Contracts/e-signature: initiation, continuation or termination of commitments
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In Luxembourg, the rules on electronic signature and electronic agreements stem from the eIDAS Regulation 910/2014 (the “eIDAS Regulation”), as well as from the civil code and the e-commerce law of 14 August 2000, as amended (1). There are three forms of electronic signature, and they are not all presumed trustworthy to the same degree.

  • A standard electronic signature (“SES”) is defined 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”: e.g. an e-mail signature, a scan of a handwritten signature, the tick used to accept a website’s terms and conditions when logged in to a user account, the fingerprint used to approve an online transaction, etc.
  • An advanced electronic signature (“AES”) is an SES with additional guarantees that ensure it is uniquely linked to the signatory, it can be used to identify the signatory and it is linked to the data in such a way that any subsequent change of the data can be detected.
  • A qualified electronic signature (“QES”) is an AES created by a QES creation device and based on a qualified certificate for electronic signatures. This certificate is issued by a qualified trust service provider (“QTSP”), and it attests to the authenticity of the electronic signature and the identity of the signatory: e.g. a smart card, USB token or mobile app that creates a one-time passcode complying with the requirements listed in Annex II to the eIDAS Regulation.

The requirement in civil law matters for acts containing agreements based on reciprocal obligations to be signed by the parties in their private capacity in as many originals as there are parties having a distinct interest does not apply to acts signed electronically (Article 1325 of the civil code).

A QES has the equivalent legal effect of a wet-ink signature and will be recognised as a QES in all EU Member States. In the current context, electronic signatures are thus an alternative to wet-ink signatures for signing unilateral acts or agreements, provided in the case of agreements that it is practically (and technically) feasible for all signatories to the agreements to sign with a QES. However, there is still the option for multiple counterparties to sign by wet-ink and exchange a PDF copy thereof initially, and then to exchange the originals afterwards.   

The QTSPs accredited in Luxembourg can be found on the website of the Institut Luxembourgeois de la Normalisation, de l'Accréditation, de la Sécurité et qualité des produits et services (“ILNAS”) (2). According to the internal market principle under the eIDAS Regulation, the parties can also chose a QTSP accredited in another EU Member State (3) because a qualified trust service based on a qualified certificate issued in one Member State should be recognised as a qualified trust service in all other Member States.

Nevertheless, in view of the technical complexity and expense associated with QES, companies often decide to use SES or AES instead. Note that such signatures do not enjoy the above-mentioned presumption of equivalence. However, the eIDAS Regulation does provide a principle of non-discrimination in that it stipulates that “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”.

In case of dispute, the validity of a QES is thus presumed, and the reverse burden of proof principle is applied. It will be up to the person who questions the signature’s trustworthiness to prove that it is not valid. Where an SES or AES is challenged, the burden of proof of the electronic signature’s validity falls to the signatory. Note that among merchants (exclusively in commercial matters where there is no implication of non-merchant parties) any form of evidence may be used (as per Article 109 of the commercial code). In any case, SES or AES are only seen as prima facie written proof (commencement de preuve par écrit), meaning they will need to be supplemented by other means of evidence if their validity is challenged.

Practically speaking, the choice of e-signature ought to depend on the type of document, the importance of the transaction and the degree of trust a company has in its counterparties.

As an alternative to wet-ink signature, it is therefore recommended to use QES exclusively whenever the process for deal or fund closings must involve electronic signatures.

Your contact for more details: Astrid Wagner (astrid.wagner@arendt.com) and Faustine Cachera (faustine.cachera@arendt.com)
(25/03/20)

Useful link(s) :

  1. A bill amending the e-commerce law of 14 August 2000 is currently under discussion (Bill n°7427) - French only.
  2. ILNAS – Liste des prestataires de services de confiance
  3. European Trusted List Browser

This question is not new, having been raised in the wake of previous epidemics like H1N1 in 2009 and Ebola in 2014. As these precedents indicate, an epidemic or pandemic will not always be viewed as a case of force majeure justifying non-performance of contractual obligations.

Any event must be looked at individually, and must satisfy three criteria to legally qualify as force majeure: it must be external, unpredictable and unavoidable.

In view of the multitude of contractual obligations that may be impacted by the current circumstances, an assessment of each case must be made taking into account the contractual provisions in question. Obligations to transport, to pay, to build, to provide care, to deliver, etc. will each give rise to very different methods of performance, not only due to their specific nature, but also depending on the circumstances and intended time and place of their performance.

Assuming that the criteria for force majeure have been met, the consequences for the performance of the contract still remain to be determined: will performance be partial or delayed, or will the contract be terminated? The question of which party must bear the costs of non-performance or deferred performance must also be answered for each situation.

Many other questions may arise as well. What practical steps must be taken to successfully invoke force majeure? Are the costs incurred covered by insurance? Is there any impact from available State support?
We can assist you in choosing the right way forward and finding the best possible solutions for your company in light of the current circumstances.

Your contact for more details: Marianne Rau (marianne.rau@arendt.com), Christian Point (christian.point@arendt.com), Astrid Wagner (astrid.wagner@arendt.com) and Clara Mara-Marhuenda (clara.mara@arendt.com)
(27/03/20)

Article 1244, paragraph 2 of the Civil Code provides that a judge may, taking into account the position of the debtor and exercising extreme reserve, grant moderate time extensions for payment as well as stay the execution of proceedings, all other things remaining equal.

This article is a means for the debtor of an obligation to postpone its performance.

From the existing case law, it can be predicted that such a measure will only be granted exceptionally, at the judge’s discretion.

Moreover, it will be up to the debtor to provide evidence of facts that would justify granting this exceptional measure.

As the COVID-19 pandemic constitutes an unprecedented and exceptional situation, one could imagine that the courts would choose to apply this article to grant longer payment periods to debtors who find themselves unable to meet their obligations as a result of the government-ordered closure of many businesses. However, this is not a certainty, and some scope for discretion on the part of judges will always remain.

Other questions may arise, such as: what practical steps must be taken to successfully invoke Article 1244 (2) of the Civil Code? Can the voluntary application of this article be considered outside of court proceedings? Are there certain limitations that may lead to the refusal of payment periods?

For all of the above reasons, each contractual arrangement should be analysed individually to ensure the best possible outcome for you and your company.

Your contact for more details: Philippe-Emmanuel Partsch (philippe-emmanuel.partsch@arendt.com)
(27/03/20)

As the question can be very specific depending on the matter, we can help you to find a sustainable solution.

Your contact for more details: Christian Point (christian.point@arendt.com) and Pierre Hédouin (pierre.hedouin@arendt.com)
(01/04/20)

So far, no binding government measures have been taken in this regard. However, on 6 April 2020 three deputies submitted a new law proposal, number 7551, that would suspend rents relating to commercial and professional leases for the duration of the state of emergency, and amend the amended law of 4 December 1967 concerning income tax.

Your contact for more details: Christian Point (christian.point@arendt.com) and Pierre Hédouin (pierre.hedouin@arendt.com)
(20/04/20)