Published in www.legalbusinessonline.com in November 2011 by Tuan Nguyen, Partner at bizconsult law LLC.

On 17 November 2010 the Vietnam Parliament adopted Law No. 59/2010/QH12 on Protection of Consumer's Rights. As publicly announced by the State President on 30 November 2010, this new law will become effective as of 1 July 2011, replacing the existing 1999 Ordinance No. 13/1999/PL-UBTVQH10 on Protection of Consumer's Rights, which is deemed too simple and therefore does not work in practice. The new law provides particular legal stipulations on the rights and obligations of consumers; the responsibilities of traders to consumers and the responsibilities of social organisations in protection of the rights of consumers; disputes and settlement of disputes between consumers and traders; and the responsibilities of the State to protect the right of consumers.

The new law will be guided by the Government of Vietnam for implementation - however, these guidelines are not available at the present time. This article therefore provides you with summary of main issues of the law.

• Definitions

Unlike the Ordinance on protection of consumer's rights, the new law - a higher level of the Ordinance -provides definitions and interpretations of legal terms and phrases, which will facilitate implementation and compliance. Some necessary legal terms and phrases are as follows:

• Consumer means buyer(s) of goods, services for the purpose of use, personal use, family use or use by organisations
• Trader means organisation(s) and/or individual(s) who conduct one or several or all processes of investment, from the protection process to sale of goods or supply of services in the marketplace for profit. Trader includes traders as defined by the 2005 Trade Law and individual(s) who engage in business independently and regularly and are not required to register his/her business activities
• Defective goods means goods which are not safe to consumers, likely causing damage to life, health, and/or the property of consumers. This is even if such goods are manufactured correctly with technical standards or processes but their defect(s) are yet to be discovered at the time of supply to consumers. Defective goods include (a) one of mass production which has technical design defects, (b) one of single production which has defects from the production process, transportation and/or storage, (c) one which is implicit damage or non-safety during utilisation without proper guidance or warning to consumers
• Disturbance to consumers means either a direct or indirect approach to consumers for the introduction of goods and/or services, or the introduction on traders or for a proposal of contractual execution, which are not required by consumers, which obstruct or affect the common works or activities of consumers

• Governing jurisdiction

The new law only governs consumers, traders and organisations, and individuals related to activities of protecting the rights of consumers within the territory of Vietnam.

• Rights of consumers

Under the new law, consumers have the following rights:

• Are entitled to be safe in their life, health, legitimate assets and interests when participating in transactions and the utilisation of goods and/or services provided by traders
• Are entitled to be provided full and accurate information on traders, contents of transactions, origin of goods, and are entitled to be provided with invoices, vouchers and documents related to transactions and other necessary information on goods and/or services purchased and used by consumers
• Are entitled to select goods and/or services and traders based on their needs and condition, are entitled to decide whether to participate or not in the transactions with traders
• Are entitled to make comments, suggestions to traders on price and quality of goods and/or services, style or manner of services, method of transaction and other issues related to transactions between consumers and traders
• Are entitled to participate in the building and implementation of policy and laws on protection of right of consumers
• Are entitled to claim for compensation when goods and/or services provided do not meet with technical standards, quality, quantity, features, use, price or other issues which are all published, posted up via notice, or advertised or committed by traders
• Are entitled to complain, denounce, sue or propose social organisations to sue for protecting their rights under this law and other regulations of Vietnam
• Are advised, supported and guided with knowledge on consuming goods and/or services

• Prohibited acts

The new law provides for the following acts to be banned to traders:

