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A new Federal Electronic Transactions and Trust Services Law in UAE

Federal Decree by Law No. 46 of 2021 on Electronic Transactions and Trust Services (“New Law”) has been issued by the UAE to regulate electronic transactions. It incorporates European eIDAS Regulation-like legal elements into UAE legislation to increase trust in electronic transactions.

With effect from January 2, 2022, Federal Law No. 1 of 2006, which dealt with electronic transactions and electronic commerce (the “Old Law”), would be repealed. If you fall under the law, you have a 12-month grace period in which you may check your compliance.

Regulatory Authority 

“TDRA” is the authority that can regulate the law. The Federal Authority for Identity and Citizenship will control trust services provided to the government sector and trust services that rely on information or services from the Federal Authority for Identity and Citizenship. Still, TDRA can’t regulate the law itself because it doesn’t have enough power (e.g. Emirates ID).

The law gives a new way to ensure that Electronic ID Systems and Trust Services are regulated. eID stands for electronic identification. Businesses and customers may both use electronic identification to verify their identities. After consulting with relevant authorities, the TDRA is mandated to create rules, procedures, and standards for electronic identification systems (eID), verification processes (eIDV), and digital IDs.

What are the Trust Services?

Consumers and companies alike may have more peace of mind knowing that electronic transactions are safe and secure when they use these tools.

The following are the four primary categories of trust services regulated by the Law.

  • People may indicate their consent to a document or data set by signing it electronically;
  • When a document has been authenticated, it is given a digital seal;
  • Proof of the existence of a document at a particular moment in the time provided by an electronic time stamp;
  • Provides evidence of data transmission and receipt through electronic registered delivery services.

Significance of New Law

  1. The new legislation improves licensing procedures by incorporating the latest technologies facilitating digital transactions. 
  2. It facilitates various civil and commercial activities, including marriage, personal status, and notary public, as well as real estate transactions, including renting, buying, selling, and contract amendment.
  3. It will improve the efficiency of legal proceedings and the resolution of civil and commercial disputes. 
  4. It will simplify accepting, creating, or keeping electronic records. The digital signature enables the issue of permits, licenses, or approvals in the form of electronic documents and the electronic receipt of fees or other payments.
  5. It will allow the electronic submission of bids and receipt of tenders for government procurement.

Other Essential Provisions of New Law

  1. There aren’t any exceptions:
    Certain types of transactions were explicitly forbidden by the Old New (e.g. property transactions, or negotiable instruments). There are no exemptions to the new law. A person may use any electronic signature or electronic stamp unless the statute specifically states otherwise.
  2. Requirement of License under the new law
    The New Law mandates that the TDRA issue a license to any business providing “trust services,” regardless of size. The scope of this license need is not yet apparent since it might include any electronic signature technique.

    Under the New Law, Certified Trust Services are subject to a more stringent evaluation and have higher legal consequences. According to the New Law and accompanying Executive Regulations, no one may perform certified trust services without obtaining a TDRA license.

  3. Electronic signature types
    As a result of the New Law, electronic signatures are now on par with handwritten signatures in terms of legal significance. In the past, there were no differences, but now there are:

    • the Basic Electronic Signature, 
    • Approved Electronic Signature, and 
    • Qualified Electronic Signature under the New Law.

     The degree of security associated with each of these signatures will be different.

  4. Digital Signature secured by latest Technology
    The Electronic Transactions and Trust Services Act increases the legal value of digital signatures by requiring them to be backed up by secure current Technology. It will have the same legal power as a handwritten signature in terms of acceptance. The digital signature will eliminate the requirement for human presence at institutions, banks, and courts, whether inside or outside the country. People inside and outside the UAE can use the digital signature to execute different government transactions such as contracts, agreements, and other transactions, provided that these nations establish a digital identity and trust services system that meets UAE criteria.
  5. The UAE Trust List
    The TDRA will develop and publish a UAE Trust List, which will include a list of licensees under the Law and their trust services. The requirements and conditions for admission on the UAE Trust List will be specified in the Executive Regulations.
  6. Trust Mark
    The purpose of the TDRA is to provide a trust mark that certified trust service providers might use to demonstrate that they offer accredited trust services that fulfil the criteria of the Law. This article aims to provide a general overview of the subject. The information included herein may not be appropriate in all circumstances and should not be relied upon without seeking specialized legal counsel based on specific cases.

For more information, please don’t hesitate to contact HHS Lawyers today.

Hassan Humaid Al Suwaidi., LL.B. is a Senior Partner in HHS Lawyers. He has 20 years of experience dealing with high-value and complex cases. Frequently featured in local and international legal directories and commended for his ability to attain favorable outcomes for clients, Hassan has been involved in some of the largest legal settlements. A major part of his work is providing expert legal advice on UAE legislation and acting for individuals and businesses during disputes and litigation.