ADVOCATEN • NOTARISSEN • BELASTINGADVISEURS
P.O. Box 7113 1007 JC Amsterdam Beethovenstraat 400 Amsterdam, 27 November 2018 1082 PR Amsterdam T +31 20 71 71 000 F +31 20 71 71 111
F.W.J. van der Eerden, advocaat
T +31 20 71 71 697 International Swaps and Derivatives Association, Inc. M +31 6 51 86 97 12 10 East 53rd Street, 9th Floor frans.vandereerden@nautadutilh.com NEW YORK, NY 10022
UNITED STATES OF AMERICA S. Uiterwijk, advocaat T +31 20 71 71 595 M +31 6 20 21 05 70 [email protected]
Ladies and Gentlemen,
FvdE/SU/MdV – 50109937 ISDA / Opinion E-Contracts
1 INTRODUCTION
1.1 You have asked us to provide you with a legal opinion with respect to the enforceability under the laws of the Netherlands of electronically executed and electronically confirmed contracts, in the context of transactions under the ISDA Master Agreement.
1.2 For the purpose of this opinion, you have provided us with thirteen questions set forth in your instruction letter of 29 August 2018 (the "Questions"). These Questions are set out in italics in paragraph 3, in each case followed by our answers thereto.
2 SCOPE OF THE OPINION
2.1 Capitalized words not defined in this opinion letter have the meanings assigned thereto in the ISDA Master Agreement, except as provided otherwise herein. The section headings used in this opinion letter are for convenience of reference only and are not to affect its construction or to be taken into consideration in its interpretation.
2.2 This opinion letter is strictly limited to the matters stated in it and may Amsterdam
Brussels This communication is confidential and may be subject to professional privilege. All legal relationships are London subject to NautaDutilh N.V.'s general terms and conditions (see https://www.nautadutilh.com/terms), which apply mutatis mutandis to our relationship with third parties relying on statements of NautaDutilh N.V., include Luxemburg a limitation of liability clause, have been filed with the Rotterdam District Court and will be provided free of charge upon request. NautaDutilh N.V.; corporate seat Rotterdam; trade register no. 24338323. New York
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not be read as extending by implication to any matters not specifically referred to in it. Nothing in this opinion letter should be taken as expressing an opinion in respect of the validity or enforceability of the ISDA Master Agreement, any transaction thereunder or any other agreement or transaction. Its contents may not be quoted, otherwise included, summarised or referred to in any publication or document or disclosed to any other party, in whole or in part, for any purpose, without our prior written consent, except that a copy of this opinion letter may be provided by ISDA or its members to any competent regulatory or supervisory authority to which such member is subject, as well as to professional advisors of ISDA and its members. However, this memorandum of law is not addressed to such regulatory or supervisory authorities and professional advisors and may not be relied upon by them.
2.3 This opinion letter sets out our opinion on certain matters of the laws with general applicability of the Netherlands, and, insofar as they are directly applicable in the Netherlands, of the European Union, as at today's date and as presently interpreted under published authoritative case law of the Netherlands courts, the General Court and the Court of Justice of the European Union ("Netherlands law"). We have given regard only to those laws that we, having exercised customary professional diligence, would reasonably be expected to recognize as being applicable to an entity, transaction or agreement to which this opinion letter relates. No undertaking is assumed on our part to revise, update or amend this opinion letter in connection with or to notify or inform you of any developments and/or changes of Netherlands law subsequent to today's date. At the date hereof, we are not aware of any developments that have taken place or that are pending in the Netherlands that might materially and adversely affect the conclusions reached in this memorandum of law.
2.4 We do not express any opinion on Netherlands or European competition law, tax (other than Question 13) or privacy law, nor on any regulatory requirements arising out of or in connection with the ISDA Master Agreement, any Transaction or any other agreement or transaction. Furthermore, we do not express any opinion as to whether any party needs to comply with or as to the consequences of non-compliance with any applicable provisions of Directive 2006/123/EC on services in the internal market, Directive (EU) 2015/1535 on information society services (each as implemented in Netherlands law), or similar laws and regulations regulating the provision of services by electronic means or otherwise at a distance.
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2.5 The opinions expressed in this memorandum of law are to be construed and interpreted in accordance with Netherlands law. This memorandum of law is issued to ISDA solely for its benefit and the benefit of its members on the following conditions: (i) the competent court at Amsterdam, the Netherlands have exclusive jurisdiction to settle any issues of interpretation or liability arising out of or in connection with this memorandum, (ii) any legal relationship arising out of or in connection with this memorandum (whether contractual or non-contractual), including the above submission to jurisdiction, is governed by Netherlands Law, (iii) any liability arising out of or in connection with this memorandum shall be limited to the amount which is paid out under NautaDutilh N.V.'s insurance policy in the matter concerned and (iv) no person other that NautaDutilh N.V. may be held liable in connection with this memorandum.
2.6 In this opinion letter, legal concepts are expressed in English terms. The Netherlands legal concepts concerned may not be identical in meaning to the concepts described by the English terms as they exist under the law of other jurisdictions. In the event of a conflict or inconsistency, the relevant expression shall be deemed to refer only to the Netherlands legal concepts described by the English terms.
