Business to consumer e commerce dispute settlement in vietnam the reality and legal resolutions suggested

ABBREVIATIONS ADR Alternative Dispute Resolution APEC Asia-Pacific Economic Cooperation ASEAN Association of Southeast Asian Nations EDI Electronic Data Interchange E-transaction Electro

VIETNAM NATIONAL UNIVERSITY, HANOI

Degree program: Full-time Class of QH-2014-LKD

HANOI, 2018

VIETNAM NATIONAL UNIVERSITY, HANOI

Degree program: Full-time Class of QH-2014-LKD

SUPERVISOR:

DR PHAN THI THANH THUY

HANOI, 2018

STATUTORY DECLARATION

I herewith formally declare that I have developed and written the submitted Barchelor’s Thesis independently with guidances from Dr Phan Thi Thanh Thuy I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper This Thesis was not used in the same or in a similar version to achieve an academic grading or is being published elsewhere

Hanoi, April 20th, 2018

Signature of Bachelor Candidate

Tran Minh Ha

ABBREVIATIONS

ADR Alternative Dispute Resolution

APEC Asia-Pacific Economic Cooperation

ASEAN Association of Southeast Asian Nations

EDI Electronic Data Interchange

E-transaction Electronic transaction

IBM International Business Machines Corporation

ICT Information and Communication Technology

MLEC The Model Law on Electronice Commerce

ODR Online Dispute Resolutions

OECD Organisation for Economic Co-operation and Development TPP Trans-Pacific Partnership Agreement

UNCITRAL United Nations Commission on International Trade Law VIAC Vietnam International Arbitration Center

WTO World Trade Organization

TABLE OF CONTENT

STATUTORY DECLARATION 1

ABBREVIATIONS 2

INTRODUCTION 6

Chapter 1: Some theoretical issues of commerce, business-to-consumer e-commerce and business-to-consumer e-e-commerce dispute 9

1.1 E-commerce and the corelation with business-to-consumer e-commerce 9

1.1.1 Definition of e-commerce 9

1.1.2 Features of e-commerce 11

1.1.3 Forms of e-commerce 13

1.1.4 The corellation with business-to-consumer e-commerce 14

1.2 Business-to-consumer (B2C) e-commerce 14

1.2.1 Definition 14

1.2.2 Features of business-to-consumer e-commerce: 16

1.3 Business-to-consumer e-commerce dispute 17

1.3.1 General concept 17

1.3.2 Features of business-to-consumer e-commerce dispute 18

Chapter 2: The reality of applying the Law on business-to-consumer e-commerce dispute settlement 21

2.1 The Law on business-to-consumer e-commerce dispute settlement 21

2.1.1 The concept of the Law on business-to-consumer e-commerce dispute settlement 21

2.1.2 The role of the Law on business-to-consumer e-commerce dispute settlement22 2.1.3 Principles of business-to-consumer e-commerce dispute settlement 23

2.1.4 Forms of business-to-consumer e-commerce dispute resolution 24 2.2 The legal system of business-to-consumer e-commerce dispute settlement 28 2.2.1 International law 28 2.2.1.1 The UNCITRAL Model Law on Electronic Commerce (1996) 28 2.2.1.2 The UNCITRAL Model Law on Electronic Signatures (2001) 29 2.2.1.3 The Trans-Pacific Strategic Economic Partnership Agreement (TPP) 30 2.2.1.4 The role of the Organisation for Economic Co-operation and

Development (OECD) in the context of electronic commerce 30 2.2.1.5 United Nations Convention on the use of electronic communications in international contracts (New York, 2005) 31 2.2.2 The legal system of business-to-consumer e-commerce dispute settlement in Vietnam 32 2.3 The reality of applying the Law on business-to-consumer e-commerce

dispute settlement in Vietnam 35 2.3.1 Dispute settlement over business-to-consumer e-commerce contracts 35 2.3.1.1 Dispute over the process of entering into business-to-consumer e-

commerce contracts 35 2.3.1.2 Dispute over the perfomance of business-to-consumer e-commerce

contracts 38 2.3.2 Dispute settlement over the protection of consumers’ personal data 44 2.4 Limitations on the application of the Law on business-to-consumer e-

commerce dispute settlement in Vietnam 48

Chapter 3: Legal resolutions suggested for business-to-consumer e-commerce dispute settlement 52

3.1 The need for improvement in the Law on business-to-consumer e-commerce dispute settlement in Vietnam 52

3.2 Legal resolutions suggested for business-to-consumer e-commerce dispute 53 3.2.1 Improving regulations on business-to-consumer e-commerce dispute

resolutions 53

3.2.2 Setting up and acknowledging the legality of the Online dispute resolution platform 55

3.2.3 Enhancing the effectiveness of law enforcement 59

CONCLUSION 62

REFERENCES 63

1 Rationale

Electronic commerce, commonly referred to as e-commerce, is a new trend in the Industry 4.0 where people are shaped in the manner of shopping for products online The e-commerce market has gained popularity among the western countries, in Europe, the United States and is currently penetrating in Asian countries Research has shown that e-commerce market is expected to grow to over $20 billion by the year 2020 E-commerce in Vietnam is more developed than some Southest Asian countries and is anticipated to expand in the coming years In particular, business-to-consumer e-commerce, one of e-commerce forms, is gaining popularity in Vietnam recent years With the fast growing in this type of commerce comes more legal concerns for dispute settlement

