With Indonesia’s recent temporary banning of domestic and international air travel in efforts to hinder spreading of the Covid-19 virus, this will undoubtedly prove to be a major disruption for those required to physically attend crucial meetings and sign legal documentation.
To accommodate this discomfort, clients and businesses will undoubtedly turn to the validity of electronic signatures to ensure continuance of local and global transactions amongst annual legal compliance requirements of their business in Indonesia.
General Framework
Electronic signatures are regulated under Law No. 11 of 2008 on Electronic Information and Transactions as amended by Law No. 19 of 2016 (“EIT Law”), Government Regulation No. 71 of 2019 on Electronic Systems and Transactions (“GR 71/2019”) and Ministry of Communication and Informatics Regulation No. 11 of 2018 on the Organization of Electronic Certification (“GR 11/2018”).
An “electronic signature” can be defined as a signature consisting of electronic information attached, associated or related to other electronic information used as a tool for authentication and validation purposes. Its functionality also provides verification for the identity of the Signer and the electronic information’s integrity and authenticity. There are two types of electronic signature recognized in Indonesia, i.e., certified electronic signature and uncertified electronic signature. A certified electronic signature is created by procuring the services of an electronic certification provider (“ECP”) and shall be evidenced by an electronic certificate.
Certified electronic signatures in terms of authenticity provides for stronger evidentiary value if the electronic signature were used as evidence in proceedings. Weighting of proving the legitimacy of the electronic signature in the eyes of the law will be clearer, as long as the electronic signature has received confirmation from an acknowledged Indonesian ECP. An uncertified electronic signature is created without engaging the services of an ECP wherein the legality and accuracy of such may be questioned.
In the event that the utilization of an electronic signature represents a Business Entity, its electronic signature is referred to as an electronic seal.
Legality
GR 71/2019 stipulates that the use of electronic signatures in an electronic transaction can be generated through various signing procedures, which may differ depending on the ECP. With regards to the legality, the electronic signatures shall be valid and possesses legal binding force if:
i. The electronic signature creation data is specifically related only to the respective Signer;
ii. The electronic signature creation data during and at the time of signing process is within the sole control and power of the respective Signer;
iii. Any changes to the electronic signatures occurring after the time signing can be known;
iv. Any changes to the electronic information associated with the electronic signature after signing time can be known;
v. There is clarity on the method to verify and identify the Signer; and
vi. There is clarity on the method to verify and indicate that the Signer has granted approval to the relevant electronic information.
Certification Authority
In creating certified electronic signatures, contracting parties have to engage with the service of an Indonesian or foreign Electronic Certification Providers or Certification Authority for their electronic signature to be certified as stipulated in EIT Law and GR 71/2019.
An ECP is a legal entity that acts as a reliable party, issues, and audits electronic certificates. The ECP shall consist of Indonesian and foreign ECPs. The organization of Indonesian Electronic Certification Providers must obtain acknowledgement from the Ministry of Communications and Informatics (“MCI”) and an assessment from a certification body of the accredited Electronic Certification Provider. Whilst foreign ECPs providing their services within Indonesia shall be registered in Indonesia and its registration provisions be regulated under Indonesian Law.
Examples of Indonesian ECPs registered with the MCI include:
• PrivyId;
• Digisign;
• Vida;
• Peruri Sign;
• BSSN; and
• BPPT.
Limitations of Legality?
Certified electronic signatures may be used for contracts such as procurement and commercial agreements including invoices, trade, and payment terms amongst others. However, there are some limitations in regards to the extent of legality such as the following:
i. Corporate Documentation including but not limited to Articles of Association and shareholders resolutions;
ii. Documents that are required to be signed in a notarial deed;
iii. Intellectual Property transfer documentation;
iv. Documentation specifically required by the respective laws and regulations to be signed by traditional inked (wet) signatures.
Remarks
In the current overall situation and recognition of electronic signatures in the EIT Law and GR 71/2019, it is fair to view that as long as procedures are met and fulfilled, most electronic signatures are legally recognized. As for it’s legality, this may differ depending on the specific documentation and prevailing laws and regulations.
If there are any queries with regards to how this may affect your business, please contact us for further legal consultation.
This information does not, and is not intended to, constitute as legal advice; instead, all information, content, and materials are for general information only.