2.7 This opinion is not written with a view to any particular party, any agreement or transaction and does not express any advice with respect to any such party, agreement or transaction. Any party may potentially be subject to requirements under its constitutional documents or to statutory or regulatory requirements that may affect the legality or validity of, or may result from, its entering into or performance of the agreement or transactions thereunder. We do not consider such issues in this opinion letter.
2.8 As Netherlands lawyers we are not qualified or able to assess the true meaning and effect of the terms of the ISDA Master Agreement under the applicable law and the obligations of the parties to the ISDA Master Agreement and we have made no investigation of such meaning and effect. Our review of the ISDA Master Agreement has therefore been limited to the terms of such document as they appear to us on their face.
2.9 For purposes of the below, we have assumed that the ISDA Master Agreement, any transaction thereunder and any other agreement or transaction, are duly signed by both parties, valid and enforceable under
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its applicable law(s) and are not entered into with individuals (natuurlijke personen).
3 ANSWERS TO QUESTIONS
3.1 Below are our answers to the Questions. Please note that we have answered the Questions from a Netherlands law perspective only, without giving regards to any conflict of laws. In other words, albeit Netherlands law may for instance refer to the law validly chosen by the parties to govern the ISDA Master Agreement for establishing the existence and validity thereof1, we will answer the Questions as if Netherlands law would apply to all matters relevant to it.
Question 1 - Are there any laws or regulations in your jurisdiction that may restrict or prevent parties from electronically forming or electronically executing contracts?
3.2 In general, as set out in more detail below, contracts may be electronically formed or executed under Netherlands law. Provisions of Netherlands law that may restrict parties from doing so are included in Section 6:227a of the Netherlands Civil Code (Burgerlijk Wetboek, "NCC"). These are discussed below.
3.3 Certain formalities may also apply to ensure the validity and admissibility into evidence of an electronic deed (which may evidence an electronically executed agreement) and an electronic signature. These are set forth in Question 2.
General
3.4 Firstly, by way of introduction, we note that an agreement comes to existence under Netherlands law by an offer (aanbod) and its acceptance (aanvaarding).2 Both an offer and an acceptance are legal acts (rechtshandelingen). A legal act requires the intention of the acting person to establish a specific legal effect.3 Such an intention has to be expressed through a statement of the acting person. Unless a statutory provision or a legal act provides otherwise, statements may be expressed in any form.4 In other words, statements are in principle not subject to a
1 Cf. Article 10 of Regulation (EC) No 593/2008 (Rome 1). 2 Section 6:217(1) NCC. 3 Section 3:33 NCC. 4 Section 3:37 NCC.
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certain formality (such as a requirement to record in writing) and can for this reason in principle be expressed by electronic means. Parties may therefore enter into or execute agreements electronically, unless determined otherwise.
Procedural requirements
3.5 Further to the above, a statutory provision may provide that an agreement can only be formed validly in writing (in schriftelijke vorm). For example, the Collateral Directive5 applies to financial collateral arrangements only if such arrangements can be evidenced in writing (or in a legally equivalent matter).6
3.6 Netherlands law does allow for agreements which are specified as being required to be made in writing, to be entered into by electronic means (langs elektronische weg), subject to certain conditions.7 These conditions, laid down in Section 6:227a (1) NCC, require that:
a. the agreement can be accessed by (raadpleegbaar door) the parties; b. the authenticity of the agreement is sufficiently guaranteed (in voldoende mate gewaarborgd); c. the moment on which the agreement was entered into, can be determined with sufficient certainty (voldoende zekerheid); and d. the identity of the parties can be assessed with sufficient certainty.
3.7 The first condition (a.) implies that an electronic agreement needs to be accessible for the parties in such a manner that the parties are able to disclose and preserve the content thereof, prior to, at the moment of and after entering into the agreement.8 A password-protected (pdf or Word) copy of the electronic agreement may for instance be accessible to / distributed amongst the parties to meet this condition. The second
5 Directive 2002/47/EC. 6 Article 1(5) Collateral Directive. 7 Section 6:227a(1) NCC. Other examples include: (i) depositary agreements between an investment institution (beleggingsinstelling or icbe) and a depositary (bewaarder) pursuant to Section 4:62m(2) of the Netherlands Financial Supervision Act (Wet op het financieel toezicht); (ii) tenancy agreements (pachtovereenkomsten) pursuant to Section 7:317 NCC; (iii) maritime employment contracts (zee-arbeidsovereenkomsten) pursuant to Section 7:697 NCC; (iv) certain building contracts with individuals not acting in the pursuit of a business or profession pursuant to Section 7:765 NCC. Also, please note that agreements for investment services pursuant to Section 4:89 lid 2 NFSA have to be laid down in writing or on a durable medium (duurzame drager). 8 Parliamentary documents II 2001/02, 28 197, no. 3, p. 53 and parliamentary documents I 2003/04, 28 197, C. p. 6.
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condition (b.) entails the obligation for parties to document the electronic agreement in such a way that the accuracy of its content can be adequately relied upon, which depends on the circumstances at hand, including e.g. the state of the technology, the nature of the agreement and the nature of the parties.9 This requirement may for instance be fulfilled through the use of encryption, ensuring that communication with respect to an agreement that is being negotiated and/or the contents of the executed agreement cannot be altered against by a third party.10 Whether the third condition (c.) is fulfilled also depends on the same circumstances at hand, with parties expected to take appropriate measures (deugdelijke maatregelen) depending on the interests that are associated with the agreement.11 Relevant in this respect may be the electronic time stamp (see paragraph 3.64 et seq.). Parties can satisfy the fourth condition (d.) by, for example, executing the agreement by way of an electronic signature (elektronische handtekening).12 The electronic signature will be discussed in Question 2.