Disputes in business-to-consumer e-commerce may arise more than in traditional commerce environment for many reasons That is why it is necessary to study and clarify matters surrounding business-to-consumer e-commerce dispute settlement In reality, although many business-to-consumer e-commerce transaction protocols have been proposed, very few of them have paid enough attention to the support of dispute handling Therefore, the legal framwork of business-to-consumer e-commerce in Vietnam must be changed to adapt to the world development of dispute settlement

In this thesis, I study the aspects of business-to-consumer e-commerce transaction relating to dispute settlement I also concentrate on different types of disputes that may occur during business-to-consumer transactions and discuss the effectiveness of law enforcement in the dispute settlement Indeed, the fast growing in e-commerce disputes has pushed legislators at national level to adopt new legal instruments to deal with it and foster the development of business-to-consumer e-commerce Thus, the thesis will suggest legal resolutions which are more applicable to handle disputes effectively and enhance the confidence of businesses and consumers in

e-commerce transactions One of the outstanding suggestion for Vietnam is to set up the Online dispute resolution platform as provided example from the European Union Online dispute resolution will support Alternative dispute resolution (ADR) with online platform, which may act as a lower-cost, time-saving and easily applied dispute resolution for the parties to protect their legitimate rights (to consumers) and reputations (to businesses) Online Dispute Resolution is a recommended solution in the world, hence, Vietnam needs to adopt this platform as soon as possible to catch up with the development of e-commerce trend

2 Objectives of research

The objectives of this thesis is to clarify the basic content of e-commerce, business-to-consumer e-commerce, arising disputes and the enforcement of law on dispute resolution in reality The thesis also identifies limitations and its causes in order

to provide new legal solutions that may improve the effectiveness of consumer e-commerce dispute settlement

business-to-To achieve the objective of the topic, the research task must satisfy these following points:

First, some theoretical issues of e-commerce, business-to-consumer e-commerce and its dispute such as the definition and features shall be clarified

Second, the reality of applying Law on business-to-consumer e-commerce dispute settlement shall be analysed with different dispute resolutions and its limitations

Third, legal resolutions are proposed to improve legal provisions on consumer dispute settlement in Vietnam

business-to-3 Subjects and scope of research

Subjects of research

Subjects of the thesis are the application of Law on business-to-consumer commerce dispute settlement in reality and legal provisions suggested

e-Scope of research

Scope of research focuses on matters arising from business-to-consumer commerce dispute settlement and the application of governing law in reality Based on that, the thesis will evaluate the limitations, reason the the need for improvement in legal system and provide efficient legal resolutions to business-to-consumer e-commerce dispute

e-4 Research methodology

The thesis uses the following research methodologies:

Part 1: Synthesis, collection, analytical method to clarify the definition and feature of e-commerce, business-to-consumer e-commerce, business-to-consumer e-commerce dispute

Part 2: Data analytical, comparative, collection methodto evaluate the application of law on business-to-consumer e-commerce dispute settlement as well as its limitations

Part 3: Analytical, synthesis, forecasting method to provide solutions to the

improvement of legislation and law enforcement in Vietnam

Chapter 1: Some theoretical issues of commerce, business-to-consumer commerce and business-to-consumer e-commerce dispute

e-1.1 E-commerce and the corelation with business-to-consumer e-commerce 1.1.1 Definition of e-commerce

The origins of commerce can be traced back to the very start of transaction in

prehistoric times.The term “commerce”, according to Black’s Law Dictionary, is defined as the “Intercourse by way of trade and traffic between different peoples or

states and the citizens or inhabitants” Commercial activities then become popular

until the explosion of Internet and the development of Electronic Data Interchange1(EDI) that E-commerce eventually appeared The beginnings of E-commerce can be traced to the 1960s and to this day, it continues to grow with new technologies, innovations, and thousands of businesses entering online market each year The convenience, safety, and user’s experience of ecommerce has improved exponentially since its inception in the 1970’s

The benefits of e-commerce include its around-the-clock availability, the speed

of access, the wide availability of goods and services for the consumer, easy accessibility, and international reach Its perceived downsides include sometimes-limited customer service, consumers not being able to see or touch a product prior to purchase, and the necessitated wait time for product shipping

E-commerce (also written as eCommerce or similar variants) is the shorten word for electronic commerce.The definition of e-commerce varies in different countries and regions, yet, to some extent, delivers the mutual idea

According to the World Trade Organization (WTO), “ the term 'electronic

commerce' is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means" 2

The European Union (EU) defined E-commerce in a narrower scope as “the sale

or purchase of goods or services, whether between businesses, households, individuals

means in accordance with an agreed standard on information structure (Law on E-transactions 2005)

2 World Trade Organization, Electronic commerce at https://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm

or private organizations, through electronic transactions conducted via the internet or other computer-mediated (online communication) networks.” 3

