Advanced Electronic Signatures: Applicability and Prospects in the Kenyan Financial Market

The digital age is here with us and the Kenyan financial market is not left behind. The technological revolution has altered the traditional mode of doing things from communication to the exchange of documents between transacting parties. In that response, the President assented to the Business Laws (Amendment) Act, 2020 (the Act). The Act has, by way of amendments to various statutes, introduced and enhanced the applicability of digital and electronic signatures in legal and financial transactions more relevantly in the wake of the Covid 19 Pandemic.

Electronic and Digital Signatures

It is important to note that while electronic and digital signatures are sometimes used to mean the same thing, the two are significantly different. The Kenya Information and Communications Act (KICA) defines an electronic signature as data in electronic form affixed to or logically associated with other electronic data which may be used to identify a signatory in relation to the data message and to indicate the signatory’s approval of the information contained in the data message.

On the other hand, an advanced electronic signature (digital signature) is defined by the same Act as a type of electronic signature that meets the following requirements:

1. must be uniquely linked to the signatory
2. is capable of identifying the signatory
3. is created using means that the signatory can maintain under his sole control and 
4. is linked to the data to which it relates in such a manner that any subsequent change to the data is detectable.

This, therefore, means that an electronic signature can range from a simple electronic signature represented in a form of a scanned signature of an individual as an indication of a name of a sender to a digital signature that is based on cryptographic authentication of the sender by technological means in a form of a coded message or an encrypted data. This means that while digital signatures are a form of electronic signature, not all electronic signatures are digital signatures.

The Kenyan legal system recognizes the use and validity of advanced electronic signatures. Section 83 of the Kenya Information Communication Act provides that where any law provides that information or any other matter shall be authenticated by affixing a signature or that any document shall be signed or bear the signature of any person, then such requirement shall be deemed to have been satisfied if such information is authenticated by means of an advanced electronic signature affixed.

However, it is worth noting that the Kenya Information Communication Act, restricts the applicability of advanced electronic signatures when it comes to certain documents. Section 83B (1) of the said Act provides that the following documents shall not be executed by way of advanced electronic signatures:

1. creation or execution of a will
2. documents of title; and
3. negotiable instruments

The section further provides that the Minister in charge may from time to time by order in the gazette modify the provisions of section 83B (1) by adding or removing any class of transactions or matters from the ambit of advanced digital signatures.

The Act further outlines the following conditions that must be satisfied in understanding and use of advanced electronic signatures. The conditions are outlined as follows;

1. the signature must be generated through a signature creation device;
2. the signature creation data must be linked to the signatory and no other person;
3. that at the time of signing, the signature creation data were under the control of the signatory.
4. any alteration to the electronic signature made after the time of signing should be detectable; and
5. that 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, must also be detectable.

Furthermore, to reinforce the validity and applicability of an electronic signature, parties to a contract may often, by way of a clause in the contract, include its applicability.

In Kenya, the Communications Authority of Kenya is charged with the mandate of licensing certification service providers who then issue the advanced electronic signatures or certificates pursuant to the Kenya Information and Communications (Electronic Certification and Domain Name Administration) Regulations 2020. That is to say, any valid and legal advanced electronic signature is only issued by a Certification Service Provider (CSP) who is duly licensed by the Communications Authority of Kenya (CA).

The Regulations contain rigorous measures to ensure the legitimacy, security and reliability of the Certification Service Provider and its services to protect the privacy and secrecy of the electronic signatures and that of the parties to the contract. Any party to a contract where electronic signatures have been permitted shall apply for the same from any licensed service provider.

Proof of the Validity of an Electronic Signature

The Evidence Act, Cap 80 Laws of Kenya provides that except in the cases of a secure signature, if the electronic signature of any subscriber is alleged to have been affixed, then the fact that such an electronic signature is the electronic signature of the subscriber must be sufficiently proved. Further, to ascertain whether an electronic signature is that of a person by whom it purports to have been affixed, the court may direct that the person or a certification provider to produce the electronic signature or any other person to apply the procedure listed on the electronic signature certificate and verify the electronic signature purported to have been affixed by that person.

Foreign Electronic Certification

Electronic signatures advance cross-border transactions without parties sending in the physical documents. As such electronic signatures issued by foreign electronic certification providers such as DocuSign may be recognized in Kenya if; first, the certification provider is duly licensed by the relevant regulator in the country the party is based, the service provider complies with internationally accepted standards and the requirements of Kenyan law.

Foreign electronic certification providers are therefore required to appoint at least one local agent to provide certification services in Kenya. It is upon that basis that the Communication Authority vide a public notice on 1 September 2020 required all foreign electronic certification providers to apply for recognition in Kenya within 30 days from the date of the said notice.

 In conclusion, it is high time the Kenyan financial market players embraced the use of electronic signatures in their day-to-day contractual dealings. This ensures the efficacy of legal and commercial transactions. Additionally, to avoid risks associated with electronic signatures such as forgery, it is important for parties to create measures to properly secure their electronic signatures to avoid misuse.