As a result of the open standards that make up conditions (a.) - (d.), it cannot be said in general which measures are required to be taken by parties to ensure their agreement meets these conditions. This will have to be assessed on a case-by-case basis.
3.8 It should be noted that Section 6:227a NCC only indicates the conditions under which agreements that are specified as only being validly formed in writing can - in any case - be validly entered into by electronic means.13 It is not inconceivable that a Netherlands court concludes that in a specific situation certain agreements have also been validly entered into by electronic means, even where not all four conditions of Section 6:227a NCC have been satisfied.
3.9 Although the conditions of Section 6:227a NCC are of particular relevance for agreements that are specified as only being validly formed in writing, fulfilling these conditions are likely to (also) support the evidentiary value of other agreements that have been entered into by electronic means. Therefore, parties may wish to fulfil these conditions also with respect to agreements that are not subject to any statutory requirement to record it in writing, such as an ISDA Master Agreement.
9 Parliamentary documents II 2001/02, 28 197, no. 3, p. 53. 10 Parliamentary documents I 2003/04, 28 197, C. p. 7. 11 Parliamentary documents II 2001/02, 28197, no 3, p. 54. 12 Parliamentary documents II 2001/02, 28197, no. 3, p. 54. 13 Parliamentary documents 2001/02, 28197, no. 3, p. 53.
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3.10 It should also be noted that Section 6:227a NCC only applies to the entering into of an agreement by electronic means. Other legal acts under Netherlands law, e.g. a notice declaring default (ingebrekestelling)14 or a notice rescinding an agreement (ontbindingsverklaring)15, are thereby strictly speaking not in scope of Section 6:227a NCC.16 Also in the absence of any general provision allowing the performance of legal acts by electronic means, we believe, supported by legal literature, that the regime of Section 6:227a NCC should by way of analogy also be available for other legal acts than agreements, including where such legal acts are required to be performed in writing.17
Exclusions
3.11 Certain agreements are by law excluded from the possibility of being entered into by electronic means. These include agreements for which the law requires the intervention of a court, a public authority or a person whose profession it is to exercise a public responsibility (Section 2:227a(2) NCC).18 According to the legislature, the nature of these agreements make it desirable to retain the formalities that apply in the 'physical world'.19
3.12 A person whose profession it is to exercise a public responsibility includes a civil-law notary (notaris). All agreements which require a notarial deed can thus not be formed or executed electronically. Notarial deeds are for instance required for a transfer of, or creation of a pledge on, shares in a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid or 'BV') as well as for a transfer of, or creation of a right of mortgage on, immoveable assets (onroerende goederen) such as real estate. Without prejudice to the fact that certain legal acts can only be performed via notarial deed, we would expect that there will generally not be a requirement for a notarial deed in the context of an ISDA Master Agreement.
14 Section 6:82 NCC. For such a notice declaring default, the legislature has stated that the reference to 'in writing' may be interpreted as to include a notice provide by electronic means (parliamentary documents I 2009/10, 31 358, E, p. 4). The legislature does however not provide for any conditions that may apply thereto. 15 Section 6:267(1) NCC. For such a notice to rescind, Section 6:267(1) NCC provides that it can also be issued by electronic means if the agreement being rescinded has also been entered into by electronic means, subject to Section 6:227a(1) NCC. 16 Parliamentary documents I 2003/04, 28 197, C, p. 6. 17 See, for instance, Asser/Hartkamp & Sieburgh 6-111 2014/275; H.J. Snijders, WPNR 2010/6864; Asser/Kortmann 3-III 2017/26 & 115. 18 Section 6:227a(2) NCC. 19 Parliamentary documents II 2001/02, 28197, no. 3, p. 55.
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3.13 A more practical hurdle in connection with electronic contracts is the registration at the competent tax authorities (Belastingdienst). This is a formality that may apply to e.g. an undisclosed assignment (stille cessie) of, or creating an undisclosed right of pledge (stil pandrecht) over, receivables (Sections 3:94(3) and 3:239(1) NCC, respectively), where the debtor is not notified of the pledge (at least not initially). Such receivables may include receivables pertaining to cash administered in an account or receivables arising under directly-held debt securities, to the extent these receivables would be assignment or pledged on an undisclosed basis. At this time, the tax authorities do not provide for the possibility of electronic registration, as a result of which a written document (which may be a print-out of an electronic record) will have to be submitted. Without prejudice to the fact that certain legal acts will require a registration in order to be valid, we would expect that there will generally not be a requirement for such registration in the context of an ISDA Master Agreement.
Final remarks
3.14 The direct relevance of Section 6:227a in the context of an ISDA Master Agreement may be limited, as there is unlikely to be an ISDA Master Agreement or related document that that can pursuant to Netherlands law only be validly entered into in writing.