Asia-Pacific Economic Cooperation (APEC)defined that “Electronic commerce

is a shorthand term that embraces a complex amalgam of technologies, infrastructures, processes, and products It brings together whole industries and narrow applications, producers and users, information exchange and economic activity into a global marketplace called “the Internet”.”[1]

The Organisation for Economic Co-operation and Development (OECD) added

that“An e-commerce transaction is the sale or purchase of goods or services,

conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders.”4

Although not bring out the definition of E-commerce, the UNCITRAL5 Model

Law on Electronic Commerce (1996) noted: “Relationships of a commercial nature

include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.”[2] The Model

Law also clarified that commercial activities “cover matters arising from all

relationships of a commercial nature, whether contractual or not”

In Vietnam, the Law on E-transactions (in 2005) did not define E-commerce but

mentioned that “An e-transaction 6 means a transaction implemented by electronic means”(clause 6, article 4); “An electronic means is a means that operates based on electric, electronic, digital, magnetic, wireless, optical, electro-magnetic technologies

or similar technologies.” (clause 10) It can be seen that the governing scope in this

3 Eurostat Statistic Explained, Glossary: E-commerce at

http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:E-commerce

4 OECD, Glossary of statistical terms at https://stats.oecd.org/glossary/detail.asp?ID=4721

5 United Nations Commission on International Trade Law

6 Electronic transactions

Law is fairly wide, covering electronic transactions in both business, commercial, civil field and the operation management of the state agencies Based on the UNCITRALModel Law, the Law on E-transactions (2005) has a similar broad-based approach to the definition of e-commerce Considering e-commerce is the use of electronic means in a broad and open sense in the future is a right approach This is because the Internet marketplace and its participants are so numerous and their intricate relationships are evolving so rapidly, which makes no universal definition of e-commerce Moreover, this approach also prevents businesses and consumers from confusion and embarrassment when conducting E-commerce activities Back to the definition, the Decree No 52/2013/ND-CP on E-commerce also interpreted more

clearly the term “E-commerce activity” as “the conduction of a part or the whole

process of commercial activities by electronic means connected to the Internet, mobile telecommunications network or other open networks.”

To sum up, e-commerce can be understood in the simplest way as a type of business models, which allows a firm or individual to conduct a part or the whole process of commercial activities by electronic means, typically the internet

1.1.2 Features of e-commerce

(1) Transaction forms

E-commerce transactions are not conducted through papers but over the network, whereas traditional commerce oftenrequires parties to meet in person in order to negotiate and sign contracts In this case, electronic means such as telephone, fax,… are used to convey additional data and unimportant information among partners However, the main transaction method used in e-commerce is the network, which can allow anybody, even from remote areas to the developed cities, whether knowing each other or not, to participate in the global market and conduct transactions

(2) Activity scope

Although traditional commerce tends to be conducted within separate nations, E-commerce market is opened globally for every participants In other words, the

global e-commerce market enables individuals and enterprises to break through borders and carry out commercial activities with the help of a localized website

(3) Subjects of participation

At least three subjects of participation are required to make e-commerce transaction Apart from the usual subjects of traditional commerce, e-commerce includes the third party such as online service-providing organizations or authentication agencies This is because the third party would act as an intemediary which supplies the network services storing and transmitting electronic data among other parties Moreover, it must play an important part of information security in order to keep the e-transaction safe and trust-worthy

(4) Timelimit of transaction

In e-commerce, time of transaction is not limited Transaction are conducted automatically through the web and the internet helps businesses run at 24 hours a day with no additional cost However, this action also depends on the stability of the online service

(5) Information network in e-commerce is the market

Information network helps transmit data in traditional commerce but plays a more important role in e-commerce It creates the online platform that provides the market for businessmen to open new types of business For example, many websites like Google, Yahoosupply huge amount of information online, which allows millions

of people access to the daily news or attain more knowledge Besides, Amazon or eBay also opens new market for users to shop online with some clicks This is why information network is highly necessary for e-commerce to develop

(6) E-commerce depends on the development of technology and users’ level

In order to develop e-commerce, it is necessary to build and continuously improve technical infrastructure such as computer network and the continuity of network with global information data Along with the network, e-commerce should have staffs who are not only proficient in technology but also have knowledge and skills in business management in general and commerce in particular

1.1.3 Forms of e-commerce

Contemporary electronic commerce can be classified into different categories The first category is business based on types of goods sold The second category

is based on the nature of the participants

The second category will be analyzed further below:

E-commerce operates in all four of the major market segments, which are: Business to business (B2B); Business to consumer (B2C); Consumer to consumer (C2C); and Consumer to business (C2B)

(1) Business to business (B2B):

Business-to-business (B2B) e-commerce includes all electronic transactions of products or services conducted between companies Producers and traditional commerce wholesalers such as software companies, office furrniture and supply companies,… typically operate with this type of electronic commerce

(2) Business to consumer (B2C)

The Business-to-consumer type of e-commerce is differentiated by the establishment of electronic business relationships between businesses and final consumers It corresponds to the retail section of e-commerce, where traditional retail trade normally operates The difference is that B2C business is conducted online as opposed to a physical store

