E-contract rules need to address concerns

October 06, 2021 | 10:35
Electronic contracts could further improve and speed up business activities. However, local enterprises seem hesitant as open questions remain. New amendments to the legal framework could remedy their doubts and boost the application of e-contracts in domestic business transactions.
E-contract rules need to address concerns
Vinh Luu - Managing partner Asia Legal

A recent survey on the difficulties preventing Vietnamese enterprises from applying e-contracts to their businesses shows that the majority of them were concerned about the legal validity such contracts, followed by concerns over signing and executing these contracts. Confidentiality was another issue causing local enterprises to remain reluctant to apply these e-contracts to their activities.

The legal framework for contracts, particularly e-contracts, is comprehensive. Vietnam promulgated the Law on Electronic Transactions in 2005, based on inheriting most of provisions under the Model Law of the United Nations Commission on International Trade Law on e-commerce in 1996.

On that basis, the government in 2018 issued guiding legal documents, notably Decree No.130/2018/ND-CP, detailing the implementation of the Law on Electronic Transactions on digital signatures and authentication services; as well as and Decree No.52/2013/ND-CP from 2013 on e-commerce.

These legal documents guide the law in fields such as accounting, finance, banking, and insurance, which creates synchronisation and ensures the legal validity of e-contracts, as well as the safety and integrity of the data contained in these.

The validity of these contracts relies on criteria prescribed in the Civil Code 2015, including for example that transaction parties must have a legal status and capacity in conformity with such transactions. Moreover, parties must also act voluntarily, with the purpose and contents of these transactions in line with the law and/or social ethics. In other words, the engagement of the contract under the form of a written, oral, or electronic means is not a decisive factor affecting the validity of such contracts.

In addition, many enterprises have been concerned over the signing procedures and the unfamiliarity of e-contracts. However, electronic transactions occur every minute, every day in our daily life. Transactions on e-commerce platforms are typical examples of electronic transactions, which are popular for most people nowadays.

Confidentiality is another concern for enterprises as information of these electronic transactions is not only stored on the enterprise’s own system but also backed up on the systems of digital signature authenticators and other service providers for maintenance and technical troubleshooting.

The current law does not clearly stipulate the obligations of these service providers to secure confidentiality. Hence, enterprises should be aware of this matter and must include confidentiality obligations in the service contract of the digital signature service provider.

Also, a question that many enterprises raised was how to prove the validity of e-contracts, especially when dealing with third parties such as banks and state authorities.

In practice, Decree 52 provides a legal basis for this matter. An e-document in a commercial transaction has legal validity, similar to a printed original, if it fully meets the following conditions. There must be reliable assurance of the integrity of information contained in the e-document, starting from the time the information is first generated within it.

Further, information contained in the e-document must be accessible and usable in complete form when necessary. In which, the criterion for assessing the integrity is that the information is complete and unaltered, apart from changes in form arising the process of communicating, storing, and displaying the e-document. One of the criteria for reliability assurance is when the electronic document is signed with the digital signature granted by a licensed authentication service provider.

Thus, when an e-contract is signed with a digital signature granted by such a service provider, the information contained in the e-contract must be accessible and usable in complete form when necessary. If that the case, the e-contract shall have the same legal validity as a printed original. In reality, it is not difficult for enterprises to prove these three factors to third parties such as tax authorities and courts. However, whether it is accepted by these third parties remains an open question.

The draft decree amending the Decree 52 is expected to be officially issued soon and will stipulate the regulations on authenticating e-contracts through a service provider licensed by the Ministry of Industry and Trade. This provider is called CeCA, the Certified E-contracts Authority.

This means when the decree takes effect, there will be one more service provider offering authentication services to e-contracts.

By Vinh Luu

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