[what you need to know] Vietnam’s Draft Law on E-Transactions

Vietnam’s current Law on E-Transactions was passed in 2005 and has been effective since March 1, 2006. This law is considered a framework law, developed based on the Model Law on E-Commerce of the United Nations Commission on International Trade Law (UNCITRAL).

 

According to the Ministry of Information and Communications (MIC), over the past 17 years, the implementation and application of e-transactions have shown significant evolution in certain areas demanding high levels of international integration, such as banking and e-commerce, but has faced difficulties in other areas due to a lack of detailed guidance. In addition, with the strong growth and breakthrough development of digital technologies such as artificial intelligence, big data, biometrics, and blockchain, and in the context of the ongoing Industrial Revolution 4.0 and the development of digital government, digital economy, and digital society, the 2005 Law on E-Transactions has revealed its shortcomings. Therefore, the government of Vietnam has entrusted the MIC to take the lead in drafting a new Law on E-Transactions, which will replace the old 2005 law in order to meet the country’s development needs.


Accordingly, the MIC published a Draft Law on E-Transactions (“Draft Law”) for public consultation from May 4 to July 4, 2022. The latest accessible version of the Draft Law at the time of writing is Version 4.


The effective date of the Draft Law is still not yet determined, though this law is expected to be submitted to the National Assembly for its review and comments in October 2022 and approval in May 2023.


The following are some key contents of the Draft Law:


1. Scope of Application


Unlike the current law, which explicitly excludes certain areas such as the issuance of certificates of land use rights and marriage certificates from the scope of application, the Draft Law attempts to cover all areas. The MIC’s ambition is to develop a unified law which enables activities in all sectors carried out in traditional ways to be carried out in the digital environment. However, retaining a key principle of the current law, the Draft Law will not interfere with the regulations of substantive laws which stipulate the content, conditions, and forms of transactions in their respective areas.


The Ministry of Justice expressed its concerns about this expansion of coverage to embrace all sectors in an appraisal of the Draft Law. However, according to the MIC, the reason for excluding certain areas in the old law was because the technology was not ready and did not meet the requirements of safety and reliability at that time. Now, technology has advanced, and e-transactions in all sectors are an international trend. Digital signatures have become harder to forge than handwritten signatures; facial recognition by machine is more accurate than facial recognition by humans; execution of transactions electronically saves time, costs, and human resources and at the same time still ensures security, confidentiality, and reliability compared to transaction execution in the traditional way. In addition, the Draft Law adds a section on trust services, which will help previously excluded activities to be carried out electronically while ensuring they meet the necessary legal requirements.


Importantly, this coverage expansion allows all sectors to adopt e-transactions on a voluntary basis. It is up to the relevant substantive law to decide to adopt e-transactions partly or wholly, or not at all.


2. E-Transactions in All Sectors


The Draft Law retains the key principles of the current law, while providing more comprehensive regulations in order to facilitate e-transactions in all sectors, especially sectors in which the relevant substantive laws require certification/notarization when executing transactions in the traditional way, such as those related to housing and land, inheritance, marriage/divorce, etc.


Data Messages:


The Draft Law retains the main content of provisions under the current law on the legal validity of data messages; recognition of data messages being valid as written documents, as original copies, and as evidence; and rules for sending and receiving data messages.


The Draft Law also supplements regulations to recognize the legal validity of data messages as written documents in cases where the respective substantive laws require documents executed in the traditional way to be verified/affirmed (i.e., signed, or signed and sealed), certified, or notarized. In other words, the Draft Law recognizes the legal validity of e-transactions in areas with s