(3) Consumer to consumer (C2C)

Created by the rise of the e-commerce sector, Consumer-to-consumer (C2C) type encompasses all electronic transactions of goods or services conducted between consumers Generally, these transactions are conducted through a third party, which provides the online platform where the transactions are actually carried out

(4) Consumer to business (C2B)

In C2B there is a complete reversal of the traditional sense of exchanging goods This type of e-commerce is very common in crowdsourcing-based projects It involves individuals selling products or services to businesses, and is roughly equivalent to a sole proprietorship serving a larger business

Examples of such practices are the sites where designers present several proposals for a company logo and where only one of them is selected and effectively purchased Another platform that is very common in this type of commerce are the markets that sell royalty-free photographs, images, media and design elements

1.1.4 The corellation with business-to-consumer e-commerce

Although e-commerce can be divided into different types, this thesis will focus only

on matters arising from of B2C e-commerce dispute setllement As described above, B2C e-commerce is a type or a model belonged to e-commerce Because this model involves the participation of businesses and consumers, disputes will frequently arise

In Vietnam, this business model is booming recently with thousands of consumers shopping for products and services online As a result, disputes between companies and consumers occur frequently but have not yet been settled with satisfaction Therefore, the B2C disputes need carefully handling as this may affect consumers’ confidence in e-transactions

acronym B2C to mean “business to (end) consumer” trading Further, such ‘end consumption’ means that the goods or services do not contribute directly to the factors

of production for other goods and services

Oracle7, in their “Application Developer’s Guide”, (Oracle, 2000) define

business-to-consumer as “a term describing the communication between businesses

and consumers in the selling of goods and services” Using a similar idea, their

“Glossary of Industry-Specific Abbreviations, Acronyms and Terms” interpret

business-to-consumer as “the ability of companies to deliver products, services, support,

and information over the Internet directly to individual consumers” While IBM8

(IBM,2001) offers a similar viewpointwhich defines business-to-consumer as “the use

of Web-based technologies to sell goods or services to an end-consumer” These three

similar definitions referring to B2C in terms of “communication between”, “ability of”, and “use of”, contrasts with more popularly implied interpretations describing

business-to-consumer (B2C) as referring to simply “the sale of goods, products or

services between a business and consumer” (Smart Computing Dictionary, 2001) B2C

e-commerce involves goods, products and services but also inherently involves the two-way exchange of information between the user (consumer) and the system (business)

B2C e-commerce may therefore be defined as an exchange between producers and end consumers of goods, services and explicit knowledge about goods and services (or information about consumers) for available consumption in return for the actual or potential payment of monies

To personal point of view, B2C e-commerce can be understood to be the direct exchange of goods or services over the internet between online stores and individual customers Usually, B2C e-commerce web shops have an open access for any visitor,

7 “Oracle Corporation is an American multinational computer technology corporation, headquartered

in Redwood Shores, California The company specializes primarily in developing and marketing database

software and technology, cloud engineered systems and enterprise software products — particularly its own

brands of database management systems…”–Wikipedia, Oracle Corporation at

https://en.wikipedia.org/wiki/Oracle_Corporation

8 “IBM (International Business Machines Corporation) is an American multinational technology company

headquartered in Armonk, New York, United States…” –Wikipedia, IBM at https://en.wikipedia.org/wiki/IBM

meaning that there is no need for a person to login in order to make any product related enquiry

Examples of B2C businesses includes global names like Staples, Wal-Mart, REI, or domestic names like Tiki, Sendo, Adayroi,… in Vietnam

1.2.2 Features of business-to-consumer e-commerce:

The B2C e-commerce model is very familiar and popular all over the world including Vietnam, yet, it is still growing and has enjoyed a boom recently

The B2C model may be the easiest and most dynamic to operate, but also more sporadic or discontinued This type of commerce has developed greatly, due to the introduction of the web, and there are already many virtual stores and malls on the Internet, which sell all kinds of consumer goods, such as computers, software, books, shoes, cars, food, financial products, digital publications, etc

When compared to buying retail in traditional commerce, the B2C model provides consumers with more information available in terms of informative content and there is also a widespread idea that consumers will be buying cheaper, without jeopardizing an equally personalized customer service, as well as ensuring quick processing and delivery of orders

In addition, the more distinct characteristic of the B2C model is the diversity of markets and suppliers since any supplier can open a website or transaction channel in which they publish information about their products and services As diversed as it may seems, this model also creates competitive environment, which in turn makes it harder for companies to attract loyal customers as more and more options of products and services are available to every customer

Another features of B2C e-commerce is that this model help businesses reduce production, labour and communication cost Companies which operate this type of business may minimize the cost of materials, printing, information sharing and communications In reality, they still earns more profit than using traditional model

Moreover, B2C model can improve distribution system because the showcase system is then replaced or supported by the online showroom

1.3 Business-to-consumer e-commerce dispute

1.3.1 General concept

Disputes is an inherent part in business In e-commerce environment, disputes may occur more than usual since transactions are conducted without face-to-face meetings To clarify what is B2C E-commerce disputes, we must define the term

