old law, a few exemptions were provided on the electronic transactions which are relating to properties, negotiable instruments, etc. The new law has ended all such exemptions, and all the electronic transactions will require an electronic signature or an electronic stamp.
Further, the new law made it mandatory for all the trust service providers to obtain a license from the TDRA. The authority will publish a UAE trust list highlighting the name of all the trust service providers along with their details. The TDRA will also issue a trust mark to all the certified trust service providers. This is done with an objective to keep a strict check on the activities of the service providers.
5. Type of e-signatures
The new law has prescribed three kinds of electronic signatures, which are as follows-
- Basic electronic signature
- Approved electronic signature
- Certified electronic signature
In short
This main objective of this new law is to encourage the confidence of the general public and the business investors in the electronic transactions. This law has come into force from 2nd January, 2022. However, a 12-month grace period have been provided to ensure compliance with its provisions.
If you want to know further about the legal compliances and the usage of electronic signatures in your documents, you can contact us.