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Vietnam’s legal framework on e-commerce: inadequacies and solutions (part 1)

By VNA 12/28/2017 12:55 |

E-commerce is basically the applicati­on of electronic means to business and commercial activities__Photo: Internet

E-commerce is basically the applicati­on of electronic means to business and commercial activities. The development of the Internet and its universal use have paved the way for the growth of online business activities and brought about huge benefits to business entities. When participating in e-commerce, entities must comply with not only direct regulations on e-commerce but also relevant investment, commerce and civil laws. Therefore, the building and completion of a legal framework on e-commerce has become imperative. E-commerce legislation is regarded as a tool to protect and direct business entities and create a sound business environment through e-commerce.

According to Vietnam’s overall plan on e-commerce development from 2016 to 2020, by 2020, 50% of enterprises will have websites and 80% of enterprises will place or receive orders via e-commerce applications.

Current legal framework on e-commerce

Three laws that lay the legal foundation for e-ecommerce were passed in 2005, including the Commercial Law, the Civil Law and the Law on E-transactions. E-commerce activities and the settlement of disputes in e-ecommerce are also governed by various laws, such as the 2006 Law on Information Technology, the 2009 Telecommunications Law, the 1999 Penal Code (amended in 2009), the 2010 Law on Protection of Consumer Interests, the 2012 Advertising Law, the 2014 Law on Investment, and the 2014 Law on Enterprises.

Besides, in order to guide and manage transactions and activities related to e-commerce and the handling of violations in e-commerce, the Government and ministries have issued dozens of decrees and circulars. The important and new contents of some of these decrees and circulars are discussed below.

Principles of e-commerce activities

Government Decree 52 of 2013 on e-commerce establishes four principles for e-commerce activities.

The first principle is free and voluntary agreement in e-commerce deals. Accordingly, entities participating in an e-commerce transaction are free to reach agreement that is not contrary to law to establish the rights and obligations of each party in the transaction. This agreement serves as a ground for the settlement of disputes that may arise in the course of carrying out the transaction.

Second is the principle of determination of the scope of business in e-commerce. If traders, organizations or individuals that sell goods, provide services or promote trade on e-commerce websites do not announce specific geographical limits of these activities, such activities will be regarded as being carried out on a national scale.

Protection of consumer interests is the third principle, which requires owners of e-commerce sale websites and sellers on e-commerce service websites to comply with the Law on Protection of Consumer Interests when providing goods or services to customers. Customers on e-commerce service websites are users of e-commerce services and consumers of goods and services provided by the sellers on these websites. If the sellers directly post information about their goods and services on e-commerce websites, then the providers of e-commerce services and the suppliers of infrastructure are not the third party providing information as prescribed by the Law on Protection of Consumer Interests.

The last principle relates to e-commerce in goods and services restricted from trading or subject to trading conditions. This principle requires entities applying e-commerce to trade in goods and provide services restricted from trading or provision or subject to business conditions to strictly observe relevant regulations on the trading in those goods and provision of those services.

Relevant regulations concerning e-commerce 

The 2014 Law on Investment has many new provisions that ensure an open legal corridor for attracting investment and a transparent business investment environment to guarantee the interests of investors and business people and bring the best benefits for socio-economic development. The most significant provisions in the Law deal with citizens’ freedom of investment and business in all sectors and trades not prohibited by law or subject to business and investment conditions prescribed by law.

Meanwhile, the 2014 Law on Enterprises manifests the spirit of the 2013 Constitution on freedom of business. The Law separates enterprise establishment procedures from project investment and investment certification procedures, thus giving greater market access to enterprises. It lifts the requirement on an enterprise to provide a sector code when making business registration. Enterprises are not entitled to autonomy in doing business and deciding on forms of business organization. They also have the freedom to select business lines, places and forms as well as change their business scale and lines.