“dispute” first

The Black’s Law Dictionary explained “dispute” as “… an assertion of aright,

claim, or demand on one side, met by contrary claims or allegations on the other.”In

general, most should agree that the legal term “dispute” shall be construed as the

dissent, inconsistencies or conflicts of interests, rights and obligations between the parties in the economic relations at different levels Normally, disputes are related to the economic interests of the parties, hence, they may be called economic disputes in the broad sense However, there is a significant feature of economic disputes in the broad sense that the subjects involved in the relationship are not always seeking profit

Commercial dispute is evidently a small part of economic disputes The concept oftrade dispute was brought out by the WTO as in the following line:

“A dispute arises when one member countryadopts a trade policy measure or takes some action that one or more fellow members considers to a breach of WTO agreements or to be a failure to live up to obligations” 9

As can be seen above, trade disputes, according to the WTO, are international but occur only among WTO members The object of the dispute is related to the exercise of rights and obligations under the WTO agreements In Vietnam, the

definition of “commercial dispute” was first introduced in the Commercial Code

9 World Trade Organization, Understanding the WTO: Settling disputes: A unique contribution at

https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm

(1997) Article 238 said that“A commercial dispute is a dispute arising from the

non-performance or defective non-performance of a contract in the course of commercial transactions.”Both explanations above, though expressed the term differently, had the

same notion that “commercial dispute” happens when the parties, for their own sake,

whether or not take actions that may violate the contract or agreement

Although this term was not included in the recent Commercial Law (2005), I

agree that“commercial dispute” should be understood as contradictions (disagreements

or conflicts) about the rights and obligations between the parties in commercial activities

Back to disputes arising from B2C e-commerce environment, Vietnam lawmakers did not consider adding a definition of this issue However,Article 51 of the

Law on E-transaction (2005) mentioned that “Disputes in e-transactions are disputes

arising in the course of transaction by electronic means” It is clearly that this

explanation merely provided a general definition which involves both commercial and non-commercial activities, whereas B2C e-commerce in particular and e-commerce in generalare both small parts of commerce in general Although Vietnamese law has not given full explanation to this, it should be widely known that B2C e-commerce disputes are interpreted as the dissent, inconsistencies or conflicts of interests, rights and obligations between the businesses and consumers when implementing B2C e-commerce activities

1.3.2 Features of business-to-consumer e-commerce dispute

Some features of B2C disputes are similar with those of commercial disputes The first feature is about the disputing subjects, one of whom must be traders In B2C e-commerce, the remaining subjects are obviously consumers who may be individuals or organizations Disputes may arise when consumers make online purchase of products or services

Another feature is that the ground of dispute must be the breach of contract, which one party fails to fulfill his or her obligation as described in the contract, or

expresses an intent to fail the obligation or otherwise appears not to be able to perform his or her obligation under the contract The breach will then cause the parties to conflict with each other for economic reasons In B2C e-commerce, disputes must arise from the contradictions of rights and obligations in e-contract between parties from activities for profit purpose, including goods purchase and service provision through the network

The third feature shows that in B2C e-commerce environment, there is always a third party involved As mentioned, the third party can be online service-providing organizations or the authentication agencies who open an online platform for e-transactions

Lastly, data message in B2C e-commerce is considered to be “as valid as

evidence” (Article 14, Law on E-transaction in 2005) Data message here means

information generated, sent, received or stored by electronic, optical or similar means including, but not limited to, EDI, electronic mail, telegram, telex or telecopy When data message is transmitted and certificated by the third party, they can be used as legitimate evidence

In conclusion, disputes arising from B2C e-commerce in particular and commerce in general are indispensable phenomenon of the market economy However, disputes must be resolved in a transparent and effective manner in order to protect the legitimate rights and interests of the subjects, prevent law violations in commercial activities and ensure social order

Chapter 2: The reality of applying the Law on business-to-consumer commerce dispute settlement

e-2.1 The Law on business-to-consumer e-commerce dispute settlement

2.1.1 The concept of theLaw on business-to-consumer e-commerce dispute settlement

Due to the increasing use of the Internet worldwide, the number of disputes arising from Internet commerce is on the rise The explosive expansion of the use of the Internet makes it possible for businesses to expand their markets and render services to large groups of e-consumers While off-line transactions can lead to problems and disputes, the same is true for online transactions In other words: e-commerce transactions will without a doubt result in electronic disputes To ensure that all parties concerned will feel they can safely participate in e-commerce transactions, it is imperative that e-disputes are resolved adequately because uncertainty over the legal framework may inhibit both consumers from purchasing products or services over the Internet, and companies from entering into the electronic market place

The importance of making e-commerce a safe market for both consumers and companies lead to the need of a strong and complete legal system in a national scope

In Vietnam nowadays, it is more important than ever to develop the legal system of settling B2C e-commerce dispute so as to quickly resolve contemporary issues When problems occur in B2C e-commerce transactions, an accessible and responsive redress method is what the consumers immediatelyrequire and expect from the merchants That

is why the Law in this field need to be improved to support and open optimal resolutions for parties when disputes happen

