Watch your Signature: Choosing the Wrong one Might Bring Consequences

The signature of a document is what gives authenticity and legal effect to its content. It allows the receiving (relying) party to trust the integrity and origin of the content. For a long time, this has been achieved with wax seals and similar techniques, as well as with handwritten signatures. An untrusted seal (or signature) prevents the document from fulfilling its function.

This is something that a Swiss manufacturer learned recently when delivering an electronic tender to an Austrian one. By using a Swiss electronic signature that is not recognized in the European Union, the document was not formally signed and therefore invalidated a €2.8 billion bid. A news story that has been in several European news media.

Why has this happened, and is it just a formality or is there more to it?

The European Union is aware that in a digitized world we need to be able to conclude contracts online, without handwritten documents. The result has been the eIDAS regulation. Most importantly, the Member States have reviewed this framework and agreed that the underlying security and integrity checks of trust service providers are of such a high standard that an eIDAS-qualified electronic signature is equivalent to handwritten signatures. This came into legal force for the entire European Union, thus enabling its citizens to identify themselves and sign online.
The signature framework used in Switzerland is established and recognized locally in the country (non a EU Member State). But it has not gone through the same review process among EU member states and is therefore not recognized, i.e., trusted, in the same way in the European Union Member States.

Of course, not all documents or actions require a high level of trust. Buying groceries in the supermarket can be done anonymously and through a basic agreement, goods for money. But when it comes to agreements that are rather formal, or that carry within a the possibility of being taken to court, the legal profession has long agreed that reliable identification of the parties to the contract and the integrity of the content are needed. This Swiss-Austrian contracting process narrated in the news, is rather unique in its situation, but proofs and serves as an example and reminder on the implications and effects of not being careful at the moment of formalizing a transaction in a regulatory compliant way.

If you are operating in the European market subject to the jurisdiction of EU Member States jurisdiction and courts, understand the level and kind of trust you need to place in your documents and agreements. Digital certificates qualified according to eIDAS can establish the necessary trust relationship between you and your business partner.