The Law on Protection of Consumers' Rights - Vietnam's Magna Carta for Consumers? - Christian Schaefer, Hogan Lovells International LLP
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The Law on Protection of Consumers' Rights – Vietnam's Magna Carta for Consumers? Christian Schaefer, Hogan Lovells International LLP Ho Chi Minh City, 9 May 2012
OUTLINE 1. Overview 2. Scope of application 3. Standard form contracts and "general trading conditions” 4. Protection of personal data and information 5. Implications for product liability 6. Dispute resolution process 7. Risks and legal consequences www.hoganlovells.com 2
1. Overview
Key regulations:
• Law 59/2010/QH12 dated 17 November 2010 on protection of
consumers’ rights (effective as of 1 July 2011, “LOPC”)
• Decree 99/2011/ND-CP dated 27 October 2011 of the Government
making detailed provisions and providing guidelines for the
implementation of a number of articles of the Law on protection of
consumers’ rights (“Decree 99”)
www.hoganlovells.com 31. Overview (cont’d)
• Decree 19/2012/ND-CP dated 16 March 2012 of the Government
providing on fines in protection of consumers’ rights (“Decree 19”)
• Decision 02/2012/QD-TTg dated 13 January 2012 of the Prime
Minister promulgating the list of essential goods and services for
which contract forms and general trading conditions must be
registered (“Decision 02”)
www.hoganlovells.com 41. Overview (cont’d)
Objectives:
• initially: to establish a comprehensive framework of consumers’ rights
in Vietnam – Article 1 LOPC
• to replace the outdated Ordinance on protection of consumers’ rights
(1999)
• however, results and outcome are far “tamer” than initially planned
www.hoganlovells.com 51. Overview (cont’d)
• Introduction / clarification of a number of typical concepts
relating to consumer protection, such as:
- Standards for general terms and conditions
- Right of rescission from contracts entered into online, over the
phone, at consumer’s home or work place
- Product liability
www.hoganlovells.com 62. Scope of application
• LOCP governs the relationship (rights and responsibilities)
between consumers and “traders”
• “Consumer”:
- “person purchasing or using goods and services with the aim of
consumption for living purposes by an individual, family or
organization” (Article 3.1 LOCP)
- no requirement that buyer and user/consumer of the goods or
services are identical
- use/consumption by organization?
www.hoganlovells.com 72. Scope of application (cont’d)
• “Trader”
- organization or individual conducting business in goods and services
that “implement” one or more phases of the investment process from
their manufacturing to their commercial sale (Article 3.2 LOCP)
- including business entities under the Commercial Law and
independent individual traders (non-registered) that act with a certain
regularity
• In addition, LOCP includes rights and obligations of social
organizations for consumer protection, and State agencies
www.hoganlovells.com 83. Standard form contracts and "general trading
conditions”
(Article 19 LOCP and section 1, chapter 3 of Decree 99)
• standard contracts used by traders in an unspecified number of
transactions with consumers
• “general trading conditions” (akin to standard terms and conditions of
sale/service): terms for sales to consumers / provision of services to
consumers
www.hoganlovells.com 93. Standard form contracts and "general trading
conditions” (cont’d)
• general requirements for standard form contracts and
“general trading conditions”:
– Vietnamese language
– contents must be “clear and simple to understand”
– font size must be at least 12pt
– readability of the print (paper and ink used must ensure sufficient
contrast)
– consumers must be allowed time to review standard form contracts;
“general trading conditions” must be publicly announced and
displayed at the business location of the seller / service provider
• Incorporation of standard terms into an agreement?
