Honduras: Electronic Signature Law Reforms and Contracts Through Online Means

Written by:

Karla Andino

 

In the context of the crisis caused by COVID -19, electronic contracting becomes increasingly important and necessary due to the series of restrictions that individuals and societies face and that impede the ordinary course of business. Although it is true that Honduras already had a legal framework that recognizes the contracting and carrying out of commercial acts by electronic means, its use has not been part of commercial custom to date, not only because of the risks that the implementation of new forms of contracting may entail, but also because the use of these figures in practice lacked clarity in some aspects. In order to facilitate and promote the use of technologies so that trade is not affected by the crisis, the National Congress approved the “Aid Law for the Productive Sector and Workers in the Face of the Effects of the Pandemic Caused by COVID-19” (hereinafter “Aid Law”) which among other things reforms the Electronic Signatures Law, as well as establishing measures for the implementation of electronic commerce mechanisms. The following is a summary of some of the main provisions of this Law that may be relevant to operations by electronic means, as well as some comments related to the implementation and possible use of said measures.

 

Article 38 of the Aid Law, subsection C) contemplates that “by electronic means all kinds of acts, contracts and any other type of legal business may be held whenever it is possible to demonstrate in a reliable way the will of the parties to carry out the legal business by that means. The consent of the parties is proven by exchanging emails, videos, voice recordings, exchanging text messages, electronic acceptance of standardized contracts or by sending an electronic self-portrait holding the identity document visibly next to the face of the signatory taken through the corresponding application prior to sending the respective application or form”.

 

Both the Civil Code and the Code of Commerce already contemplate the possibility that contracting can be carried out without the contracting parties being physically present in the same placeLikewise, article 12 of the Electronic Commerce Law already recognizes and grants validity to contracts that are concluded by electronic means, so article 38 of the Aid Law, subsection C) referred to, contains provisions that in principle could be considered to expressly and illustratively expand the means that contracting parties can use to demonstrate the consent and the respective offer and acceptance required for contracting between absentees. Notwithstanding the breadth provided by said provision, it is important that certain criteria and practical measures are taken into account to provide the greatest possible support for each operation.

 

The use of electronic signatures for example, gives additional legal safeguards to mere offer and acceptance of a contract via electronic means such as the email. The Electronic Signatures Law already establishes that the acts and contracts granted or celebrated by natural or legal persons, subscribed by means of electronic signature, will be valid in the same way and will produce the same effects as those executed in writing and on paper. The Aid Law in this sense, reforms the Electronic Signatures Law in order to promote the use of electronic signatures in electronic contracts, and expands the type of forms that will be considered valid to identify a signatory. The Aid Law reforms article 7 of the Electronic Signatures Law and mentions that “the administration” may grant the equivalence of effects to the advanced electronic signature for certain cases to other types of signature or means of identification of persons, among others:

 

I. Hybrid of technologies based on Public Key Infrastructure (PKI) and Biometric Signature or any other equivalent or substitute technology; 

II. Electronic signature systems in the cloud;

III. Double factor systems; 

IV. Biometric systems including photographic media; 

V. Others that may be developed according to the advancement of technologies.

 

In accordance with this reform, the State entities will issue a regulation of the Aid Law or an agreement that will determine the cases in which the use of a reliable means of identification of the aforementioned, and the methods and systems of signature apart from advanced electronic signature. Although the reform to the Electronic Signatures Law is giving a greater degree of validity to other means of identification or other types of signatures in order to facilitate the electronic subscription of documents, as long as a regulation is not issued, there is no clarity as to how these means can be used and in which cases.

Another way in which the Aid Law aims to facilitate the use of electronic signatures is through the recognition of electronic certificates for advanced electronic signatures issued by foreign suppliers. Prior to this reform, this was allowed, however, certain requirements were required to be met in order for said certificates to be valid. Now, this article allows electronic signature certificates issued by foreign certification authorities to produce the same legal effect as a certificate issued by National Certifying authorities, provided that such certificates present a degree of reliability as to the regularity of its details, as well as its validity. Additionally, it is established that the Property Institute may prepare a list of foreign entities designated as trustworthy. While it is true that this allows greater scope for the use of foreign certificates and suppliers, there is no clarity as to how or when the list will be created by the Property Institute, nor if the entities that are part of said list will have greater weight against the authorities in the event of a controversy or litigation with said certificate, unlike others that are not part of said list. Notwithstanding the foregoing, this article also establishes that the parties may agree to the use of certain types of electronic signature or foreign certificates and in principle it would seem to grant the agreement between the parties sufficient recognition for the foreign certificate to be valid, without requiring that the foreign supplier is part of the list of entities that the Property Institute will consider as reliable.

 

A third element that the Aid Law contemplates to facilitate electronic commerce is the figure of the “attesting official”, through which public and private entities may “designate one or more responsible persons for certifying the corresponding authorizations to ensure the fluidity of their operations by electronic means”. Notwithstanding this, until now there is no clarity on how said attesting officials should “certify” the authorizations of the operations to be carried out by electronic means, which may give rise to questions regarding their validity.

 

Although it is true the legal framework grants validity to operations and contracts that are carried out by electronic means, it is important that in the implementation of these there are measures that support their reliability. The way to document each operation can vary depending on the level of risk, complexity and available measures, so it is important to determine processes, as far as possible, that are appropriate for each type of operation, without prejudice to operations that must be analyzed from case to case. According to article 9 of the Electronic Commerce Law, “the degree of reliability required is determined in light of the purposes for which the information was generated and of all the circumstances of the case.”

 

Finally, it is important to mention that the courts in the country do not have experience in the matter of contracting by electronic means, which means that this type of operation carries the risk of being the subject of controversy in processes in which the validation or processing will be more complex and delayed unlike ordinary contracting. This would imply that there would be an “exploratory” phase for these operations in the courts, that has associated with them the risks inherent in said implementation. While it is true that the provisions of this Aid Law are available, it is considered also necessary that we have an established legal framework that complies with the formalities required by law to harmonize the existing legal framework with such measures.

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