Issue of October 2023 – Updates on new Law on Electronic Transactions 2023

Dear Valued Clients,

On November 29, 2005, the National Assembly issued the Law on Electronic Transactions No. 51/2005/QH11 (“LET 2005”). However, after nearly 18 years of implementation, LET 2005 has clearly revealed shortcomings as many provisions are no longer consistent with development reality, and fail to respond to the needs of the 4.0 industrial revolution as well as digital transformation and building Vietnam’s digital economy in the coming period. Therefore, on June 22, 2023, the National Assembly issued Law on Electronic Transactions No. 19/2023/QH15 (“LET 2023”), coming into effect from July 1, 2024.

In this Legal Update, we would like to summarize and clarify new policies when this Law officially takes effect.

1. Expand the scope of regulation of the LET 2023

The expansion of the scope of regulation is one of the most notable changes of the LET 2023. Currently, the LET 2005 stipulates that electronic transactions (“e-transaction”) shall not apply to “the grant of certificates of land use rights, ownership of houses and other immovable properties, inheritance documents, marriage certificates, divorce decisions, birth certificates, death certificates, bills of exchange and other valuable papers.”^[1]

However, in practice, some exclusion areas within the scope of regulation of the LET 2005 have now been widely implemented on the national electronic portal at levels 3 and 4 such as birth registration, marriage registration, etc. Therefore, this exclusion may make it difficult to deploy online public services as well as deploy e-transaction applications in the areas mentioned above.

Therefore, the LET 2023 amends and expands scope of regulation, specifically:

“1. For the purpose of this Law, provision is made for conducting transactions by electronic means.

2. Contents, requirements and forms of transactions are not included in this Law.

3. If other laws permit or do not specify whether a transaction can be carried out electronically, this Law shall be applied. If another law does not permit a transaction to be carried out electronically, such law shall be applied.”^[2]

It can be seen that the expansion of the scope of regulation of the LET 2023 is completely reasonable and appropriate, contributing to the establishment of a complete, favorable legal corridor for the transformation of activities from the real environment to the digital environment in all industries and fields.

2. Prohibited acts in e-transactions

In addition to expanding the scope of regulation, the LET 2023 has more specifically and clearly stipulated prohibited behaviors in e-transactions, facilitating the application of the law. Prohibited acts include:^[3]

(i)       Taking advantage of e-transactions to commit offences against the national interests, national security, social order and safety, public interests, legal rights and interests of agencies, organizations and individuals.

(ii)      Illegally obstructing or preventing the process of generating, sending, receiving and storing data messages or committing other acts to destroy information systems serving e-transactions.

(iii)      Illegally collecting, providing, using, disclosing, displaying, spreading, trading data messages.

(iv)      Counterfeiting, falsifying, or illegally deleting, canceling, copying, moving the part or whole of a data message.

(v)        Creating data messages in order to commit illegal acts.

(vi)       Cheating, counterfeiting, appropriating or illegally using e-transaction accounts, electronic certificates, electronic signature certificates, and electronic signatures.

(vii)      Obstructing the selection of carrying out e-transactions.

(viii)      Committing other prohibited acts in accordance with regulations of law.

3. Conversion between printed documents and data messages

The conversion between printed documents and data messages is also one of the completely new changes added to the LET 2023. The conversion needs to ensure other conditions of specialized laws related to the content or form of the document. The legal validity of a converted document shall comply with regulations of relevant laws. If the conversion conditions are not satisfied, the data message or printed document resulting from the conversion shall not be legally valid.

In case data messages are converted from printed documents, the following conditions must be fully satisfied:^[4]

(i)       There exists an assurance as to the integrity of the information contained in the data message in comparison with that in the printed document; and

(ii)      Information contained in the data message is accessible and usable for reference;

(iii)      There is a special sign special signs of certifying the conversation from the printed document to the data message and information of the agency, organization or individual carrying out the conversion;

(iv)      There is a digital signature of the agency or organization carrying out the conversion, unless otherwise prescribed by law.

On the contrary, in the case of printed documents converted from data messages, the following conditions must be fully satisfied:^[5]

(i)        There exists an assurance as to the integrity of the information contained in the printed document in comparison with that in the data message; and

(ii)       There is information to determine information system and governing body of the information system that generate, send, receive and store the original data message for searching;

(iii)       There is a special sign certifying the conversation from the data message to the printed document and information of the agency, organization or individual carrying out the conversion;

(iv)        There is a signature and a stamp (if any) of the agency or organization carrying out the conversion in accordance with regulations of law.

4. E-certificates

The LET 2023 has amended the concept of e-certificates. According to the new regulations, e-certificate means a license, certificate, confirmation or approval published by a competent authority or organization in the form of electronic data.^[6] Meanwhile, the LET 2005 currently stipulates that an e-certificate means a data message issued by an e-signature certification service-providing organization in order to verify that the certified agency, organization or individual is the person having made the e-signature.^[7] It helps solve the biggest problem in online public services throughout the process, which is the result of resolving administrative procedures electronically.

Information contained in an e-certificate shall be legally valid, if:^[8]

(i)      The e-certificate is signed by a digital signature of an issuing agency or organization according to regulations the LET 2023;

(ii)      Information contained in the e-certificate is accessible and intelligible so as to be usable in its final form;

(iii)      If any law requires a determination of time-related to the e-certificate, the e-certificate shall contain a timestamp.

