Making sense of requirements in data localisation

August 11, 2021 | 13:08
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In recent years, the government has attempted to follow global best practices in regulating data. One critical aspect of these new legislative attempts is Vietnam’s data localisation requirements. The Law on Digital Transactions 2005 defines “data” as information in the form of symbols, scripts, numbers, images, sounds, or of other similar forms.
By Tran Manh Hung & Nguyen Tuan Nghia , BMVN International Law Firm
Tran Manh Hung & Nguyen Tuan Nghia , BMVN International Law Firm

Data localisation should be distinguished from data sovereignty, the idea that data are subject to the laws of the jurisdiction in which they are collected. Indeed, each jurisdiction may have different rules relating to the same matter, and as such, each is said to claim “sovereignty” over such data. Data localisation takes a step further by requiring that the initial collection, processing, and storage of a citizen’s data occur first within national boundaries.

Data localisation requirements in Vietnam are found in three legislations. Firstly, the Law on Cybersecurity 2018, Article 26.3 on ensuring information safety provides that “[Enterprises] providing services on telecommunication networks or the internet and value-added services in cyberspace in Vietnam must store such data [here] for a period specified by the government. Foreign enterprises under this scope must also establish a branch or a representative office in Vietnam.”

The scope of the above provision is broad and includes every provider of any service over cyberspace who processes personal data. There are no exceptions to this rule.

Secondly, Article 26 of the draft cybersecurity decree stipulates that only foreign providers of prescribed services (domain name service, e-commerce, online payment, social network and social communication) may be required to store data and set up a branch/representative office in Vietnam.

Additionally, that obligation only arises if the service has been used to violate the Law on Cybersecurity; such violation(s) has been notified to the service provider by the authority; and the service provider has not complied with such instructions.

In contrast to the Law on Cybersecurity’s preemptive approach, the cybersecurity decree takes a reactive one. Not all offshore service providers have the localisation obligation, only those who have been notified of a breach and fail to comply do. Furthermore, while the Law on Cybersecurity imposes the localisation obligation on all online service providers, under the cybersecurity decree, only foreign providers of listed services may have such an obligation.

Under Vietnamese law, should there be conflicting provisions, the law prevails, so it is interesting to see how the final version of the decree resolves this matter.

The last legislation relating to data localisation is the draft personal data protection decree (PDPD). Under Article 21.1, an enterprise may only transfer data abroad if it meets all of the stipulated requirements, including storing the original data in Vietnam. However, should the exceptions in paragraph 3 apply, the enterprise is exempted from such requirements.

It is unclear whether only one or all four requirements under paragraph 3 must be satisfied for the enterprise to enjoy the exemption, and even so, whether the enterprise is relieved from all or just one of such obligations.

One can draw four remarks from this analysis. Firstly, although the cybersecurity decree, the Law on Cybersecurity and the PDPD all concern “personal data,” their approaches are significantly different. Secondly “storing of data” may be construed to include the storage in processing centres in Vietnam or the storage in third-party storage service providers’ systems. Last but not least, in Vietnam, with respect to certain business activities and especially novel ones, the law may be interpreted to permit only acts that are “approved,” “explicitly permitted,” or “licensed.”

This means that as long as current regulations on data localisation remain conflicting, there is no clear legal basis for businesses to ensure full compliance with the laws.

Making sense of requirements in data localisation

By Tran Manh Hung and Nguyen Tuan Nghia, BMVN International Law Firm

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