Indonesian Rules on E-Signatures

Continued growth in electronic transactions has resulted in electronic signatures, or e-signatures, becoming more common in daily transactions. In this article we discuss the use and applicability of e-signatures in Indonesia and the relevant regulations under Indonesian law.

Introduction and definition

E-signatures were unregulated in Indonesia until the enactment of Law No. 11 of 2008 regarding Electronic Information and Transactions (Law No. 11/2008). E-signatures were further regulated by Government Regulation No. 82 of 2012 regarding the Implementation of Electronic Systems and Transactions (GR No. 82/2012).

Under the relevant regulations, an e-signature is defined as containing electronic information that is attached to, associated with, or linked to other electronic information that is used as a verification and authentication tool. E-signatures in Indonesian law will have lawful legal force and legal effect as long as they meet the following requirements:

• E-signature creation data is associated only with the signer;
• E-signature creation data at the time of the electronic signing process shall be only in the authorization of the signer;
• Any alteration to e-signatures that occurs after the time of the signing is traceable;
• Any alteration to electronic information associated with the e-signature after the time of the signing is traceable;
• Certain methods are adopted to identify the signer; and
• Certain methods are adopted to demonstrate that the signer has given his or her consent to the associated elec­tronic information.

The said regulations do not stipulate the qualifications of "cer­tain methods" as mentioned above. However, we believe that these methods are those that have the ability to secure origi­nality and may be traced back to signers for authentication pur­poses. In view of this, we believe that these methods also relate to encryption technology.

Function and types of e-signature

E-signatures function as an authentication and verification tool for:

• The identity of the signer; and
• The intactness and authenticity of the attached, associated, or linked electronic information.

In Indonesia, there are two types of e-signature, i.e., (i) cer­tified e-signature and (ii) uncertified e-signature. Certification is provided by an independent certification company, as regulated in Law No. 11/2008and GR No. 82/2012.

Applicability in practice

As discussed, e-signatures are recognized under Indonesian law, pro­vided that certain conditions are met as explained above. To discuss the applicability of e-signatures we must also discuss electronic documents, or e-documents, that must contain an e-signature for the purpose of authenticating and verifying the originality of such e-document. E-documents are admissible as evidence in disputes settled through either the courts or arbitration.

Please note, however, that for e-documents to be admissible in courts or arbitration bodies they must be at least generated or transmitted through an elec­tronic system that in general satisfies the following requirements:

• Able to retain the electronic information and/or e-doc­uments in their entirety in accordance with the relevant laws and regulations;
• Able to protect the availability, intactness, authenticity, confidentiality, and accessibility of electronic information in the implementation of such electronic system;
• Can be operated pursuant to the procedures or instruc­tions for the implementation of such electronic system;
• Equipped with procedures or instructions announced in a language, information, or symbol that can be understood by the party related to the implementation of such elec­tronic system; and
• Has a continual mechanism for maintaining the novelty, clarity, and accountability of the procedures or instruc­tions.

In practice, depending on the knowledge of the district court, appeals court or Supreme Court justices hearing the case, the ex­amination of submitted e-documents could be a challenge. While the judges may be well equipped with the knowledge and experi­ence of examining conventional types of evidence in a civil dispute (e.g., contracts signed in ink), the same may not be true for e-doc­uments.

One way to overcome such challenge is to present expert witnesses during the examination process. That being said, there is no guarantee of the result. At the end of the day, the judges shall is­sue the court award based on their understanding of the presented evidence as well as their sense of fairness.

This may be less of a challenge in arbitration proceedings. In practice, arbitration settlements are more practical and efficient in view that arbitration awards are final and binding and the arbiters are experts in their respective fields.

Please note that under Indonesian civil law, for a contract to be valid and binding for the parties (i) the contract must be signed by mutual consent of the parties; (ii) it must be signed only by duly authorized parties; (iii) it must be about a certain object(s), which means that the parties must agree to conduct certain actions focus­ing on a mutual goal(s) (for example, a contract for the distribu­tion of electronic merchandise); and (iv) the contract must not be in violation of the laws of Indonesia.

Even if an e-signature is on an e-document being transmitted and generated by a system that complies with Law No. 11/2008 and GR No. 82/2012, if it does not satisfy the validity and principles of a contract then such e-signa­ture and e-document may be voidable under the law or automati­cally void by law, as far as Indonesian civil law is concerned.

Exceptions

While Indonesian law recognizes e-signatures and e-documents, as discussed above, there are certain situations in which e-signa­tures and e-documents are not recognized. These are as follows:

• Documents that pursuant to the relevant laws and regula­tions must be made in written form; and
• Documents together with their supporting papers that pur­suant to the relevant laws and regulations must be made in notarial deed form or deed form by a land deed official.

Deeds of Sale and Purchase of Land and Buildings and Arti­cles of Association in view of the establishment of a limited liability company are examples of where e-signatures and e-documents are not recognized under Indonesian law.

This article originally appeared in Passport, published by the International Law & Practice Section of the North Carolina Bar Association.

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