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Understanding Vietnam’s Draft Law On E-Transactions – Financial Services



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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 has 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
stricter requirements for transaction execution which require
certification or notarization. The Draft Law also provides for
conversion from written documents to data messages and vice versa
so that parties can use data messages instead of written documents
and vice versa where appropriate or allowed by law.

E-Contracts:

The Draft Law continues to recognize the legal validity of
e-signatures (see below) and e-contracts, retaining the current
law’s rules for signing and performance of e-contracts; rules
for sending or receiving data messages in signing and performance
of e-contracts; and legal validity of notice in signing and
performance of e-contracts. In addition, the Draft Law adds
regulations to enable signing and performance of e-contracts
through automatic information systems.

3. E- Signatures and Digital Signatures

The Draft Law provides clearly that the use of electronic means
to conduct transactions is voluntary, unless otherwise
provided for by law. In addition, as in the current law, the Draft
Law clearly regulates that parties to transactions are free to
agree on the selection of technology to execute the
transactions—no specific technology should be mandated in
transactions. This important policy has been emphasized in order to
facilitate innovation of technology.

An “e-signature” denotes a technology-neutral concept
while a “digital signature” is a type of more secure
e-signature which uses the specific technology of asymmetric
cryptography. Digital signatures have long and commonly been used
in Vietnam (and in the world) in e-transactions, and digital
signature certification services have also been in operation in
Vietnam for many years.

The previous version of the Draft Law was more adherent to
technological neutrality, while Version 4 shifts to the predominant
use of digital signatures. In particular, Version 4 provides that
in cases where a document requires a signature by law, the
requirement for a data message is considered fulfilled if that data
message is signed with a digital signature as specified in
the law; and where the law requires a document to be certified by
an organization/agency, that requirement for a data message is
considered fulfilled if the data message is signed by the
digital signature of that organization/agency.

This specific use of “digital signature” to recognize
the legal validity of e-signatures in transactions that need to be
signed or to be certified would violate the important policy of
technological neutrality; thus, these regulations should be
carefully reconsidered.

As in the current law, the Draft Law recognizes the legal
validity of foreign e-signatures and foreign e-signature
certificates.

4. E-Certificates

Regulations on e-certificates are introduced in the Draft Law,
which provides for recognition of their legal validity. An
e-certificate is defined as a data message created by an agency,
organization, or individual, the information in which is used to
serve as the result of administrative procedures, or as a permit,
diploma, certification, certificate, valuable paper, written
consent, or other confirmation in electronic form. E-certificates
can be transferable or non-transferable. The information system to
store and process e-certificates must be ensured to meet at least
Level 3 of network information security in accordance with the Law
on Network Information Security.

Although the current law uses the term
“e-certificates,” it denotes a different meaning,
referring to the verification of a signing person/organization,
similar to the concept of e-signature certificates under the Draft
Law.

5. Trust Services

Trust services in e-transactions, including timestamp services,
data message certification services, and digital signature
services, are supplemented in the Draft Law. Although this is new
content compared to the current Law on E-Transactions, timestamp
services and digital signature services are not new services, and
have been regulated under Decree No. 130/2018/ND-CP. The Draft Law
retains and incorporates certain framework regulations of state
management of timestamp services and digital signature services
regulated in this decree. In particular, the Draft Law provides
that these trust services are conditional business services and
subject to licensing with a license duration of 10 years.

Data message certification services used to certify data
messages in cases where the corresponding substantive law requires
documents to be certified. These services include services of
certifying the reliability of data messages and services of sending
and receiving secure data messages.

In the previously released draft, the MIC additionally included
certification of e-transactions and e-contracts in the trust
services, and the broader (and technology-neutral)
“e-signature certification services” was used instead of
“digital signature services.”

The MIC removed the certification of e-transactions and
e-contracts from the trust services and also removed provisions on
intermediary services in e-transactions and digital credit rating
information services from Version 4 because these regulations would
create administrative procedures for organizations and businesses
which wished to provide those services. After assessing the current
situation, the MIC proposed that it was not appropriate at this
time to include these services in the Draft Law. However, this
appears to conflict with the MIC’s stated ambition to enable
e-transactions in all sectors. With no regulations on e-transaction
and e-contract certification services, how can transactions and
contracts be certified in the digital environment if the respective
substantive laws require such certification? Will this matter be
left for a sub-law to regulate? Or will the MIC amend the Law on
E-Transactions again, after the new law has taken effect?

6. Information Systems Serving E-Transactions

The Draft Law adds a new section on information systems serving
e-transactions, which includes information systems for the
provision of trust services and information systems for the
provision of services for sending and receiving secure data
messages. This section regulates information systems serving
e-transactions; e-identification accounts; e-transaction accounts;
responsibilities of information system owners; responsibilities of
state agencies in state management; and measures to protect
e-transactions.

E-identification accounts are used to verify the identity of an
individual or an organization to perform administrative procedures,
e-government services, and other activities in the network
environment.

E-transaction accounts are used to conduct e-transactions, store
transaction history and ensure the accuracy of the order/process of
transactions of the account holder, and as evidence of the
transaction history of the parties to e-transactions. E-transaction
accounts could be used in carrying out administrative procedures in
the network environment, or in other transactions of account
holders’ choice.

The responsibilities of information system owners are classified
into three groups, based on the number of users served. Owners
serving large numbers of users are subject to additional
requirements and obligations, such as having to disclose algorithms
used to make recommendations and display ads.

The previous version of the Draft Law provided the concepts of
digital platforms, digital services, and online transactions, but
in Version 4, the more general and inclusive term “information
systems serving e-transactions” is used to simplify
understanding and to be consistent with definitions in other
relevant substantive laws, according to the MIC.

7. Open Data

The Draft Law adds new content regarding the open data of state
agencies, which is defined as data that is published/disclosed by a
state agency for other parties to freely use, reuse and share, in
order to promote e-transactions, digital transformation, and
development of the digital economy and digital society.

Organizations and individuals are free to access and use open
data without being requested to provide identification; are allowed
to freely copy, share, exchange, and use open data or combine open
data with other data, and use open data in their commercial or
non-commercial products or services; but are not allowed to sell
open data which has been exploited in its original state from state
agencies to other organizations and individuals.

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.



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