3.15 As will be discussed further below (paragraph 3.20 et seq.), where an agreement in the context of the ISDA Master Agreement would require a deed, another concept of Netherlands law – i.e. the electronic deed – would be available. If the conditions for an electronic deed are fulfilled, such electronic deed – which may include the terms of any agreement – will in principle have conclusive evidentiary value (dwingende bewijskracht) in court. This means that a court will deem the contents of the deed to be true, subject to contra-evidence (tegenbewijs).
3.16 Having said this, as indicated earlier, the conditions of Section 6:227a NCC may nonetheless be relevant to (further) strengthen the evidentiary value of any agreement entered into by electronic means, also if laid down in an electronic deed.
Question 2 - Does your jurisdiction have specific legislation giving legal recognition to transactions entered into “electronically” and/ or specific legislation dealing with the admissibility into evidence of electronic
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records? If there are no specific statutes, is it possible to justify the enforceability of electronic transactions and the admission into evidence of electronic records through legal reasoning, and how robust would such a position be?
3.17 Netherlands law includes specific provisions giving legal recognition to agreements and deeds entered into electronically (Section 6:227a NCC and Section 156a of the Netherlands Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering "NCCP"), respectively). Furthermore, Netherlands law includes specific provisions pertaining to the admissibility into evidence of electronic records (Sections 151, 152 156a and 157 NCCP). Finally, Section 3:15a NCC in combination with Regulation (EU) No 910/2014 (the "eIDAS Regulation")20 specifically pertains to the legal effect and admissibility into evidence of electronic signatures.
3.18 Netherlands law does not include a general provision providing the conditions under which an electronic record may have similar legal effect as a record in writing.
Legal recognition
Entering into an agreement by electronic means 3.19 As set forth in our answer to Question 1, parties can in principle validly enter into an agreement electronically, unless a specific form is prescribed by statutory provision. However, also where a statutory provision would provide that an agreement can only be formed in writing, such agreement may also be entered into by electronic means in accordance with certain conditions (Section 2:227a(1) NCC). This is subject to certain exclusions (Section 2:227a(2) NCC), but, with reference to paragraphs 3.11 - 3.13 above, we would expect that there will generally not be an exclusion relevant or required in the context of an ISDA Master Agreement.
Electronic deeds 3.20 For evidentiary purposes, as will be discussed further below (see paragraph 3.35 et seq.), parties may decide to use a deed (akte), for instance to document an agreement between them.21 Deeds are signed documents in writing, intended to serve as evidence.22 There are two
20 Regulation (EU) No 910/2014. 21 Parliamentary documents II 2007/08, 31 358, no.3, p. 3. 22 Section 156 in conjunction with Section 157 NCCP.
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types of deeds. Notarial (certified) deeds (authentieke akten) are deeds that are drawn up by an authorized public officer (such as a civil-law notary) in the required form.23 Private deeds (onderhandse akten) are all other deeds.24
3.21 In certain cases, Netherlands law also prescribes for a certain legal act to be laid down in a notarial or private deed in order to be valid. This is for instance the case for an assignment (cessie) of, or creating a right of pledge (pandrecht) over, receivables (Sections 3:94, 3:98 and 3:236(2)/239 NCC, respectively).
3.22 Although private deeds are in principle (signed) documents in writing, according to Section 156a NCCP, private deeds also can be drawn up in a different manner than in writing, such as electronically. In order for a private deed that is drawn up electronically (hereafter, an "electronic deed") to have the same legal effect as a 'regular' private deed, it needs to satisfy the following requirements:
a. it needs to be possible for the person to whom the deed is evidence, to store the content of the electronic deed; b. the electronic deed needs to be accessible for future use by this person during a period that is aligned with the purpose for which the deed is intended; c. the electronic deed needs to enable unaltered reproduction.
Similar to a private deed, an electronic deed will need to be signed, in this case by an electronic signature. The concept of an electronic signature will be discussed further below (see paragraph 3.25 et seq.).
Finally, the above conditions are largely similar to the definition of a durable medium (duurzame drager), as included in certain EU legislation25 and in the Netherlands Financial Supervision Act (Wet op het financieel toezicht).
3.23 In the event Netherlands law stipulates that a private deed must be issued (moet worden verschaft), (i) explicit consent or (ii) an electronic signature from the recipient thereof would be required in order for the deed to be validly drawn up in a different manner, such as
23 Section 156(2) NCCP. 24 Section 156(3) NCCP. 25 See, for example, Article 4(1)(62) MiFID II.
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electronically.26 This is for example the case for an insurance policy.27 There is however unlikely to be a requirement to 'issue' a private deed in the context of an ISDA Master Agreement. Moreover, assuming an ISDA Master Agreement is duly electronically signed by both parties thereto, the foregoing condition would be fulfilled as a result thereof (no separate explicit consent would be required).
3.24 Finally, we note that for any electronic document (agreement, deed or otherwise), the eIDAS Regulation provides that it shall not be denied legal effect (and admissibility as evidence in legal proceedings) solely on the grounds that it is in electronic form.28
Electronic signatures 3.25 As discussed in paragraph 3.22 above, an electronic deed needs to be signed in order to ensure it has the same legal effect and is treated similarly from an evidentiary perspective as a private deed in writing. The signing of an electronic deed can be done by means of an electronic signature. Any other electronic record can also be signed by an electronic signature in order to evidence a party adhering to the terms of that electronic record and to identify such party.
