Abu Dhabi Global Market proposes electronic transactions regulations

Out-Law News | 22 Sep 2020 | 9:58 am | 1 min. read

The Abu Dhabi Global Market (ADGM) has proposed introducing regulations for electronic signatures, records and contracts. 

The Abu Dhabi Global Market (ADGM) has proposed introducing regulations for electronic signatures, records and contracts. 

The proposed legislation (9 page / 419KB PDF) is designed to bring the ADGM’s regulatory framework into line with international best practice in relation to e-commerce and electronic dealing. The draft regulations are based on the model laws published by the UN Commission on International Trade Law and follow a minimalist approach, which leaves parties free to choose the signature method they deem appropriate.

Other jurisdictions to have adopted a similar approach include the Dubai International Financial Centre, Australia, New Zealand and the US. Under the minimalist approach, electronic signatures are treated as the functional equivalent of handwritten signatures as long as the technology used meets certain requirements.

Financial services expert Marie Chowdhry of Pinsent Masons, the law firm behind Out-Law, said:  

"We are seeing more and more firms in the region seeking to use electronic authentication techniques as substitutes for handwritten signatures. This increase in the adoption of electronic signatures suggests that there is a need for a specific legal framework to reduce uncertainty as to the legal effect that may result from the use of electronic means."

The regulations stipulate that where any ADGM provisions require information to be in writing, or for information to be delivered or records to be maintained, the use, delivery or retention of an electronic document will satisfy those requirements.

The ADGM said it was aiming to facilitate rather than over-regulate electronic transactions, through adapting existing legal requirements to the requirements of e-commerce while allowing for technological advances. It said the regulations would provide the basic legal validity of electronic transactions as well as increased legal certainty.

"By following the UN's technology-neutral approach the proposed rules should recognise both digital signatures, for example those based on cryptography, as well as electronic signatories using other technologies" Chowdhry said.

Wills, powers of attorney, real estate transactions and documents required to be notarised are all excluded from the proposed regulations.

The consultation on the draft regulations runs until 14 October 2020.