Introduction - where are we coming from

Provided a number of technical and other requirements are met, intended to guarantee authenticity and integrity, an electronic (or microform) copy of a document will be presumed to have the same probative value as the original, pursuant to the actual rules of evidence set out in the Luxembourg Civil Code. These requirements are laid down in a grand ducal regulation of 1986 (the "1986 Regulation").

The Commercial Code requires undertakings to store all business-related information and documents (contracts, invoices, incoming and outgoing correspondence, etc.) for a certain period of time. Such documents, with the exception of the balance sheet and profit-and-loss statement, can be kept in electronic form (or microform) provided the requirements of the 1986 Regulation are met.

Why introduce new rules?

The current legislation, which dates back to 1986, is not very well known and has certain shortcomings:

  • an electronic (or microform) copy, within the meaning of the Civil Code, will only be deemed equivalent to the original paper version if the latter no longer exists;
  • some of the requirements are not in line with current archiving practices, e.g. the requirement that information be stored on a device where, once written, it cannot be modified (e.g., a "write once, read many" or WORM device);
  • the company bears the burden of proving that the requirements of the Regulation are met.

In view of the foregoing, Luxembourg businesses have proved hesitant to dematerialise their documents, and the Luxembourg financial regulator, the CSSF, has in its 2008 annual report discouraged entities in the financial sector from doing so.

2. How do the new rules address these shortcomings?

On 13 February 2013, the Luxembourg government has submitted to the Luxembourg Parliament the long-awaited e-archiving act and accompanying grand ducal regulation (the "Proposal"). The Proposal will bring about the following changes:

  • an electronic (or microform) copy of written agreements within the meaning of the Civil code and commercial documents that must be stored according to the Commercial code, will be deemed equivalent to the original even if the paper version still exists;
  • the conditions of equivalence guarantee the authenticity and integrity of the copy but will be neutral from a technological perspective and in line with current archiving practices;
  • the burden of proof of the compliance with these conditions will be shifted for undertakings that wish to dematerialise and store their business documents (including contracts) by electronic means provided they use a certified dematerialisation and conservation service provider (PSDC);
  • two new categories of "support" financial services professionals will be introduced.

3. What is a dematerialisation and conservation service provider (PSDC)?

Pursuant to the Proposal, any undertaking can perform document dematerialisation and conservation services in Luxembourg once it has obtained a general business licence.

However, only qualified dematerialisation and conservation service providers (PSDCs) can certify that all conditions are met for an electronic (or microform) copy to have the same probative value as the original.

Undertakings can only obtain PSDC status after certification by duly accredited organisms and after validation of notification by the Luxembourg Institute for Normalisation, Accreditation and Security (ILNAS). Although the Proposal has yet to be approved, undertakings that wish to apply for PSDC certification can start preparing their applications now, in accordance with the technical rules for certification issued by ILNAS. These rules are based on international standards, such as ISO/IEC 15489:2001 on record management, ISO/IEC 27001:2005 and ISO/IEC 27002:2005 on information security management, and ISO 30301:2011 on operational management. Undertakings can obtain certification and ILNAS notification validation for dematerialisation activities only (PSCD-D), for conservation activities only (PSDC-C) or for both dematerialisation and conservation activities (PSDC-DC).

The Proposal also requires PSDCs to provide information to their customers about, amongst other things, the dematerialisation, conservation, copy, transfer and/or destruction procedures to be used as well as the contractual terms and conditions, prior to conclusion of the agreement. Customers have specific rights, as well, including the right to claim back dematerialised and/or conserved data if a PSDC is subject to insolvency proceedings or ceases or must cease its activities (due to loss of certification). PSDCs are further prohibited from granting any kind of security interest in the equipment and supports used to conserve data. These rights are in line with those provided for by another Proposal, which will allow http://tinyurl.com/bmt5eph data to be claimed back from bankrupt service providers.

4. What other rules are relevant in a dematerialisation and conservation project?

When a Luxembourg-based financial sector professional (FSP) wishes to outsource document dematerialisation and/or conservation, it must in principle call upon a so-called "support FSP" which is authorised by the finance minister to conduct dematerialisation and/or conservation activities on behalf of FSPs. Both the FSP and the support FSP must also abide by the CSSF's http://tinyurl.com/bsoqfe5 outsourcing rules. Undertakings that dematerialise for FSPs documents with probative value and/or conserve such documents must have the PSDC status as well as an authorisation of the Minister of Finance. These authorisation requirements are also laid down in the Proposal.

If personal data are involved, it goes without saying that EU and national data protection rules must be respected. These rules will be amended in the near future by a new Data Protection Regulation. This forthcoming regulation will probably impose an obligation to carry out a data protection impact assessment for processing transactions and procedures that pose specific risks, such as "large-scale filing systems" (see Recital 71 to the European Commission proposal for such a regulation). It remains to be seen whether the risk assessment carried out in the PSDC certification process will be sufficient in this respect.

5. What is the probative value of electronic copies in a cross-border context?

The new rules on the dematerialisation and conservation of documents are based on international standards and good practices. They will certainly contribute to the acceptance of dematerialised documents abroad, e.g., before a foreign court.

The cross-border acceptance of dematerialised documents, archived in accordance with the conditions laid down in the Proposal, will most likely be ensured by the forthcoming Regulation on electronic identification and trust services for electronic transactions in the Internal Market. According to the proposal for the regulation, issued by the European Commission on 4 June 2012, an electronic document shall be considered equivalent to a paper version and admissible as evidence in legal proceedings in all EU countries, if the authenticity and integrity of the electronic document can be warranted. It goes without saying that in its new dematerialisation and conservation rules, Luxembourg is taking the lead in determining how the conditions of authenticity and integrity can be applied in practice. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.