3.26 Netherlands law distinguishes three types of electronic signatures:
a. the 'regular' electronic signature; b. the advanced electronic signature; and c. the qualified electronic signature.
3.27 An electronic signature is defined in the eIDAS Regulation as "data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign".29 This definition covers both digital scans of handwritten ('wet ink') signatures as well as complex encryptions.
3.28 A regular electronic signature (a.) is an electronic signature as defined above, and can have the same legal effect as a handwritten signature, provided that the method used for signing is sufficiently reliable, taking the purpose for which the electronic signature was used and all other
26 Section 156a(2) NCCP. 27 Section 7:932 NCC. 28 Article 46 eIDAS Regulation. 29 Article 3(10) eIDAS Regulation.
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circumstances at hand into account.30 This is a technology-neutral, but also very open, norm. Reliability will in our view depend on whether and to what extent the method used for signing can ensure that (i) the intended signatory has also signed (i.e. authentication) and (ii) the document that has been signed cannot be altered after it has been signed. Parties can ((pre-)contractually) agree on the reliability of the regular electronic signature used.31 It is ultimately up to the court to assess the effects of such an agreement with a view to the signature's reliability.
3.29 An advanced electronic signature (b.) is defined in the eIDAS Regulation as an electronic signature which is (i) uniquely linked to the signatory, (ii) capable of identifying the signatory, (iii) created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and (iv) linked to the data signed therewith in such a way that any subsequent change in the data is detectable.32 Just like the regular electronic signature, the advanced electronic signature can have the same legal effect as a handwritten signature. In order to have the same legal effect, the method used for signing should be sufficiently reliable, taking the purpose for which the electronic signature was used and all other circumstances of the case into account.33 Also as regards the advanced electronic signature, parties are able to ((pre-)contractually) agree on its reliability, whereby a court is expected to take that agreement into consideration in assessing a signature's reliability.34
3.30 A qualified electronic signature is defined in the eIDAS Regulation as "an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures".35 Qualified electronic signatures must comply with the requirements in Annexes I and II of the eIDAS Regulation. A qualified electronic signature has the equivalent legal effect of a handwritten signature.36
3.31 In summary, each of three types of electronic signatures can have the equivalent legal effect of a handwritten signature. Only the qualified electronic signature is however guaranteed to have such equivalent legal
30 Section 3:15a NCC. 31 Parliamentary documents II, 2015/16, 34 413, no 3, p. 63. 32 Article 3(11) eIDAS Regulation in conjunction with Article 26 eIDAS Regulation. 33 Section 3:15a NCC. 34 Parliamentary documents, 2015/16, 34 413, no. 3, p. 63. 35 Article 3(12) eIDAS Regulation. 36 Article 25(2) eIDAS Regulation.
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effect pursuant to the eIDAS Regulation. For the regular and advanced electronic signature, the method used for signing should be sufficiently reliable, taking the purpose for which the electronic signature was used and all other circumstances of the case into account, with the possibility for parties to agree on said reliability, which a court is expected to take into consideration. An advanced electronic signature will generally be (considered) more reliable than a regular electronic signature, due to the technology required for such signature to ensure the conditions referred to in paragraph 3.29 above are fulfilled.
3.32 Finally, although applications used for placing a regular electronic signature may well provide users with a comparable 'look and feel' as the applications used for an advanced (or even qualified) electronic signature do, these may not provide the same level of reliability due to the underlying technology, the process used for verifying and confirming the authenticity of the signature ('validation') and/or the certificate issued (which links the validation data to a signatory and confirms the name of such person). In other words, which application provides which type of electronic signature will have to be assessed on a case-by-case basis.
Signing of an electronic deed – which type of signature should be used? 3.33 For only certain types of deeds, Netherlands law prescribes which type of electronic signature is required for such deed to be validly signed electronically.37 In the absence of any such statutory requirement, which electronic signature is required for an electronic deed depends on the reliability of the signature, the purpose for which the data is used and all other circumstances at hand. Examples of such other circumstances are the nature of the agreement and the interests associated with the transaction.38
3.34 Although it will depend on the transaction at hand, we generally consider it advisable where signing an electronic deed (an agreement) that purports to have a certain proprietary effect (e.g. a transfer of legal title to a certain assets, or creation of a security interest over such asset), to make use of an advanced or qualified electronic signature. Having said that, we do not imply that the use of a regular electronic signature in respect of such transactions would disqualify a certain electronic record as an electronic deed or render such record invalid as evidence. As the eIDAS Regulation
37 For example, electronic insurance policies have to be signed with a qualified electronic signature (Section 7:932 NCC). 38 Parliamentary documents 2000/01, 27743, no. 3, page 4 and parliamentary documents 2001/02, 27743, no. 6, p. 2.
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puts it: "an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures".39 Furthermore, we refer to the aforementioned possibility for parties to ((pre-)contractually) agree on the reliability of a certain electronic signature method.