• Traders who trick or create confusion for consumers through advertising activities or to conceal or provide improper and/or incorrect information on either of the following: (a) goods and/or services provided by such traders, (b) traders' reputation, business ability, ability for providing goods and/or services (c) contents, the character of transactions between consumers and traders
• Traders who disturb consumers through promotional activities for goods and/or services which are out of consumers desire, or commit acts of obstructing and/or affecting the normal works and activities of consumers
• Traders who constrain consumers through conducting any of the followings acts: (a) force or threatening to use by force or other measures, causing damage to life, health, honour, reputation, human dignity, and/or assets of consumers, (b) take advantage of the difficult situations of consumers or take advantage of natural disasters and/or diseases to force transactions or to provide goods and/or services of unqualified quality
• Traders who conduct commercial promotional activities, proposing to deal directly with civil incapacity of persons
• Traders who request consumers to pay for goods and/or services which are provided by them without having prior agreement with consumers
• Traders who provide unqualified goods and/or services causing damage to life, health, and the assets of consumers
• Consumers, social organisations and/or traders who take advantage of the protection of rights of consumers to trespass on the interests of the State, and/or the legitimate rights and interests of other organisations and/or individuals

• Penalties for violations

The new law stipulates the principles of applying penalties for violations as follows:

• An individual in breach of the law will, depending on the nature and degree of violation, be handled via administrative procedure or prosecuted for criminal responsibility. If such breach causes damage, he/she shall be forced to pay compensation under the laws
• An organisation in breach of the law will, depending on the nature and degree of violation, be handled via administrative procedure. If such breach causes damage, it shall be forced to pay compensation under the laws
• An individual taking advantage of his/her position and/or competence in breach of the law will, depending on the nature and degree of violation, be disciplined or prosecuted for criminal responsibility. If such breach causes damage, he/she shall be forced to pay compensation under the laws.

The new law authorises the Government of Vietnam to issue guidance on sanctions to administrative violations in the protection of right of consumers. It is expected that the decree will soon be promulgated.

• Responsibilities of traders to consumers

The new law stipulates the following responsibilities on traders of goods and/or services to consumers in Vietnam:

• Labeling goods in accordance with the laws of Vietnam
• Posting up notice of price of goods and/or services in the business
• Providing warnings on the adverse effect of goods and/or services to health, life, and assets of consumers with precautionary measures outlined
• Providing information on the ability to provide spare parts, fittings, accessories of goods
• Providing a user manual
• Fulfilling the obligations of warranty of goods which are provided with warranty attached. In particular, traders in this case are responsible for (a) providing consumers with certificate of warranty with clear information, (b) replacing spare parts, fittings, accessories to goods under warranty, (c) exchanging goods under warranty or refunding money to consumers if goods under warranty cannot be repaired during warranty period, etc
• Providing full and accurate information to consumers on forms of contract and conditions of transaction/s prior to signing up for the transaction/s
• Providing consumers with invoices, vouchers, and/or documents related to the transaction/s as prescribed by laws or at the request of consumers. For digital transactions, traders are required to facilitate consumer access, downloading, storage and print out of such invoices, vouchers and documents

If traders are importers of goods and discover that imported goods have defects shall have to (a) apply all necessary measures for suspending the distribution and sale of such imported goods in a timely manner in the market and (b) publicly announce on the imported goods their defects and withdrawal for at least five consecutive issues of a daily newspaper or five consecutive days of broadcasting in provinces where such imported goods are distributed and sold. Such public announcement must contain at least the base information as prescribed in the new law. After completion of the withdrawal of such defective goods, traders shall have to send a report to the competent state authority at province level. If such goods are distributed and sold within two provinces or more, the report shall also be submitted to the State Authority at central level.

• Responsibilities of third parties to consumers

In case traders provide information to consumers through third parties, the new law stipulates that the third parties shall have the following responsibilities to consumers:

• Ensuring the provision of full and accurate information on goods and/or services as provided by traders
• Requesting traders to provide proof of evidence showing the accuracy and fullness of information on goods and/or services
• Taking joint responsibility for providing incorrect or improper information, except in the case where the third party can prove that it had applied all measures prescribed by laws for checking the accuracy and fullness of information on goods and/or services
• Complying with the laws on press and advertisements
If traders provide information to consumers through mass media, the operator/owner of the mass media shall, apart from complying with the above-mentioned responsibilities, also have the following responsibilities:
• Applying technical measures for preventing their equipment and systems from being used for the purpose of disturbance to consumers
• Refusing traders use of their equipment and systems if they see such use will result in disturbance to consumers
• Stopping traders from using their equipment and systems if they see such use will result in disturbance to consumers or at the request of the competent authorities of Vietnam