www.hoganlovells.com 103. Standard form contracts and "general trading
conditions” (cont’d)
• mandatory registration of standard form contracts and
“general trading conditions” applies only to contracts for
goods / services included on the “list of essential goods and
services” (as issued by the Prime Minister with Decision 02 )
- utilities contracts for personal consumption (electricity, water)
- “pay television” (cable and other pay TV services)
- telephone subscriptions (other than prepaid)
- internet connection contracts
- air and rail passenger transport contracts
- purchase and sale of apartments, day-to-day services provided by
apartment-managing units
www.hoganlovells.com 113. Standard form contracts and "general trading conditions” (cont’d) • interestingly, no banking services (e.g. personal accounts), hospital / medical treatment contracts, other personal transport services (in particular, bus transport), postal / delivery contracts etc. www.hoganlovells.com 12
3. Standard form contracts and "general trading
conditions” (cont’d)
• registration process:
- Ministry of Industry and Trade (“MoIT”) for contracts / conditions that
are applied Vietnam-wide or at least in two provinces / municipalities
- local Department of Industry and Trade (“DoIT”) for contracts /
conditions applied only in a particular province or municipality
• scope of review:
- Content to be reviewed: validity-test against requirements provided by
Article 16 LOCP
- examples of clauses prohibited by Article 16 LOCP
the clause excludes statutory liability of the trader (Article 16.1(a) LOCP);
unilateral changes (Article 16.1(b) LOCP);
imprecision / lack of regulations (Article 16.1(b) LOCP);
clauses allowing the trader to unilaterally determine the price upon delivery
(Article 16.1(dd));
clauses providing that the consumer must discharge its obligation before the
trader discharges its own obligations (Article 16.1(h)
www.hoganlovells.com 133. Standard form contracts and "general trading
conditions” (cont’d)
- Competent state agency has authority to request the Traders to
amend / delete any provisions that are unclear or conflict with the
LOCP (Article 16 Decree 99). Also, the state agency reserves the
right to obtain opinions from other authorities / agencies during the
registration procedures of the standard form contracts and “general
trading conditions”
- There is no clear basis to define “unclear provisions” or “conflicting
provisions”, this means the authorities will have substantial discretion
in requiring amendments to standard form contracts and “general
trading conditions”
- Review of format and content (as provided by Article 7 of Decree 99)
• Breaches of provisions on registration of standard form
contracts and “general trading conditions” may be fined up to
VND 70 million (USD 3,500)
www.hoganlovells.com 144. Protection of personal data and information
• Article 6 LOCP protects personal data and information of
consumers (in addition to other provisions, e.g. in Article 38
of the Civil Code)
- Article 6 LOCP is more specific on obligations of traders using or
collecting information
- includes details on information requirements, consent, conditions for
maintaining and transferring personal data
• Breaches of provisions on protection of personal data and
information of consumers may be fined up to VND 20 million
(about USD 1,000) and other penalty measures
www.hoganlovells.com 154. Protection of personal data and information
(cont’d)
• Article 3.1 of Decree 19: information may be deemed a
“personal secret” of consumers under three conditions:
a. information relates to consumers personally
b. Information is protected by the consumer or other organisations,
relevant persons
c. disclosure of this information without approval of consumer may
cause an adverse effect on the consumer
• Breaches of provisions on protection of personal secrets of
consumers, may be fined up to VND 30 million (about USD
1,500) and other penalty measures.
www.hoganlovells.com 165. Implications for product liability
New / additional provisions on product liability including:
• Recall (Article 22 LOCP)
- Specific obligation to stop supply of further goods to the market
- Recall of goods / products, including:
compliance with the recall procedures provided by the law: (e.g. public
notice on at least 5 consecutive editions of daily newspaper with
compulsory contents about the products)
unclear whether failure to comply with recall procedures has only
administrative consequences (fines) or other (e.g. in determining “fault”)
www.hoganlovells.com 175. Implications for product liability
- obligations for compensation in case defective goods
cause damages (Article 23 LOCP)
- liability of importer / trademark owner or licensee
- liability also where there has been no “fault” unless trader
can demonstrate that the product was “state-of-the-art”
and defect could not have been detected or anticipated
www.hoganlovells.com 186. Dispute resolution process
• LOCP provides for three permitted methods of dispute
resolution:
- mediation: conditions to set up mediation organisations and conditions
to become mediator
- courts: in accordance with Civil Code and Civil Procedures Code,
special “consumer claim” where the value of the transaction is less
than VND 100 million (USD 5,000)
- arbitration: will only be applied if consumer accepts arbitration even
where an arbitration clause is included in the contract.
www.hoganlovells.com 197. Risks and legal consequences
• High degree of uncertainty regarding the legal validity of general terms
and conditions in consumer transactions (these are mitigated in part for
registered terms)
• Greater liability / exposure for importers / trademark owners’ and
licensees’ from a product liability perspective
• Increase in important of consumer protection organizations (who are
given the right to initiate proceedings)
www.hoganlovells.com 20Christian Schaefer
Senior Associate
Hogan Lovells International LLP
10th Floor, VTP Building
8 Nguyen Hue Street, District 1
Ho Chi Minh City
Tel: +84 8 3829 5100
Direct: +84 8 3822 6198
Fax: +84 8 3829 5101
Email: christian.schaefer@hoganlovells.com
www.hoganlovells.com
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