Admissibility into evidence
Electronic deeds and other records 3.35 The general principle regarding the Dutch rules of evidence is that the court can base its decision solely on those facts or rights that have been raised in the case at hand. Unless the law provides otherwise, the party relying on the legal consequences of the facts or rights asserted by it will bear the burden of proving these facts or rights.40 Evidence to prove those facts or rights can - in principle - be provided by all means.41 This includes electronic documents, which, according to the eIDAS Regulation shall not be denied admissibility as evidence in legal proceedings solely on the grounds that it is in electronic form.42
3.36 The court is free to evaluate the evidence before it, except where the law provides otherwise.43 The law provides otherwise in respect of conclusive evidence, being (i) evidence the substance of which the court is obliged to accept as true or (ii) certain information with evidentiary value provided by law which the court is obliged to acknowledge.44 Any evidence, including conclusive evidence, is however in principle subject to contra evidence (tegenbewijs).45
3.37 As mentioned above, deeds are signed documents in writing, intended to serve as evidence. Certified deeds have full conclusive evidentiary value, including with respect to third parties. Private deeds only have conclusive evidentiary value with respect to the parties directly involved (e.g. the parties that are a party to the agreement laid down in the private deed).46
3.38 A counterparty may deny having signed a private deed. In such case, the
39 Article 25(1) eIDAS Regulation. 40 Section 150 NCCP. 41 Section 152(1) NCCP. 42 Article 46 eIDAS Regulation. 43 Section 152(2) NCCP. 44 Section 151(1) NCCP. 45 Section 151(2) NCCP. 46 Section 156 in conjunction with Section 157 NCCP.
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private deed will not have any evidentiary value as long as it has not been proven who signed the private deed.47
3.39 Finally, it should be noted that the conclusive evidentiary value of a private deed is conferred on the original deed.48 This entails that any pdf copy of a private deed in writing does not have the same conclusive evidentiary value as the original deed. The same may be the case for digital copies or print-outs of an electronic deed.49 A Netherlands court would however still be free to evaluate the evidentiary value of such (pdf) copy or print-out, which may ultimately result in a similar outcome.
Electronic signatures 3.40 As regards the evidentiary value of electronic signatures specifically, we refer to the provision in the eIDAS Regulation (paragraph 3.34) which provides that an electronic signature shall not be denied admissibility into evidence solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures. Any type of electronic signature or any other electronic record purporting to have similar effect (which may include a digital scan of a handwritten signature) will thus be admissible into evidence, although it will be up to the Netherlands court to determine its evidentiary value.
Question 3 - Would there be a presumption as to the authenticity, validity and integrity of the electronic records, and admissibility of electronic records at court? Further, is there any law, regulation or legal principle that would mean that electronically executed or electronically formed contracts would be treated differently to contracts physically executed with “wet ink” signatures?
3.41 There is no general provision in Netherlands law providing for a presumption as to the authenticity, validity and integrity of electronic records and admissibility of electronic records in court proceedings. However, as set forth above in our answer to Question 2, certain provisions of Netherlands law pertain specifically to the legal recognition and admissibility in evidence of electronic records. These are summarized below.
3.42 If an electronic record qualifies as an electronic deed (see paragraph 3.20 et seq. above and paragraph 3.43 below), such electronic record will have
47 Section 159(2) NCCP. 48 Section 160 NCCP. 49 Parliamentary documents II 2007/08, 31 358, no. 7, p. 3.
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the same conclusive evidentiary value as a private deed signed by a handwritten signature (Sections 156a and 157 NCCP). Even where an electronic record would not qualify as an electronic deed, it is in principle admissible as evidence, with the court being free to evaluate it and subject to contra-evidence (which would similarly apply to any written document not qualifying as a private deed; Section 151 and 152 NCCP).
3.43 An electronic deed requires an electronic signature having the same legal effect as a handwritten signature. An electronic signature – regular or advanced - will have such legal effect (Section 3:15a NCC), provided that the method used for signing is sufficiently reliable, taking the purpose for which the electronic signature was used and all other circumstances of the case into account. For the qualified electronic signature (only), the eIDAS Regulation provides that such signature will have the same legal effect as a handwritten signature.50 In any case, no electronic signature can be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures.51 Furthermore, as mentioned above, as any electronic record is admissible into evidence, this includes any electronic record purporting to have similar legal effect as a signature.
3.44 Finally, Netherlands law does not treat electronically executed or electronically formed contracts differently to contracts physically executed with handwritten ('wet ink') signatures, provided the above conditions and any other applicable conditions set out in Questions 1 and 2 are fulfilled.
Question 4 - Assuming that there are legal provisions governing electronic contracts in your jurisdiction, are there any specific areas of law where the usual rules on electronic contracts would not apply? Please note specific areas relevant to banking and finance.
3.45 There are no specific areas of Netherlands law where the usual rules on electronic contracts do not apply. For certain types of agreements or deeds, however, a specific type of electronic signature (usually a qualified electronic signature) is prescribed. For example, a qualified electronic signature is required with regard to an electronic insurance policy.52 The deviations to the rules on electronic contracts are however
50 Article 25(2) eIDAS Regulation 51 Article 25(1) eIDAS Regulation. 52 Section 7:932(1) NCC.
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unlikely to be relevant in the context of an ISDA Master Agreement.
Question 5 - Where a contract is required to be made or evidenced in writing, would the “in writing” requirement be satisfied by an electronic record?
3.46 As set forth in our answer to Question 1, if a statutory provision implies that an agreement can only be formed validly in writing, such an agreement can also be entered into by electronic means, subject to the four conditions of Section 6:227a(1) NCC (see paragraph 3.6 above) being met and such an agreement not being excluded pursuant to Section 6:227a(2) NCC.
