Note: Because Iceland is not an European Union (EU) member state, EU directives and regulations do not have direct effect in Iceland and must be specifically implemented into local law. Iceland has fully implemented and adopted into its local law Regulation No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market into through Act no. 55/2019 (‘the eIDAS Act’).
For more information on eIDAS, please read the Electronic Signature Laws & Regulations – The European Union.
Overview
The use of electronic signatures is common and widely encouraged in Iceland. Icelandic legislation provides that, in general, electronic signatures are considered as binding as wet signatures or handwritten signatures.
In Iceland, freedom of contract is a main principle of contract law, meaning the parties to a contract are free to agree on terms, including the form of the agreement (such as choosing between digital or hard copy) and the type of signature used for execution (such as using a wet signature or an electronic signature). Furthermore, to underline this point, Article 8 of Act no. 30/2022 on electronic transactions and electronic services provides that digital contracts are to be considered equivalent to physical contracts. To that end, under Icelandic law it is generally permissible to submit digital documents with electronic signatures as evidence to courts for the judge to freely assess as evidence.
In addition, Article 25 of eIDAS on the judicial effect of electronic signatures is fully in force in Iceland, which stipulates that electronic signatures 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.
Types of Electronic Signatures
Given the adoption of eIDAS, Icelandic legislation also distinguishes between the following three types of electronic signatures:
- Simple Electronic Signature, means 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.
- Advanced Electronic Signature (“AES”) is an electronic signature which is uniquely linked to the signatory, is capable of identifying the signatory, is created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and is linked to the data signed therewith in such a way that any subsequent change in the data is detectable. An advanced electronic signature must fulfil the requirements set forth in Article 26 of eIDAS.
- Qualified Electronic Signature (“QES”) is an elaborated signature which is supported by a valid certificate and made with secure signature equipment. A QES service must fulfil the requirements set out in Annex II of eIDAS.
In alignment with eIDAS, Iceland has established, maintains and publishes a trusted list of Qualified Trust Service Providers (QTSPs) and the qualified trust services provided by them. The Icelandic list of QTSP providers is available at: https://esignature.ec.europa.eu/efda/tl-browser/#/screen/tl/IS
Generally, in practice in Iceland, parties choose to use at least the standard of ‘advanced electronic signature’ in order to uniquely link the signatory to a confirmed identity. Apart from certain use cases (see below for special considerations), it is not a legal requirement in Iceland for a signature to be a QES for the signature to be legally binding.
Use cases for Electronic Signatures
As discussed above, the general rule in Iceland is that an electronic signature can be used as long as the electronic means fulfil any legal or regulatory form requirement for the conclusion of a contract.
There are some use cases in which legislation specifically requires that if an electronic signature is used, the electronic signature must be a QES, such as:
- The registration of deeds requires a QES in case an electronic signature is used (Act no. 39/1978).
- Loan agreements subject to Article 12 of Act no. 33/2013 on consumer loans require a QES if they are signed electronically, or consent through a customer portal through qualified identification.
- In addition, according to Act no. 38/2020 on financial support to small businesses due to the corona pandemic, declarations of debt for support loans due to the pandemic may be signed electronically, provided that the signature is a QES.
There are also some exceptions to this general rule where an electronic signature cannot be used, such as a Declaration of Debt which can be enforced directly. Such a Declaration must be signed by the debtor with certification by a notary, attorney, certified real estate agent or two witnesses. However, note that Declarations of Debt for specific support loans due to the corona pandemic may be signed by a QES.
Special considerations
Data Processing Considerations. In general, the storage and processing of electronic signature data is subject to the conditions of the EU General Data Protection Regulation (GDPR), which is fully implemented in Iceland.
Transacting with public sector entities
Currently, there are few legal requirements or restrictions for using electronic signatures when interacting with government entities in Iceland. In general, it is left to each government entity to decide the type of signature that it will accept– but the option to replace wet signatures with electronic signatures in transaction with public sector entities is provided for by law. The Administrative Act no. 37/1993 stipulates that when law, administrative directives or custom requires a signature, the relevant administrative body may decide that wet ink signature may be replaced with an electronic signature, as long as the origin of the electronic signature can be verified to the same standard as wet ink signature. QES shall always be considered sufficiently valid in this regard.
In practice, most public entities currently provide for the option to perform transactions using a QES.
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