• Contracts between consumers and traders

Matters of contracts between consumers and traders are new in the law. Basically, there are three main forms of contracts: verbal, written and digital form (signed online). In the case of the digital form of contract, traders must provide favourable conditions to consumers to review the entire contract before execution. Vietnam also adopted the laws on authentication of digital signature, which are most commonly applied in the banking industry and recently in tax registration/declaration.

The language of the contract shall be in Vietnamese, except if otherwise mutually agreed upon between consumers and traders or stipulated by laws. It should be noted that in the case of different understandings and interpretation of the contract, the new law stipulates that the Vietnam authorities in a competent jurisdiction shall interpret the contract in favour of consumers.

It should be further noted that provisions of the contract in the following circumstances shall not be valid:

• Such provisions eliminate statutory responsibilities of traders to consumers
• Restrict or eliminate right of complaint, right to sue of consumers
• Allow traders to unilaterally change provisions of contract without consent from consumer or rules of sale applied to consumer are not specifically stipulated in the contract
• Allow traders to unilaterally determine non-implementation of one or several obligations
• Allow traders to rule or change price at the time of delivery of goods and/or services
• Allow traders to explain a contract in the case of having different interpretation on the provisions of contract
• Eliminate responsibilities of trader/s in case they provide goods and/or services through third parties
• Force consumers to comply with his/her obligations while trader/s has not yet fulfilled their obligations
• Allow traders to transfer, assign rights, obligations to third parties without consent from consumer

Traders must keep the contracts they signed with consumers until they expire, and are responsible for providing a copy of such contracts at the request of consumers in case they are lost or damaged.

• Registration of contract between consumers and traders

Not all types of contracts signed between consumers and traders must be registered with the Vietnam authorities. The new law only requires any trader who is engaging in the business of goods and/or services in the list of essential goods and/or services which is promulgated by the Prime Minister, and is required to register the model contract and generally transaction conditions with the competent state authorities for protection of consumer's rights. The new law does not delegate the competent authority with which such contracts shall be registered (from the view of author, it is likely to be the Ministry of Industry and Trade at central level and/or the Department of Industry and Trade at province level), as well as the procedure for registration of such contracts. These would be stipulated in a guiding regulation of the Government.

• Responsibility for compensation

Traders are responsible for compensation for damage to consumers caused due to the goods being defective, regardless of whether traders do not know or have no fault for such defects of goods, except in cases where responsibility of compensation is waived. The following traders (organizations and/or individuals) shall have such responsibility for compensation:

• Traders producing goods
• Traders importing goods
• Traders affixing trade name on goods or use of trademark on goods, which allow the determination that such traders produce and/or import goods
• Traders directly supplying goods with defects to consumers, in cases of non-determination the trader will take responsibility for compensation as mentioned above

Compensation shall be ruled in accordance with the civil laws of Vietnam. The new law stipulates that traders will be waived from undertaking responsibility for compensation if they can prove that defective goods cannot be discovered through scientific and technical skill at the time of supplying the goods to consumers. However, this waiver is vague as to which scientific and technical skill will be mentioned, or is applicable to which party (specific trader or specific consumer), and how it is determined. It's quite difficult for traders to successfully prove they can enjoy such a waiver in Vietnam.

• Claiming against traders for compensation

Article 25 of the new law stipulates that when discovering violations by a trader which adversely affect the rights and interests of consumers or the state, the consumer and/or social organization/s is entitled to claim against the trader at the competent state authority, in the district where the transaction is conducted for settlement under administrative procedure. The petitioner is obliged to provide information and proof supporting the claims.