3.47 Further to our answer to Question 2, in certain cases, Netherlands law prescribes for the use of a deed. A private deed can also be formed electronically, subject to the conditions set out in Section 156a NCCP. Such a deed will have to be signed by an electronic signature with the same legal effect as a handwritten signature. A regular or advanced electronic signature can have said legal effect, provided that the method used for signing is sufficiently reliable taking the purpose for which the electronic signature was used and all other circumstances of the case into account. The qualified electronic signature always has the same legal effect as a handwritten signature.
Question 6 - What are the conditions, if any, that would need to be satisfied with regard to:
(i) legal enforceability of electronic transactions;
3.48 In the absence of any statutory requirement, there is no need for an agreement to be in any particular form. Provided such agreement is otherwise validly entered into or performed in accordance with general statutory rules (i.e. for an agreement there has to be an offer and acceptance, and a specific legal effect should be intended), an electronic agreement will be enforceable in a manner similar to written agreement.
3.49 If there is a statutory requirement, for instance where an agreement can only be formed validly in writing or where a deed must be used, the conditions set out in our answers to the above Questions will have to be adhered to in order for such an electronic transaction to be valid and (thus) enforceable. Please refer to our answers to Questions 1 and 2, respectively.
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3.50 As required in the context of an electronic deed, but as may also be used in order to evidence a party adhering to the terms of another type of electronic record and to identify such party, an electronic signature will only have the same legal effect as a handwritten signature if certain conditions are fulfilled. Please refer to our answer to Question 2.
(ii) admissibility into evidence of electronic records;
3.51 Evidence can in principle be provided by all means, including by way of electronic records. The court is free to evaluate the evidence before it, except where the law provides otherwise. If parties wish to attach the conclusive evidentiary value of a deed to such electronic record, the conditions for drawing up an electronic deed are to be fulfilled.
(iii) presumption as to the authenticity, validity and integrity of the electronic records?
3.52 As mentioned above in paragraphs 3.41 et seq., there is no general provision in Netherlands law providing a presumption as to the authenticity, validity and integrity of the electronic records and admissibility of electronic records in court proceedings. However, once the conditions of Section 156a NCCP (electronic deeds) and Section 3:15a NCC/eIDAS Regulation (electronic signatures) are met, such electronic records are admissible in legal proceedings with similar legal effect as a handwritten signature on a written private deed.
Question 7 - Would these rules cover the execution of documents physically executed but exchanged electronically (PDF) including, but not limited to ISDA Master Agreements, ISDA Credit Support Annexes, Confirmations, Guarantees, Electronic Trading Terms or similar documents?
3.53 The rules under Netherlands law on forming, executing and the admissibility into evidence of electronic agreements, electronic deeds, electronic signatures and/or other electronic records would apply to any type of agreement or document, including ISDA Master Agreements, ISDA Credit Support Annexes, Confirmations, Guarantees and Electronic Trading Terms and similar documents.
3.54 Physically executed agreements or documents, but which have been negotiated through electronic means and for which signatures have been
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exchanged electronically, are likely subject to the rules applicable to electronic agreements, deeds and signatures discussed in this opinion letter.
3.55 If the same original copy (hard-copy) of an agreement or document has been physically executed, a scanned (pdf) copy thereof is in our view unlikely to be subject to such rules. Having said this, a scanned copy of a physically executed document will in general not have the same evidentiary value as the original, unless such scanned copy would in itself be considered an electronic deed (which we do not find likely). As mentioned above in paragraph 3.39, specifically where a deed is envisaged, Netherlands law makes clear that the conclusive evidentiary value is conferred on the original (private or electronic) deed. Again, a Netherlands court would however still be free to evaluate the evidentiary value of such (pdf) copy or print-out, which may ultimately result in a similar outcome.
Question 8 - Are there any jurisdictional considerations that would require updates to the form of existing documentation, including to such electronic agreements as “click-through” agreements?
3.56 There are no specific considerations or provisions of Netherlands law applicable to "click-through" agreements. Therefore, "click-through" agreements would be subject to the same provisions as all other electronic records in order to be valid and enforceable.
3.57 We highlight however that in order for any click-through mechanism to have the same legal effect as a handwritten signature - notably in case parties intend for the document to be an electronic deed - it should be considered whether this method qualifies as an electronic signature and can be deemed sufficiently reliable. The click-through mechanism should result in electronic data (e.g. the digital records evidencing the 'clicks') being attached to or logically associated with other data in electronic form (e.g. an electronically formed document). That a document has been signed electronically can also be visibly reflected in the document itself, but this is not a formal requirement. The reliability of the click-through mechanism can be supported by ensuring that it meets the standards of an advanced or qualified electronic signature.
3.58 Finally, although updates to the form of the documentation do not appear to be required under Netherlands law, additional provisions or terms may be considered to e.g. provide for a ((pre-)contractual) agreement on a
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certain electronic signature method used and the reliability of such method (see paragraphs 3.28, 3.29 and 3.34).
