Legality of eSignatures in China

Background

As technology advances, there is a growing need for modern signature verification methods on documents, prompting a surge of interest in the use of electronic signatures. These digital techniques offer quick and eco-friendly means of executing documents, reducing paper use, and accelerating transactions. This holds true not just in China but globally.

When conducting business in China, selecting an electronic signature provider that adheres to the country’s legal framework, especially the Electronic Signature Law is essential. Conforming to these legal requirements confirms that electronic signatures bear the same legal weight as traditional wet-ink signatures. It is crucial to be aware that some documents may still require a physical signature, and due to varying local regulations, seeking advice from legal experts is advisable.

The security features offered by the electronic signature service are paramount. Providers must guarantee robust security through encryption, authentication protocols, and comprehensive audit trails to prevent unauthorized access and safeguard document integrity. BoldSign complies with these stringent security demands to uphold regulatory conformity and reinforce security.

In conclusion, electronic signatures are broadly recognized and provide considerable benefits. Yet, their successful deployment in China is contingent upon adherence to legal norms, the guarantee of security, and the selection of a user-friendly platform.

What constitutes an electronic signature

According to Chinese electronic signature laws, an electronic signature is a data form that is electronically affixed or logically connected to other electronic data utilized by the signatory to execute the signing process. In China such signatures are deemed legally binding for most types of documents, provided they are unequivocally identifiable to the signer and backed by trustworthy evidence of authenticity, ensuring the document remains unaltered and genuine. Furthermore, it is vital that the signer’s intention to sign is clear, indicating their consent to the document’s contents. When these conditions are met, electronic signatures offer a secure and recognized means of executing documents as handwritten signatures.

Overview of electronic signature regulations in China

Operations entailing the use of electronic signatures in China are regulated by the:

The Electronic Signature Law¹

As a rule, the regulation deems electronic signatures legal in the completion of transactions. eSignatures under the regulation are categorized into two categories:

Simple Electronic Signature
Advances (Reliable) Electronic Signature

A simple electronic signature is electronic data attached to or logically associated with an electronic document, which ensures the authenticity of the electronic document and confirms the identity of the signatory.²

A reliable electronic signature is an electronic signature that meets a set of requirements as follows³:

It is linked only to the signatory.
It ensures the personal identification of the signatory.
It is created with secure electronic signature-creation devices, which may be controlled only by the signatory.
It is linked to a signed electronic document so that subsequent changes in the electronic document are detectable.

Uniquely linked to a person

A reliable electronic signature must be uniquely connected to the person using it. The signature must be uniquely made with methods only the signer can access, like a private key and confidential info, to verify their identity.

Use and incorporation remain in their sole control

The person using the reliable electronic signature must have sole control over the means of creating the signature. Typically, this requires managing a key pair or two-factor authentication, with the signer exclusively holding the private key to prevent signature forgery.

Identify the signatories

The process used to create the signature must be capable of identifying the person signing. This may include using a biometric signature, a Personal Identification Number (PIN), an email address, or a company registration number.

Track down alterations made after signing

It is essential to preserve the authenticity of the signed document. Modifications made to the document post-signature should be identifiable. This is commonly accomplished through an audit trail. Audit trails record the signer’s IP address, timestamps of key signing events, and location, providing proof of identity, timing, and signature place.

In day-to-day use, a reliable electronic signature is deemed to meet the validity standards of a handwritten signature.⁴

Summary analysis

Under the Electronic Signature Law of the People’s Republic of China (2004)

Type of signature	Unique features	Legal validity
Standard Electronic Signature (SES)	N/A	Depends on the evidentiary weight.
Reliable (Advanced) Electronic Signature	It is linked only to the signatory. It ensures the personal identification of the signatory. It is created with secure electronic signature-creation devices, which may be controlled only by the signatory. It is linked to a signed electronic document so that later changes in the electronic document are detectable.	Bears the validity value of a handwritten signature unless proven otherwise.

The scope and limitations of electronic signature transactions

Electronic signatures’ validity varies with document types, making them acceptable for some transactions but not others. A detailed analysis and a summary table of such transactions are provided below.

Documents that can be signed

Electronic signatures can be employed to affix signatures and countersignatures on a diverse array of documents, such as:

Human Resources
Procurement
Non-Disclosure Agreements (assuming they are contracts, not formal deeds)
Internal correspondences
End-user licences
Educational Field
Offer letters

Exempted transaction

In limiting the scope of electronic signatures, the regulations exempt the following transactions from completion by electronic means.⁵

Documents relating to such personal relations as marriage, adoption and succession. Wills, codicils, nuptials and such agreements and testamentary trust documents.
Transactions relating to the transfer of the rights and interests residing in such real estate as land and houses.
Documents relating to termination of such public utility services as water supply, heat supply, gas supply and power supply.
Other circumstances where electronic documentation is not applicable, as provided for by laws and administrative regulations.

Summary scope of limitations

Permissible transaction	Exempted transactions
Human Resources Procurement Non-Disclosure Agreements (assuming they are contracts, not formal deeds) Internal correspondences End-user licences Educational Field Offer letters	Wills Codicils Marriage Nuptials and Such Agreements Testamentary Trust Documents Transfer of interest in real estate Documents relating to the termination of such public utility services as water, heat, gas, and power supply. Adoption agreements

To ensure the credibility of an electronic signature, it is advisable to follow these best practices in addition to complying with all applicable legal requirements:

Confirm the signer’s identity and, in business dealings, verify that the individual is duly authorized to act on behalf of the company in affixing their signature.
Secure explicit agreement from the individual signing, which may be incorporated in the contract itself or in a separate accord, to signify their intention to use the specified electronic signature for the document in question.
Safeguard the document to prevent any modifications after the signature is applied.
Keep an exhaustive log of the signing procedure, recording each step the signer performs.