The Law on B2C e-commerce dispute settlement should be understood as a comprehensive legal frameworkexpressed in legal documents and promulgated by competent state agencies in order to regulate the process of settling disputes betweens companies and consumers, including the processes from the beginningof dispute until when dispute is resolved

In Vietnam, a legal framework for e-commerce has been built since 2005 with a series of documents ranging from laws, decrees, and circulars to regulate different aspects of e-commerce activities The Law on e-commerce is then improved and updated but has not been modified recently This shows that the legal framework which governs e-commerce is slowing down and cannot catch up with new changes in the 21stcentury, especially when regulations of e-commerce dispute settlement seem to be rather new, incomplete and have not supported consumers and companies much There exists only traditional methods for dispute settlement, which in fact are difficult to carry out and time-consuming in the industry 4.010

In order to resolve electronic disputes, the subjects of participation in B2C commerce activities may consider apply: the Commercial Law (in 2005), Law on E-transactions (in 2005), the Civil Code (in 2015), the Code of Civil Procedure (in 2015), etc Moreover, e-commerce activities and dispute settlement are also regulated by other related legal documents such as: the Law on Information Technology (in 2006), the Law on Telecommunications (in 2009), the Intellectual Property Law (in 2013), the Law on Protection of Consumer Rights (in 2010), etc B2C e-commerce is a part of e-commerce in general, therefore, disputes occuring in this domain can also apply regulations in the legal documents above

e-2.1.2 The role of the Law on business-to-consumer e-commerce dispute

settlement

Firstly, the law on dispute settlement in B2C e-commere plays an important role

of providing support for both businesses and consumers in conducting e-transactions safely It can serve as a legal platform in which parties are able to protect their legitimate rights and interests This is because when dispute occur, each of the parties may choose an appropriate resolution that the law offers to settle dispute

10“Industry 4.0 is a name for the current trend of automation and data exchange in manufacturing

technologies.”-Wikipedia, Industry 4.0 at https://en.wikipedia.org/wiki/Industry_4.0

Secondly, the law on dispute settlement in B2C e-commere is built to guarantee

“the right to freedom of enterprise” according to the Constitution of Vietnam This

freedom means that every party has the right to decide which type of resolution he or she may apply to settle any dispute that occurs during B2C e-commerce transactions The Law here need to provide suitable and renew resolutions in order for traders to promote a fair and trustworthy business and for consumers to seek a practical remedy

to their problem

Thirdly, the Law on dispute settlement in B2C e-commere can act as a legal instrument for the competent agencies to apply it in an effective way If the Law in this field establishes practical and specific procedures for settling disputes, many competent agencies will be able to guide both companies and consumers resolve disputes successfully

2.1.3 Principles of business-to-consumer e-commerce dispute settlement

Based on the right to freedom of enterprise and choice and equality before the law, the process of dispute settlement has to follow these principles:

- Right to self-determination: This principle means that parties have the right

to negotiate the optimal form of dispute resolution without the intervention of the state agencies Parties can also authorize other person to participate in the settlement process

or else ask lawyers to defend their legitimate rights and interests In addition, when involved in arbitration or litigation procedure, parties shall have the right to change their requests or voluntarily reach agreement with another, which is not contrary to law and social ethics

- Equality before the law: Each party must be treated equally by the law and receive equal access to justice When resolving disputes, the law must guarantee that no individual nor group of individuals should be privileged or discriminated against by the government, especially when they choose court as resolution

- Meditation/Conciliation: When resolving dispute, parties are encouraged to choose conciliation before bringing the case to court When the court handle the case,

parties will aslo be encouraged to participate in obligatory conciliation to reach mutual agreement on the resolution of the cases

- Resolve disputes in a quick and opportune manner in order not to interfere with the business activities: The law here need to offer parties with useful, cost-saving and minimum-time method of settling disputes That is because the expense and time involved in traditional litigation has become increasingly unattractive (Cortés 2013)[3] Therefore, a sound legal framework may support parties to resolve disputes promptly

so that it cannot affect their bussiness process

Thus, when choosing a form of resolution of disputes, parties must comply with both general and particular principles of that form For example, if parties decide arbitration as their resolution, they will have to abide by regulations of Law on commercial arbitration (in 2010); or by the court, they need to follow principles under the provisions of Civil Procedure Code (in 2015); etc

2.1.4 Forms of business-to-consumer e-commerce dispute resolution

In Vietnam, forms of dispute resolution is regulated in the Commercial Law (2005), hence, resolutions for disputes occuring in B2C e-commerce environment will also be applied according to this Law:

“Article 317.- Forms of resolution of disputes

1 Negotiations between the parties

2 Conciliation between the parties by a body, organization or individual selected by the parties to act as the conciliation mediator

3 Resolution by the Arbitration or the Court

Procedures for resolution of commercial disputes by arbitration or a court shall comply with procedures applicable to arbitrations or courts provided…” 11

In general, Vietnam’s Law provided 4 types of dispute resolutions, which are: negotiation, conciliation, arbitration, and court Besides, e-commerce dispute in which