Are there any specific requirements, including but not limited to any mandatory provisions of law, for “click-through” agreements to be enforceable, especially as relates to i) authorisation (of the individual clicking to accept the agreement) and ii) authentication (to confirm the identity of authorised individuals on behalf of an institution)? With respect to i) could this be achieved/mitigated by including a reference that by clicking the “I agree” button or equivalent the person is confirming that they are authorised by the counterparty to enter into the agreement? Are there any practical considerations to rely on “click through” under the governing laws of your jurisdiction?”
3.59 If there are no statutory requirements as to the entry into of an agreement, the intention of a person to be bound by the terms thereof can by expressed by a statement in any form. Although a signature is likely the most commonly used method, a click-through mechanism would also be an acceptable form. If a certain agreement has to be signed (e.g. where it is laid down in a deed), the click-through mechanism should, as mentioned above, fulfil the conditions applicable to electronic signatures. Reliability of the electronic signature, including with respect to authentication, is an important element thereof. With reference to item (ii) of your Question, this can be strengthened by requiring additional steps to be taken, e.g. by issuing personal login details to be used to access the click-through mechanism (such a username and password combination), requiring the signatory to insert personal information (such as answering 'security questions') and/or using biometrics (such as fingerprint recognition through an app). With reference to item (i) of your Question, the foregoing only extends to the identification of the envisaged signatory, whether the person is actually authorized to perform the acts at hand is subject to the general rules on capacity, authorisation and representation. Including a reference that by clicking the "I agree" button or equivalent the person is confirming that they are authorized to enter into the agreement may reduce the risk of an individual acting outside the scope of his or her authority, but it will generally not be sufficient to bind the person or a principal if the person has indeed acted outside the scope of his or her capacity or authority, respectively.
3.60 We note that it is good practice in the Netherlands to include a reference that by clicking the "I agree" button or equivalent the person is confirming that they are authorized to enter into the agreement.
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Furthermore, it is in such case also good practice to have the relevant terms of the agreement made visible before the "I Agree" button can be clicked and subsequently for the agreement that has been agreed to be downloadable and/or confirmed and sent via e-mail.
Question 9 - Is an electronic contract or are electronic transactions made under an electronic contract (or made under an equivalent paper form contract) required to be governed by the law of your jurisdiction in order to be enforceable under the applicable rules for enforcing electronic contracts/ electronic transactions in your jurisdiction?
3.61 No, assuming such electronic contracts or transactions are enforceable under the applicable law, electronic contracts or transactions are not required to be governed by Netherlands law in order to be enforceable in the Netherlands. We do refer to the rules on the admissibility of electronic records into evidence at a Netherlands court, which apply irrespective of the applicable law (paragraphs 3.35 et seq.).
Question 10 - Is a translation into a local language of the electronic access agreement required to permit enforceability in the courts of your jurisdiction against clients located in your jurisdiction?
3.62 No, a translation into the Dutch language of the electronic agreement is not required to permit enforceability in the Netherlands courts against clients located in the Netherlands.
Question 11 - Are there any capacity or other restrictions in your jurisdiction on the types of legal entity that can enter into such electronically formed contracts? In particular, would you confirm that there are no capacity restrictions on financial institutions and corporates for entering into electronically formed contracts?
3.63 We are not aware of any general capacity or other restrictions applicable to financial institutions, corporates or other entities entering into electronically formed agreements. Such restrictions may apply to a particular type of agreement or transaction, but generally irrespective of whether such agreement or transaction is entered into electronically. It can however not be excluded that a specific constitutional or regulatory regime may impose certain restrictions on entering into an electronic agreement or transaction by a particular party. This will have to be assessed on a case-by-case basis.
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Question 12 - Are there any other issues that you consider relevant to the matters raised above, such as on timing and place of sending and receipt of electronic records or in respect of electronic signatures and digital signatures?
Electronic stamps
3.64 Netherlands law does not include any specific provisions on when electronic records are deemed to have been made, sent or received. For evidentiary purposes, it may thus be considered to time stamp these records. Reference is also made to paragraph 3.6, which sets out the conditions for certain agreements to be validly formed by electronic means, including the condition (c.) that the moment on which the agreement was entered into must be able to be determined with sufficient certainty.
3.65 Records can be electronically time stamped by a 'regular' electronic time stamp or by a qualified electronic time stamp.
3.66 An electronic time stamp is defined in Article 3(33) eIDAS Regulation as "data in electronic form which binds other data in electronic form to a particular time establishing evidence that the latter data existed at that time". Any electronic time stamp shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in electronic form of or that is does not meet the requirements of the qualified electronic time stamp.53
3.67 A qualified electronic time stamp is an electronic time stamp that meets three requirements.54 Firstly, it needs to bind the date and time to data in such a manner as to reasonably preclude the possibility of the data being changed undetectably.55 Secondly, it should be based on an accurate time source linked to Coordinated Universal Time.56 Finally, it needs to be signed using an advanced electronic signature or sealed with an advanced electronic seal of the qualified trust service provider, or by some equivalent method.57 A qualified electronic time stamp shall enjoy the presumption of the accuracy of the date and the time it indicates and the
53 Article 41(1) eIDAS Regulation. 54 Article 42(1) eIDAS Regulation. 55 Article 42(1)(a) eIDAS Regulation. 56 Article 42(1)(b) eIDAS Regulation. 57 Article 42(1)(c) eIDAS Regulation.
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