Notable case laws in China on electronic signature and transactions

In Zhe Min Er Zhong Zi No. 154 (2008), Mr. Yang, the complainant, had created an account with the respondent, a company that engages in futures trading. Mr Yang could access the company’s information system using a personally set username and password, which remained confidential. This access allowed him to empower the respondent to execute futures trades on his behalf. A contentious issue arose when Mr. Yang disputed the authorization of a specific trade order, leading to a legal altercation with the futures trading company. In response, he initiated legal proceedings.

During the appellate trial, the Zhejiang Provincial Higher People’s Court evaluated the case, emphasizing the significance of the privacy, uniqueness, and security associated with a user’s password. The court concluded that such a password constituted a reliable electronic signature, legally equivalent to a handwritten signature. Consequently, the court ruled that the electronic authorization provided by Mr. Yang to the trading company was legally binding as an electronic letter of authorization.

In Shen Zhong Fa Shang Zhong Zi No. 249 (2014), the claimant, Cai Jianguo, was issued a debit card by the Bank of China Limited’s Shenzhen Branch, specifically the Jinxiu Sub-branch. Cai Jianguo personally created a secret password for the card, which was not disclosed to the opposing party. Cai Jianguo had the facility to withdraw money from ATMs operated by the defendant, which required using his debit card and entering his confidential password. Subsequently, there was an incident of unauthorized withdrawal from Cai Jianguo’s account.

The Shenzhen Intermediate People’s Court found that the defendant was negligent in not recognizing the counterfeit debit card used in the unauthorized transaction. The court also acknowledged that Cai Jianguo’s password was private, distinctive, and secure, essentially serving as an electronic signature. Based on this understanding, the court inferred that Cai Jianguo was responsible for compromising his password. In conclusion, the court ruled that both parties should assume responsibility for their respective parts in the incident.

Summary analysis of other case laws

Case title	Summary of facts and decision	Insights
(2016) Yun 0111 Min Chu No. 3711	The court ruled that if the plaintiff and the Defendant each had an agreement with the operator and manager of the electronic transaction system, then any electronic contract created between the transaction parties using electronic signatures and digital communication would be considered valid, provided there was a mutual understanding that a contract could be executed in this manner.	Validity of e-contracts
Hang Bin Shang Chu Zi Case No. 178- 2011	The Defendant, represented by someone with the last name Ke/E/A, entered into the disputed Loan Agreement with the claimant using an electronic format on a loan service website. Subsequently, the claimant provided a loan to the Defendant's authenticated Alipay account, which was established under their real name, as per the terms of the electronic Agreement. Following this, a disagreement emerged between the claimant and the Defendant regarding the electronic contract. The court held that the disputed loan contract was valid with regard to the E-signature Law. This confirms the legitimacy of using an electronic signature through the act of clicking an accept button on a website.	This confirms the legitimacy of using an electronic signature through the act of clicking an accept button on a website.

How does BoldSign help

The following elements of compliance available within BoldSign can be used to comply with Chinese eSignature laws:

Secure and unique signing link: A secure and unique link to sign a document is sent directly to the signer’s email address. This helps ensure that the document is only accessed by the intended signer and cannot be tampered with.
Password protection: Senders can specify a password that needs to be entered before viewing and signing a document. This adds a layer of security to the signing process.
Audit trail: The IP address of the signer and timestamps for all significant events in the signing process are recorded in an audit trail. This provides a record of who signed the document, when, and where.
Digital signature: The final document is digitally signed with an AATL-compliant certificate. This ensures that the document cannot be tampered with without invalidating the signature.
Consent: Signers are asked to confirm their intent to sign electronically and informed that they could opt out. This helps ensure that the signer is aware of the implications of signing electronically and has consented to do so.
Custom terms: Getting your signers to agree to a custom set of terms. This can be useful to ensure additional security or that the signer understands the terms of the document.

Disclaimer: The information on this page is intended to help businesses understand the legal framework of electronic signatures for this particular country.

However, Syncfusion, its officers, directors, stockholders, affiliates, attorneys, accountants, employees, or agents cannot provide legal advice. You should consult your personal attorney regarding your specific legal questions. Laws and regulations change frequently, and this information may not be current or accurate. To the maximum extent permitted by law, Syncfusion provides this material on an “as-is” basis. Syncfusion disclaims and makes no representation or warranty of any kind with respect to this material, express, implied, or statutory, including representations, guarantees, or warranties of merchantability, fitness for a particular purpose, or accuracy.

Syncfusion makes no warranties of any kind, including but not limited to respect to the information or the product, whether express, implied, statutory, or otherwise. To the maximum extent permitted by law, Syncfusion disclaims all conditions, representations, and warranties, whether express, implied, or statutory, with respect to this information without limitation any implied warranty of merchantability, fitness for a particular purpose, accuracy, or currentness of this information.

Syncfusion nor their officers, directors, stockholders, employees, affiliates, attorneys, accountants, or agents shall be liable for indemnification, nor does this create an express or implied, contractual or statutory, equitable or otherwise, under this Agreement. The officers, directors, stockholders, affiliates, attorneys, accountants, or agents will not have any liability in any form.

¹ The Electronic Signature Law of the People’s Republic of China (2004)
[http://www.lawinfochina.com/display.aspx?lib=law&id=3691&CGid=]
² Art. 2
³ Ibid Art. 13
⁴ Ibid Art. 14
⁵ Ibid Art. 3

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