COVID-19 Montenegro Update

E-Signature in Montenegro

This article provides a general legal overview of the applicable laws and use cases pertaining to electronic signatures in Montenegro.

Legal framework

In Montenegro, electronic signatures are regulated by the Law on Electronic Identification and Electronic Signature (Montenegrin Zakon o elektronskoj identifikaciji i elektronskom potpisu; “ZEIEP”).

Electronic signature is a set of data in electronic form that is attached to or logically linked to an electronic document and is used for signature and electronic identification of signatories. Also, ZEIEP recognizes an advanced electronic signature and a qualified electronic signature.

An advanced electronic signature is an electronic signature that reliably guarantees the identity of the signatory and the integrity of the electronic document. An advanced electronic signature shall: (i) be exclusively linked to the signatory, (ii) clearly identify the signatory, (iii) be generated by the use of an electronic signature creation tool that the signatory can independently manage and which is exclusively under his/her control, and (iv) include a direct link to the data to which it relates, in a way that allows unambiguous insight into any change to the original data. An advanced electronic signature based on an electronic certificate issued in a Member State of the European Union is recognized as an advanced electronic signature in Montenegro, if the above-listed requirements are met.

A qualified electronic signature is an advanced electronic signature that is created using a qualified electronic signature creation tool and is based on a qualified electronic signature certificate. A qualified electronic signature has the same legal effect as a handwritten signature and is admissible as evidence in proceedings before state bodies, local self-government bodies and local governments and legal entities that exercise public authority.

When are electronic signatures allowed?

An electronic signature is valid and applicable in legal transactions, administrative, judicial and other procedures.

An electronic signature is most commonly applied in the following areas of electronic business:

  • Electronic commerce (NDAs, LOIs, purchase orders, order confirmations, invoices, sales agreements, distribution agreements, service agreements, loan agreements, lease agreements);
  • Electronic banking (payment of bills, transactions, notifications of account balance, payment cards and exchange rate check);
  • Electronic administration (electronic archives, services of state institutions, e-offices, financial statements and filings to the tax administration); and
  • Payment systems (e-checks, e-credit cards, internet payment cards).

When are electronic signatures not appropriate?

ZEIEP does not define cases where electronic signatures are not appropriate or further prohibited.

The Law on Obligations overlooks the conclusion of agreements electronically. It also finds that the use of an electronic signature when concluding an agreement is governed by specific regulations, i.e. ZEIEP.

However, the Law on Electronic Commerce (Montenegrin Zakon o eletronskoj trgovini; “ZET”) regulates, inter alia, the conclusion of agreements in an electronic form.

ZET specifies areas to which the law does not apply, such as data protection, taxation, notarial activity and representation of parties and the protection of their interests before courts.

Furthermore, ZET states that when an electronic message or an electronic form is used to conclude an agreement, such an agreement cannot be contested for validity simply because it is in an electronic form.

However, there are some exceptions to this rule:

  • property, pre-marital or marital agreements and other agreements regulated by the law governing family relationships;
  • agreements for the disposal of property requiring the approval of a social work centre;
  • agreements for the assignment and distribution of assets inter vivos, life support agreements and agreements relating to inheritance, waiver agreements, agreements for the transfer of the hereditary part before partition, inheritance transactions and other contracts governed by the law governing inheritance;
  • gift contracts;
  • real estate transfer agreements or other legal transactions governing real property rights other than real estate leases;
  • agreements to be drawn up in the form of a notarial deed; and
  • surety agreements, if the surety is a person who acts outside his/her trade, business or professional activity.

ZET also states that when the signature of a person is required as a presumption for the validity and occurrence of an agreement, this condition is deemed to be satisfied by the electronic message signed by the advanced electronic signature, in accordance with the law.

Can blockchain technology be used for electronic signatures?

Yes, provided that blockchain technology could satisfy the requirements set out in the ZEIEP.

At first glance, it seems that blockchain technology could easily satisfy the requirements for “simple” electronic signatures, since ZEIEP does not set certain conditions except that it is created using an electronic signature creation device and that it is based on an electronic signature creation certificate.

However, in order for an electronic signature to be recognized as an advanced, it must be (i) uniquely linked to the signatory, (ii) capable of identifying the signatory, (iii) created using electronic signature creation data the signatory can, with a high level of confidence, use under their sole control, and (iv) linked to the data signed therewith in such a way that any subsequent change in data is detectable. There are blockchain frameworks which would not satisfy the above-mentioned criteria by their very nature. For example, certain frameworks employ pseudo anonymity, so it could be argued these frameworks are not capable of identifying the signatory.

The bar is set even higher for qualified electronic signatures, as these need to (i) satisfy the requirements for advanced electronic signatures, (ii) have the signature created by a qualified electronic signature creation device and (iii) be based on a qualified electronic signature certificate. Whether this is feasible will also largely depend on the individual blockchain framework but does not seem impossible (at least not from a legal perspective).

If you have any questions related to this article, please do not hesitate to contact:

montenegro@karanovicpartners.com

 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only. In addition, each electronic signature solution using blockchain or other similar technology should be analysed from a perspective of different legal areas (e.g. especially from the perspective of data privacy).