The development trend of e-transactions has resulted in changes in the use of seals. The Law on Enterprises permits enterprises to decide on the form, quantity and content of their seals in accordance with law. But they are obliged to notify their specimen seals to the business registration agency for announcement on the National Business Registration Portal. Not all documents of an enterprise must bear seals, but only those which are required by law or by the enterprise’s partners to be affixed with seals.

Government Decree 124 of 2015 (Clauses 32 thru 35 of Article 1) lists administrative violations in e-commerce activities and sets fine levels for such violations.

Under this Decree, for violations in the establishment of e-commerce websites or e-commerce applications on mobile devices (mobile applications), a fine of VND 20-30 million will be imposed on those (i) establishing e-commerce service provision websites or e-commerce service applications without making registration with competent state management agencies as prescribed; (ii) receiving the transfer of e-commerce service provision websites or e-commerce service applications without carrying out transfer procedures or without re-registering with competent state management agencies as prescribed; (iii) providing e-commerce services not stated in the registration dossier; (iv) committing fraud or providing untruthful information upon registration of e-commerce service provision websites or e-commerce service applications; (v) forging information registered on e-commerce service provision websites or e-commerce service applications; or (v) continuing to provide e-commerce services after the registration termination or cancellation.

This fine level also applies to violations of regulations on protection of personal information in e-commerce activities, such as collecting personal information of consumers without their prior consent; setting defaults to compel consumers to agree with the sharing, disclosure or use of their information for advertising and other commercial purposes; or using personal information of consumers against the notified purpose and scope.

For violations of regulations on information and transactions on e-commerce websites or mobile applications, a fine of VND 30-40 million will be levied on those forging or copying e-commerce website interfaces or mobile applications of other traders, organizations or individuals to gain profits, cause confusion or make customers distrust these traders, organizations or individuals; or on those stealing, disclosing, transferring or selling information relating to business secrets of other traders or organizations or personal information of consumers in e-commerce without their consent.

Circular 47/2014/TT-BCT on management of e-commerce websites, which was issued on December 5, 2014, by the Ministry of Industry and Trade (MoIT), clarifies the provisions of Decree 52 on management of business activities on e-commerce websites. It assigns responsibilities for management of specialized websites and regulates the trading in goods restricted from trading or goods and services subject to business conditions on e-commerce websites, and the management of e-commerce activities in social networking sites.

This Circular does not apply to websites operating in the fields of finance, banking, credit, insurance, purchase, sale and exchange of money, gold, foreign currencies and other payment instruments, or providing online games, betting or prize-winning games.

Concerning the management of business activities on social networking sites, Circular 47 says owners of sites that allow participants to establish sub-websites or to open stalls for display and introduction of their goods or services and owners of sites that have sections permitting participants to post information about goods and service purchase and sale, must register these activities via the e-commerce exchange.

The Circular disallows traders, organizations or individuals to trade in goods restricted from trading on e-commerce sale websites or e-commerce service websites, and bans individuals from trading in goods and services subject to business conditions. Meanwhile, traders and organizations may establish e-commerce sale websites to trade in goods and services subject to business conditions but must publish on their websites the serial number and date and place of issuance of their certificate of eligibility for trading in such goods and services (if this certificate is required by law). They may use e-commerce service websites for selling goods and services subject to business conditions provided that they meet the required conditions for trading in such goods and services. In this case, the owners of these websites must request the sellers to produce their business eligibility certificate and, when discovering or receiving reports that information about goods sale and service provision violates law, will remove such information from their websites.

Circular 39 issued on December 11, 2014, by the State Bank of Vietnam clearly defines types of payment intermediary services and regulates the provision of these services, including risk management, safety and security assurance and solvency assurance. Under this Circular, those wishing to provide payment intermediary services must establish and apply principles of risk management in e-banking activities. They have to ensure safety and security for their information technology systems in banking activities as well as for the provision of e-banking services. They must also comply with the provisions of the law on e-transactions regarding issuance, use, preservation and storage of e-documents in banking activities.- (to be continued)