If one of the above conditions is missing, the information in the e-certificate shall not have legal validity.

An e-certificate issued by a foreign competent agency or organization, in order to be recognized and used in Vietnam, must be granted consular legalization, unless the consular legalization is exempted according to regulations of Vietnamese law.

5. Foreign e-signatures, e-signature certificates

According to the provisions of Article 26.2 of the LET 2023, for foreign e-signatures and e-signature certificates in Vietnam to be recognized, the foreign e-signatures and foreign e-signature certificates must comply with technical standards and regulations on e-signatures and e-signature certificates as prescribed by regulations of Vietnamese laws or international standards that have been asserted or international treaties to which Vietnam is a signatory. In addition, foreign e-signature certificates are created on the basis of personally identifiable information (PII), which has been verified, of foreign organizations and individuals. Thus, compared to the LET 2005, the LET 2023 has stricter and clearer regulations on the recognition of foreign e-signatures, and e-signature certificates in Vietnam.

Subjects entitled to use foreign e-signatures and foreign e-signature certificates recognized as mentioned above are foreign organizations and individuals; Vietnamese organizations and individuals wishing to enter into transactions with organizations and individuals of foreign countries in which e-signatures and e-signature certificates of Vietnamese service providers have not been recognized.

In addition, in case it is necessary to authenticate foreign e-signatures, only organizations that satisfy the following conditions can provide the service:^[9]

(i)       Providers must be legally established and operated in country in which operation has been successfully registered; have technical audit reports of e-signature authentication service systems from auditing organizations legally operated in the country in which it is registered;

(ii)       Foreign e-signatures, and foreign e-signature certificates provided by foreign e-signature authentication service providers must satisfy technical standards and regulations on e-signatures and e-signature certificates according to regulations of Vietnamese laws or international standards that have been asserted or international treaties to which Vietnam is a signatory;

(iii)      Foreign e-signature certificates granted by foreign e-signature authentication service providers are created on the basis of authenticated personal identifiable information (PII) of foreign organizations and individuals;

(iv)       Foreign e-signature authentication service providers must update the current status of foreign e-signature certificates on trust service authentication systems of competent authorities of Vietnam;

(v)        Providers must have representative offices (ROs) in Vietnam.

6. Trust services

According to the provisions of Article 28 of the LET 2023, trust services include the following types of services:

(i)       Timestamping service;

(ii)       Data message authentication service;

(iii)      Public digital signature authentication service.

For public digital signature authentication service and timestamping service, in fact, these are not two new trusted services, but they have been implemented according to the provisions of Decree 130/2018/ND-CP of the Government dated September 27, 2018, on guidelines for of the Law on E-transactions of digital signatures and digital signature authentication.

For the data message authentication service, the reason why LET 2023 adds this service is due to the need to authenticate the integrity and uneditedness of the data messages and the service of multiplying and sending data messages. In the future, this service shall be similar to the service of notarization, authentication, and copying of original documents for current printed documents, but performed electronically.

Each trust service is a conditional investment and business line, so organizations that provide this service must have a service business license issued by the Ministry of Information and Communications and have the right to register one or several of the above-mentioned trusted services. The term of the trust service business license is 10 years.

In particular, for electronic contract authentication services in commerce, organizations business in this field must satisfy the requirements for e-contract authentication service provision according to regulations of law on e-commerce and requirements for trust service provision according to Article 29 of the LET 2023.

7. Stricter regulations on e-contracts

If according to the provisions of the LET 2005, an e-contract is only defined as a contract established in the form of a data message in accordance with the provisions of this Law, then in the LET 2023 this concept has been stipulated in more detail. Accordingly, e-contracts shall be concluded or executed from (i) the interaction between an automated information system and a person; or (ii) among automated information systems.^[10] Thus, whether an e-contract is concluded or implemented by an automatic information system (without human intervention), it still has legal validity to bind the parties to the contract to comply and perform. For example, the users agree to terms and conditions when using services from Apple, Google, etc. In addition, the LET 2023 also adds responsibilities of Ministries in promulgating regulations on entering into and implementing e-contracts related to the field of management.

From the above analysis, it can be seen that in the near future, transactions using e-contracts may become very popular and develop in all aspects of social life, and it can even become a trend and gradually replace traditional paper contracts. Right from this moment, it is very important for enterprises to clearly understand the provisions of the law and prepare the necessary steps to gradually approach the form of entering into contracts by electronic means.

As usual, we hope you find this Legal Update helpful and look forward to working with you in the upcoming time.

ENT Law LLC

The full version of this Legal Update can be found here.

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[1] Article 1.2 Decree 70.

[2] Article 1.2 Decree 70.

[3] Article 1.11(a) Decree 70.

[4] Article 2.1 Decree 70.

[1] Article 1 LET 2005.

[2] Article 1 LET 2023.

[3] Article 6 LET 2023.

[4] Article 12.1 LET 2023.

[5] Article 12.1 LET 2023.

[6] Article 3.5 LET 2023.

[7] Article 4.1 LET 2023.

[8] Article 19 LET 2023.

[9] Article 26.1 LET 2023.

[10] Article 34.1 LET 2023.