Practical and commercial aspects on using E-Signatures in Vietnam.

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Practical and commercial aspects on using E-Signatures in Vietnam

The ongoing digital transformation in Vietnam, which was intensified by the COVID-19 pandemic, has led to electronic signatures (E-Signatures) being a common talking point, due to them being an invaluable tool used by businesses across the world. Vietnam has accepted e-signatures into its legal framework, allowing it to be recognised in a wide variety of uses cases and transactions, however the implementation and practical usage still pose challenges in the majority of commercial transactions.

In this article, we seek to provide practical insights about E-Signature usage in Vietnam and highlight current issues and gaps with their ongoing implementation.

E-Signatures in Vietnam: legal definition and characteristics

As described in the Vietnam Law on E-Transactions 2005, an E-Signature is defined as a signature created in the form of words, letters, numerals, symbols, sounds or other forms by electronic means, logically attached or associated with a data message and capable of certifying the person who has signed the data message as well as the approval of such person to the content of the signed data message. Based on this structure, E-Signatures can be presented in a variety of formats, such as audio, image, pictures and sometimes just a mouse squiggle on a screen, or a hand-signature created on a tablet using your finger or stylus.

A further element the legal framework of Vietnam is Digital Signatures, which are a form of E-Signature created by transforming a data message using an asymmetric cryptography, in which those who have initial data messages and the public key of the signer can be determined exactly. Due to its safety and security during the process of creation, archiving and certification, Digital Signatures are more commonly used in Vietnam that standard E-Signatures.

At the end of 2021, Vietnam had 16 public Digital Signature certification providers licensed to undertake E-Signature certification services (in the field of Digital Signatures), and which have granted 3,942,074 digital certificates.

Digital Signatures and usage in commercial contracts

As mentioned above, Digital Signatures are a form of E-Signature. In other words, an E-Signature includes a wide range of cryptographic forms of representation such as a scanned image, or an image signature, however a Digital Signature is the most commonly used digital form in Vietnam for signing/certifying contracts.

In commercial practice, most Vietnamese laws only recognise the validity of contracts prepared in electronic form which are signed by a Digital Signature. The validity of contracts signed by scanned signature or image signature is generally not mentioned within the Vietnamese legal framework, thus rendering other forms of electronic signature less useful in contract signing.

Key regulations covering E-Signatures in Vietnam

Under the laws of Vietnam, there are several key conditions and requirements for using an E-Signature, which are detailed below.

Security conditions

E-Signatures can be deemed to meet the legal security conditions if they satisfy one of the following:

Option 1: An E-Signature is considered secured if it is verified by a security verifying process agreed upon by both parties; and it (i) satisfies the following security conditions:

  • E-signature creation data is only attached to the signatory who is using it
  • E-signature creation data is only under the control of the signatory at the time of signing
  • Any changes to an E-signature after signing are fully detectable
  • Any changes to the contents of the data message after signing are fully detectable

Option 2: If an E-Signature is already certified by an E-Signature Certification Organisation, it is deemed to satisfy the above-mentioned conditions.

In practice, the second option is the most widely used in Vietnam due to its simplified and clear process.

 Legal validity: E-Signatures and Digital Signatures

Not every type of E-Signature and Digital Signature has legal validity in order to be used in the transactions in a compliant manner. In the table below we delineate the conditions for documents signed using the E-Signature:

 

Required provisions for E-Signatures

 

Documents which require a signature1. The method of creating an E-Signature permits the identification of the signatory and indicates his/her approval of the contents of the data message

 

2. The method of creating an E-Signature is sufficiently reliable and appropriate to the purpose for which the data message was originated and sent

 

Documents which require a stamp

 

Must fulfill the Security Conditions as mentioned in Section 1
 

Required provisions for Digital Signatures

 

Documents which require a signatureThe document is signed by a Digital Signature which is secured as follows:

1. Having a valid digital certificate which can be inspected by the public key recorded on such valid digital certificates.

2. Being created by using the private key corresponding to public key recorded on digital certificates granted by one of the following authorities:

– National certification service provider

– Specialised certification authorities of the Government

– Public certification service-providing organisations

– Specialised certification authorities of agencies and organisations issued with certificates of eligibility for special-use digital signature security.

3. Being under the control of only the signatory at the time of signing.

Documents which require a stamp

In summary, the legal validity of an E-Signature and Digital Signature depend significantly on the method of storing, signing and the licensed third-party service provider which ensure the legal Security Conditions.

E-Signature in practice in Vietnam

When it comes to regular statutory processes and/or when seeking the authority’s approval regarding any commercial or legal matter, an E-Signature becomes unusable in the majority of cases. For instance, legal documents must be signed with wet-ink signature in order to be sufficient for the process of notarisation or legalisation. Furthermore, to protect against potential forgeries and misuses, the signature in the physical application for any statutory processes involving official bodies of the Vietnamese authorities must be in wet ink.

From a licensing and business compliance perspective, Vietnamese authorities have enabled some of the key processes relevant for investments, compliance, and commercial matters to use Digital Signatures, including:

AuthorityProcess
Ministry of Planning and Investment

(executed by the Department of Planning)

Register for enterprises content via the National Business Registration Portal.
Tax AuthorityDeclare and pay for tax via the E-Tax website
Vietnam CustomsRegister for online public services on the Portal for certain processes
Vietnam Social SecurityRegister for online public services on the Portal for certain processes

Digital Signatures by foreign providers – risks and provisions

DocuSign is one of the most used Digital Signature providers globally, along with many other alternatives such as Adobe Sign and Microsoft partner eSign. However, businesses in Vietnam should be aware there is statutory risk when using digital signatures in Vietnam from foreign service providers (such as DocuSign or Adobe Sign, etc.).

Out of the 16 public Digital Signature certification oganisations licensed to provide E-Signature certification services in Vietnam, none of them are foreign entities. Although there is no public policy reason to reject the services of such providers, the signing of contracts or agreements with DocuSign may result in contract being deemed invalid and subject the signatories to significant commercial and statutory risks.

Practical notes and conclusion

In practice, E-Signatures are not as commonly used in Vietnam as they are globally due to their limited scope and usage benefits presently in Vietnam, and it will take some time before Vietnam becomes accustomed to using E-Signatures in a flexible and broad manner. If you are considering applying for E-Signatures in transactions, take note of the following provisions:

  • Ensure you follow the Security Conditions and Legal validity as mentioned above. If necessary, you can seek further guidance from the authorities receiving such documents about the process
  • When agreeing to use an E-Signature, the signatory as well as the party accepting the E-Signature are required to be able to legally use E-Signatures under the law of Vietnam.

Despite being regulated by the Vietnamese laws, E-Signatures are not as frequently and widely used in transactions and documentation signing in Vietnam. Therefore, we advise investors to be aware of which documents can be signed using E-Signatures, especially Digital Signatures, otherwise, the documents can be deemed as invalid and non-compliant according to Vietnamese laws, posing significant statutory and commercial risks.

If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam.

 

Contact our teams for expert support and further information E-Signatures in Vietnam:

Dung Nguyen – Licensing Officer – dung.nguyen@acclime.com

Phuong Vo – Head of Incorporation, Licensing and Secretarial Services – phuong.vo@acclime.com

Matthew Lourey – Managing Partner – m.lourey@acclime.com

Last updated on August 7, 2022
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