How to Deal with Legal Risks in E-Commerce?

Inconsistent regulations on format data and on electronic identity authentication; ambiguity about legal validity, evidence value and legality; insufficient regulations on electronic bonding and contracts are legal risks in e-commerce transactions to which businesses need to pay attention.

According to the 2020 White Book on e-commerce, Vietnam's e-commerce continued to grow by above 30% to about US$15 billion. The Government is carrying out the National Digital Transformation Program, under which 50% of Vietnamese SMEs will switch to digital platforms and have at least 80,000 digital technology businesses by 2025.

Mr. Pham Ngoc Vinh from E-Commerce Development Center under the Vietnam E-commerce and Digital Economy Agency, said that, by 2025, 55% of Vietnam's population will have access to e-commerce and online shopping; 40% of businesses will operate e-commerce on mobile applications; 80% of e-commerce websites will have integrated online ordering function; 70% of transactions on e-commerce websites/applications will have e-invoices; 70% of electricity, water, telecommunications - communication services will be provided by electronic contracts and 10% of total retail sales of consumer goods/services will be contributed by e-commerce.

E-commerce and the internet will radically change the ways of doing business. Therefore, SMEs need to expand customer interaction channels via multi-channel sales. If they do not quickly adapt to e-commerce development, they will be left behind. In particular, if in the past, free trade agreements did not have specific e-commerce provisions, now this area has drawn new interest.

For example, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) includes such universal policies as commitments to imposition of no import and export duty on electronic transmission; commitment to non-discrimination of similar digital economic products; commitments to consumer protection; laws on consumer protection in the online environment against e-commerce fraud. The EU - Vietnam Free Trade Agreement (EVFTA) does not apply customs duties on electronic transactions and pledges cooperation in maintaining dialogues on matters relating to e-commerce. The Regional Comprehensive Economic Partnership (RCEP) also provides for trade facilitation and consumer protection to prevent e-commerce fraud. Accordingly, knowledge and preparation are important to effectively take advantage of opportunities provided by these agreements for e-commerce.

Despite its potential, e-commerce also presents numerous risks and challenges for all stakeholders. According to Mr. Phan Trong Dat, Deputy General Secretary of the Vietnam International Arbitration Center (VIAC), risks and challenges come from inconsistent regulations on format data, insufficient regulations on electronic identity authentication; ambiguity about legal validity, evidence value and legality; insufficient regulations on electronic bonding and contract.

Therefore, it is necessary to clearly define the ability of independent verification with electronic transaction generating systems in legal aspects and to define conditions to ensure security of digital signatures of individuals, organizations and enterprises, according to the legal responsibility of each subject.

E-commerce exchanges must be responsible for checking, monitoring, collating information from the suppliers/sellers, controlling the quality of goods, and preventing counterfeit goods, knockoffs and substandard goods.

Suppliers will bear the risk if they do not control the quantity and quality of goods when e-commerce exchanges deliver the goods to consumers, and carry the risks of payment, advertising and promotion. Besides, they may be jointly responsible for erroneous goods or transaction errors between exchanges and consumers.

And, consumers will face the risk of being defrauded and receiving poor-quality goods; payment risks; and inaccurate information about suppliers among other things.

The above risks can lead to commercial disputes on exchanges, Mr. Dat said. To deal with this, businesses can resort to two forms: Negotiation or mediation. For the former, the involved parties have the right to voluntarily discuss and agree to remove the dispute without the intervention of a third party.

As for mediation, the parties resolve disputes with the participation of third parties as mediators to assist in finding a resolution. Negotiation results are not binding to the parties but successful mediation results are voluntarily enforced by the parties, required to be recognized in court and enforced in accordance with the law on civil judgment. Therefore, mediation is considered an effective measure to resolve disputes arising from transactions on e-commerce exchanges. With the help of commercial mediation, the rate of voluntary execution of mediation results is usually close to 90%.

According to many experts, Vietnam needs to soon complete the legal framework on e-commerce in order to bring this potential field to full play.

 By Quynh Chi, Vietnam Business Forum