Based on the claim lodged by a consumer/s and/or social organization/s, the competent state authority will either request the parties provide information and proof of violations or conduct the investigation and clarification of such information and proof by themselves. If there is sufficient proof to conclude that there are violations by traders, the competent state authority will make a decision with regard to the following:

• Confirmation of the violation
• Remedies and duration for taking remedies. Remedies will be (a) force traders to withdraw and/or destroy goods and/or services of defects or suspend the distribution and/or selling of goods and/or services in defect; (b) suspend or temporarily suspend operation of traders; (c) force trader to eliminate provisions of model contract, which violates the right of consumers
• Administrative penalties, if any

If the traders repeat such violation they shall be put on the blacklist. However, there is no direction on whether the blacklist will be publicly announced or published in any website of the competent state authority. The Government of Vietnam will provide more detail on this part of the new law.

• Settlement of disputes between consumers and traders

Apart from the right to claim against traders at the competent state authority under administrative procedure, the new law provides for the following ways for settlement of any dispute between consumers and traders:

• Negotiation
• Conciliation
• Arbitration
• Court

However, the new law stipulates that negotiation and conciliation for settlement of any dispute which damages the interest of the State or a group of consumers or the public interest will not be accepted.

• Negotiation

Consumers can start the negotiation process by sending a request for negotiation to the trader when the consumer considers that his/her right has been trespassed. The trader will have to receive the request and conduct negotiations with the consumer within 7 business days from receipt of such request. The minutes on the result of the negotiation can be in written form or another form mutually agreed on by consumers and traders.

• Conciliation

Consumers and traders are entitled to select a third party mediator to conduct the conciliation. The mediator can be an individual or organisation, but the mediator must satisfy the conditions which will be stipulated by the Government of Vietnam. Any result of conciliation shall be made in written form of minutes, which shall consist of at least the information under the headings prescribed by the new law. If a party fails to comply with the conciliation result as mutually described in the minutes of conciliation, the other party is entitled to sue the non-complying party.

• Arbitration procedure

The new law allows consumers to sue traders at the arbitration bodies in Vietnam, but it puts a burden on the traders that they will have to inform the consumer of the arbitration clause before execution of the contract, and get acceptance from the consumer. If the arbitration clause is drafted by traders in the model contract, the new law allows consumers to select another method for settlement of the dispute, if the consumer does not agree with the arbitration clause. The procedure for settlement of any dispute between consumer s and traders at arbitration shall be in accordance with the Commercial Arbitration Law.

• Court procedure

Consumers are entitled to sue traders in court in accordance with the Civil Procedure Code. The case shall be handled by the court when all of the following conditions are met:

• Individual consumers initiates the case and traders directly providing goods and/or services is defendant
• Simple case and clear proof of dispute
• Value of dispute is less than 100 million VND (less than US$5,000)

However, it is unclear as to whether consumers are entitled to sue traders in court if the value of the dispute is bigger than 100 million VND.

Both parties are obliged to submit their proof, statement of claim and statement of defense to court. The consumer is not required to pay the court's fees and charges; instead the losing party is obliged to pay the court's fees and charge. It should be noted that the court's decision on any dispute between consumers and traders initiated by social organization/s will be published in the mass media.

• Social organisation

The new law provides for a concept of social organisation and its role in protection of the rights of consumers in Vietnam. Social organisation is established under the laws of Vietnam and operates under its charter. However, an unclear issue under the new law is where any social organisation is entitled to represent the rights and interests of consumer/s, or only social organisations having such a function under their charter shall have this right of representation (like the Association of Protection of Rights of Consumers in Vietnam, which has the right to protect consumers). A question remains that in Vietnam there are many social organisations with different functions, and many of them do not have function of representing rights and interests of consumers.

• Conclusion

The Law on Protection of Consumer's Rights provides general stipulations on the rights of consumers and the obligations of traders. Many provisions set forth in the new law are unclear, and will need to be guided by the Government of Vietnam. Nevertheless, with the adoption of the new law, traders doing business in Vietnam must now be aware of rights vested by such law on consumers in Vietnam to avoid risks or lawsuits.