In the current digital world, many other industries have accepted and embraced the technological wave. From the use of electronic record management systems to adopting cloud based storage, preferring electronic data submissions, email confirmation, digital receipts, digital certificates and embracing e-signatures, technology has taken over wet ink in different ways.
Despite the technological advancements, cross-border deals still rely on long paper trails and wet ink signatures.
The legal landscape
Cross-border deals, by definition, entail the involvement and collaboration of parties from different states and trade regions. The legal and regulatory frameworks on signature validity and document execution in these states and regions vary there by creating a huddle in the acceptance of digital versions in place of wet ink versions.
While jurisdictional laws such as the UK’s Electronic Communications Act recognise electronic signatures, many countries in different parts of the world including the UK, have laws governing cross-border deals that require wet ink signatures and physical submission of some documents.
Additionally, there is an interplay between cross-border deals jurisdictional legal and regulatory frameworks leading to wet ink signature requirements in sectors such as the real estate, immigration and banking sectors. For the real estate sector, government registries may original physical documents for conveyancing related transactions. Equally, in banking and finance, banks may require original documents with hand signatures to process credit facilities or release deposited finds.
Therefore, unsurprisingly, players in the cross-border transactions continue to submit hand-signed bills of lading, customs offices require wet ink stamps for original documents, traders take physical documents to the embassy or consulate for authentication and approval and banks mail physical documents to other banks across the world.
Authentication – the key area where wet ink matters in cross-border deals
Even in instances where contractual parties to cross-border transactions are content with finalising agreements electronically, authentication requirements present a huddle. Several contracts and documents such as certificates of incorporation which will be used in transcactions ought to be formally endorsed to determine their validity. Authentication of foreign documents remains the key area in cross-border transactions where wet ink will still be applicable for years to come.
In the context of the UK, the authentication of foreign document involves obtaining an apostille from an authorised individual or via apostille service UK based firms offer. The apostille confirms that a signature on a document is genuine for purposes of cross-border transactions. This mode of authentication is a physical process requiring the physical submission of original documents bearing hand signed wet ink signatures, seals or stamps for verification of their validity.
Why wet ink persists in cross-border deals
New opportunities bring new risks. Whereas technology has numerous benefits, it poses commercial risks such as forgery and fraud. Counterparties, foreign authorities and financial stakeholders in many jurisdictions therefore prefer original documents whose validity can be examined and verified as compared to digital versions. This is why in high stake commercial transactions, banks underwriting large facilities insist on the delivery of original copies of executed deeds and commercial documents to secure payment and facilitate enforcement rights if disputes arise.
A lot goes into finalising agreements and cross-border deal documents when there are legal requirements for original versions to be submitted to foreign authorities for authentication. Such documents must be printed out and hand signed by parties in one jurisdiction then sent to counterparties for execution before the same are submitted. The whole process can be time consuming and costly.
Until laws and regulatory frameworks of different regions harmonised to recognize e-signatures and jurisdictions come up with more effective was of verifying the authenticity of document, wet ink signatures are here to stay in cross-border deals.
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