11 Commercial Law at

http://www.moj.gov.vn/vbpq/en/lists/vn%20bn%20php%20lut/view_detail.aspx?itemid=5497

any party violating law on e-transactions is resolved by applying administrative measures Because administrative measures are more frequently used in domain name dispute which does not occur in B2C e-commerce, this Thesis shall not mention this method

The booming of e-commerce and the spreading of the Internet, which is having profound changes on almost all aspects of Vietnam’s society and life, lead to constantly increasing e-disputes, hence, this requires people to make lucid decisions for the most applicable and appropriate type of dispute resolutions

(1) Negotiation

Negotiationis the most common form of dispute resolution It can be explained

as a process by which two or more parties delibrating or discussing over one or more issues to reach a beneficial outcome without the participation of a third party Compared with processes involving third parties, generally negotiation allows the disputants themselves to control the process and the solution This form can be conducted with ease and save cost than other forms of dispute resolution

However, negotiation in e-commerce has some other significant features:

First, parties will have the opportunity to exchange information over the Internet This may save time and money for the parties to resolve e-disputes The parties often use e-mail, organize online meeting or conference when being too distant from other Nevertheless, sometimes any negotiator relying exclusively on e-mail will be engaged

in a time consuming task, since reading many e-mails and composing many e-mails is labor intensive.[4] Another drawback of this form is that because parties exchange opinion over the network, it would take some time for a reply, which leads to extended time for a dispute to be completely resolved

Second, information of the discussion will be stored in the database of the two parties (for example: electronic mail, inbox…) This can help protect the privacy and the data message may be saved as valid evidences in case they want to switch another form of dispute resolution

(2) Conciliation/Meditation

Conciliation is another type of dispute resolution in which a neutral third party meets with the disputants separately in an effort to establish mutual understanding of the underlying causes of the dispute and thereby promote settlement in a friendly, unantagonistic manner.[5]

Vietnam’s lawmakers did not differentiate between the term “conciliation” and

“meditation” However, according to the explanation in legal documents, meditation is applied more commonly in Vietnam Decree 22/2017/ND-CP on Commercial

meditation of Vietnam explained the term “commercial meditation” as “a method of

resolving commercial disputes agreed upon by involved parties with the assistance of a commercial mediator acting as an intermediary in accordance with this Decree” This

means that the neutral third party will join both parties in order toassist them in reaching a mutually-acceptable settlement Unlike a judge or arbitrator, the mediator who does not play a determinative role will have no power to impose a solution on the disputants; instead, the mediator assists them in shaping solutions to meet their interests

Conciliation or meditation is voluntarily taken by parties, therefore, the result must be depend on their co-operative attitude in reaching an agreement Here under are some benefits of conciliation/meditation:

First, this form of dispute resolution help protect parties’ privacy The third party involved is chosen by disputants and he or she must remain reliable and will not disclose the internal information

Second, parties has the right to choose a third mediator or mediation place Third, conciliation enables parties to resolve dispute flexibly because of short and easy procedure in settling disputes

(3) Arbitration

Arbitration is a long-established procedure in which a dispute is submitted, by agreement of the parties, to one or more chosen impartial arbitrators to whom they present their dispute for a final and legally binding decision Arbitration is procedually less formal than court adjudication; procedure rules may be set by the parties

This dispute resolution method is regulated in Vietnam’s Law on commercial arbitration (2010) Therefore, parties who take this method have to comply with the regulations and procedures in accordance with this law The arbitrator is usually selected by parties from a panel of available arbitrators or may have already been agreed upon in the arbitration clause

There are some advantages of this method:

- Flexibility: The arbitrator is chosen by the parties or nominated by a trusted third party

- Professional: The arbitrator must be qualified enough and have specialist knowledge of this field to help resolve disputes He or she also has the obligations to maintain confidentiality of the dispute, ensures the impartial, speedy resolution to dispute, and complies with rules on professional ethics

- Informality: The process of settling dispute is less formal than court

- Certainty and finality: The arbitral award is binding, enforceable, final and cannot be appealed

(4) Court

Court is a tribunal with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal and administrative matters

in accordance with the rule of law.[6]

In Vietnam, commercial disputes are often brought to economic court, which is within the Provincial People’s Court and the Supreme People’s Court The procedure

of settling dispute is in accordance with Civil Procedure Code (2015) If parties cannot settle their differences through negotiation, conciliation/meditation, arbitration, they will have to pursue litigation through the courts

Resolving dispute by court has some advantages:

- The decision of the judge is based on the law It is final and legally binding Although parties have the right of appeal, it will takes much more time and money to reach a final judgement The losing party also has to pay all the cost

- The court follows the regime of two-level adjudication The courts’ instance judgements or decisions can be appealed or protested against This principle enable parties to access to an accurate, fair and objective judgement

first The cost for court is much lower than that for commercial or international arbitration

However, the court can cause a few drawbacks

- The procedure process is inflexible with strict regulations and time limit Parties must abide by regulations provided in related law Time of settling dispute is prolonged

- Public-court proceedings and records are open This may affect the privacy of parties’ information, reputation and business operation

