The Enforcement and Collection Authority's Claims
- The Respondent, as a rule, does not rule out the possibility of recognizing a digital signature on a promissory note, but in the framework of its responses, it noted the difficulties that arise from adopting such an interpretation, which requires the formulation of appropriate arrangements in cooperation with all the relevant parties. In this context, she noted that a preliminary meeting had already been held on the matter. The respondent also emphasized that the issue at hand also relates to checks.
In her responses, the respondent pointed to a number of difficulties in recognizing an electronic signature on a deed. First, an examination of the language of the Ordinance indicates a document of a physical dimension, and this is also evident from the language of the Check Clearing Law. The Respondent detailed the terms used in these pieces of legislation, inter alia, "holding"; "Delivery", "Possession" in the Banknotes Ordinance, and "Computerized Scanning of Checks" in the Check Clearing Law. Second, the Respondent argues, at the basis of the physical terms in the Ordinance is the purpose of the promissory notes, such as the "offenses" feature, which is based on physical delivery and the object dimension of the note. According to the Respondent, it must be ensured that the merchant dimension of the note is preserved, even where it is electronically signed, and expressed concern that since it is possible to produce several copies of the note, it is not possible to produce a one-value identification of the person holding it, and thus its negotiability will be harmed. Hence, this type of document cannot be considered a "deed" according to the Banknotes Ordinance and its accepted interpretation.
The Respondent insisted on the provisions of the Check Clearing Law, which also views the check as a document of a physical dimension, and noted that it established an interface with the banking system in which every request for execution of a check that has been cleared electronically is forwarded for examination in order to verify that the output submitted for execution is genuine, in order to prevent counterfeiting of the output. In this context, the Respondent clarified that the Check Clearing Law was limited only to checks whose negotiability was restricted in any case.
- Another difficulty that the Respondent pointed out is the concern that the note will be presented for repayment more than once, since it will be possible to produce digital copies in an unlimited number, without the possibility of identifying who is in possession of the original note, and without the possibility of identifying a characteristic. Therefore, the transition to a digital arrangement in banknotes is not simple, and requires the creation of additional complementary rules or another mechanism for conduct that will ensure the aforementioned purposes.
The Respondent also explained that upon the printing and submission of a promissory note in the framework of a performance application, the dimension of the digital signature disappeared from it, and only the name of the signer was seen on it.
- Therefore, according to the Respondent's position, as presented in the letter of the Enforcement and Collection Authority dated September 18, 2023, which was submitted to the Honorable Registrar Lechner, "at this time there is difficulty in recognizing a document that has been signed with an electronic signature as a deed...". However, the Respondent reiterated that "the Ministry of Justice intends to conduct a more in-depth examination of the possibility of recognition of promissory notes... In the framework of which the possibility of interpreting the legislation in a purposeful manner alongside the publication of supplementary procedures will be examined, or alternatively, to examine legislative amendments to the extent necessary. Such an examination does not detract from the position of the State authorities regarding the interpretation of the existing law as detailed above" (Appendix 3 to the Respondent's response to the request for leave to appeal).
The Respondent also mentioned that the Applicant's path and that of others like her are not blocked due to the non-recognition of the electronic signature on a deed, since it has the option of opening the file as a claim for a fixed sum.
- With regard to the procedures according to which the execution offices work, the respondent argued that these are procedures that are published to the public, and they explicitly state that "it is not possible to open a writ of execution file if there is no signature of the person making the note." According to the respondent, the reference in this terminology is to a physical signature only, and no reference to an electronic signature is required. The Respondent further noted that many winners approached the Respondent to submit a request for execution of a deed to the Respondent on the question of whether it is possible to submit for execution a deed that was signed electronically, and was answered in the negative. The Respondent further referred to Form D1 of the Execution Regulations, which explicitly defines that the winner must hold the hand-signed notes.
The Respondent further noted that other legal systems based on English law have not yet recognized electronic signatures, and referred to a position paper on this matter on behalf of the World Trade Organization.
- With regard to the Attorney General's Directive 1.2500, the Respondent clarified that since the Banknotes Ordinance relates to physical signs, and in light of the purposes of the Banknotes Law and the characteristic of trades, an interpretation that includes recognition of an electronic signature cannot be regarded as fulfilling the purpose of the Banknotes Ordinance, as required by the Attorney General's directive.
- In response to the clarification requested from the Respondent in connection with the provisions of the Electronic Signature Law, the Respondent replied that even in the framework of the Knesset deliberations on the legislation of the Law, the difficulty arose to recognize the electronic signature on banknotes, and at the end of the day, it was decided in an order amending the addendum to the law that it was not possible to allow the submission of outputs of a note as a source in legal proceedings.
In summary, in its first response to the request for leave to appeal, the respondent argued that the existing law does not allow the use of digitally edited and signed banknotes, for the reasons detailed above. However, in its last response, the Respondent noted that it does not rule out the possibility of recognizing a digital signature on a promissory note, but that this requires the formulation of appropriate arrangements.