2.2 The legal system of business-to-consumer e-commerce dispute settlement 2.2.1 International law

In the process of international integration, Vietnam has signed a number of international treaties such as the Trans-Pacific Strategic Economic Partnership Agreement (TPP)12 and developed the legal framework for e-commerce based on principles and basic contents of the UNCITRAL Model Law on Electronic Commerce (1996) and Electronic Signatures (2001) Vietnam is also considering joining the United Convention on the Use of Electronic Transactions

2.2.1.1 The UNCITRAL Model Law on Electronic Commerce (1996)

UNCITRAL ( United Nations Commission on International Trade Law) is the core legal body of the United Nations system in the field of international trade law UNCITRAL’s business is the modernization and harmonization of rules on international busines.13

The Model Law on Electronice Commerce (MLEC) was adopted in 1996 for the purpose of enabling and faciliatating commerce conducted using electronic means by

12 TPP has been renamed as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

in 2018.

13 UNCITRAL, About UNCITRAL at http://www.uncitral.org/uncitral/en/about_us.html

providing national legislators with a set of internationally acceptable rules aimed at removing legal obstacles and increasing legal predictability for electronic commerce14 The Model Law has no binding force, yet, it denotes the basis for regulating e-commerce

Vietnam’s law makers has based on the Model Law to create a more secure legal environment for e-commerce Besides, the legal recognition of data messages in the Model Law is another significant point which Vietnam has aquired This means that information in the form of data message shall not be denied legal effect, validity or enforceability

2.2.1.2 The UNCITRAL Model Law on Electronic Signatures (2001)

The Model Law on Electronic Signatures was adopted in 2001 by UNCITRAL The aim of this instrument is to faciliatate use of electronic signatures in the context of international commercial activities

The increased use of electronic authentication techniques as substitues for handwritten signatures and other traditional authentication procedures suggested the need for a specific legal framework to reduce uncertainty as to the legal effect that may result from the use of electronic means.15 The Model Law on Electronic Signatures includes: legal recognition of electronic signatures; compliance with a requirement for

a signature to be reliable and appropriate; conduct of the signatory and the certification sevice provider; recognition of foreign certificates and electronic signatures; etc [7]

This model law is of significant assistance in enabling the use of e-commerce as well as the universal recognition as an essential reference in the field of e-commerce It also help make electronic transactions and commercial contracts successfully conducted

2.2.1.3 The Trans-Pacific Strategic Economic Partnership Agreement

(TPP)

The Trans-Pacific Partnership (TPP) used to be a free trade agreement (FTA) designed to liberalise trade and investment between 12 Pacific-rim countries: New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States and Vietnam.(The United States then left the Agreement) The agreement was signed on 4th February, 2016in Auckland, New Zealand The TPP agreement includes 30 chapters in which e-commerce is regulated in chapter 14 The chapter includes these following contents:

- Recognize and respect the freedom to choose electronic means to carry out commercial activities

- Recognize the validity of data messages, electronic signatures (e-signatures)

as well as regulations on e-signature certification

- Protect consumers’ right in e-commerce (online consumers) and regulations

on unwanted commercial messages (spam messages)

- Dispute settlement

…

The highlight of the TPP Agreement on Electronic commerce is “Each Party

shall maintain a legal framework governing electronic transactions consistent with the principles of the UNCITRAL Model Law on Electronic Commerce 1996 or the United Nations Convention on the Use of Electronic Communications in International Contracts, done at New York November 23, 2005” and “Each Party shall endeavour to: (a) avoid any unnecessary regulatory burden on electronic transactions; and (b) facilitate input by interested persons in the development of its legal framework for electronic transactions.”

2.2.1.4 The role of the Organisation for Economic Co-operation and

Development(OECD) in the context of electronic commerce

The OECD’s Committee on Consumer Policy represents the main forum for regulation of e-commerce at global level The OECD produced noteable papers about e-commerce, the most significant are: (1) the “OECD Action Plan for Electronic Commerce” (October 1998), which attaches particular importance to OECD work in numerous areas, especially the privacy and consumer protection In particular, OECD Recommendation of Consumer Protection in E-commerce (revised in 2014) pointed out many benefits brought by e-commerce and related risks for consumers Its recommendation also include: non-monetary transactions; digital content products; active consumers; mobile devices; privacy and security risks; payment protection; product safety; etc

Vietnam should take OECD’s recommendation as a reference to predict the risks that may occur to its citizens and provide a better legal sytem with updated and adequate regulations for e-commerce dispute settlement

2.2.1.5 United Nations Convention on the use of electronic

communications in international contracts (New York, 2005)

The Electronic communications convention which was adopted by UN in 2005 purposed to aid the use of electronic communications in international trade by

“assuring contracts and other communications exchanged electronically are as valid

and enforceable as their traditional paper-based equivalents” [8]

This convention also includes: legal recognition of electronic communications; form requirements; resolutions to error in electronic communications; regulations of time and place of dispatch and receipt of electronic communications; etc [9] The Electronic communications convention is therefore considered as an important legal instrument to enhance international trade based on the advantageous use of global internet Vietnam has not yet signed or acceded to this Convention, however, considers joining may help Vietnam to access to international legal standards and foster the world economy intergration