In the digital era, the transition from traditional paper-based contracts to electronic contracts is not merely a trend but an urgent requirement for businesses to optimize processes and costs. However, adopting new technology always brings concerns regarding the legal framework and potential risks. With the Law on Electronic Transactions 2023 officially taking effect on July 1, 2024, the legal corridor for digital transactions in Vietnam has undergone significant milestones.
In this article, LawPlus provides a detailed analysis of the legal validity and dispute risks when using electronic signatures in contract execution under the latest regulations.
Table of Contents/Mục lục
1. Legal Validity of Electronic Contracts and Data Messages
According to Articles 3 and 16 of the Law on Electronic Transactions 2023, electronic contracts established in the form of data messages possess legal validity equivalent to traditional contracts, provided they meet the requirements regarding integrity and accessibility. A key point is that the Law on Electronic Transactions 2023 no longer excludes certain sectors as the 2005 Law did. However, conducting electronic transactions in specific fields must still comply with the conditions, procedures, and forms prescribed by the corresponding specialized laws. This allows businesses to confidently apply electronic contracts across most business activities.
The legal validity of electronic contracts is affirmed through three attributes of data messages:
– Validity as a document: If the law requires information to be in writing, a data message is considered to meet this requirement if it can be accessed and used for reference.
– Validity as an original: A data message is considered an original when it ensures the integrity of information from the time it is initiated and that information can be accessed and used in a complete form.
– Validity as evidence: The evidentiary value is determined based on the reliability of the method of initiating, sending, receiving, storing, and maintaining the integrity of the message.
2. Classification and Legal Validity of Electronic Signatures
One of the crucial factors for an electronic contract to be valid is the electronic signature. Article 3 of the Law on Electronic Transactions 2023 clearly defines:
– Electronic signature: A signature created in the form of electronic data attached to or logically associated with a data message to identify the signatory and confirm the signatory’s approval of the data message.
– Digital signature: An electronic signature that uses asymmetric key algorithms, including a private key and a public key, where the private key is used for signing and the public key is used to verify the digital signature. Technically, digital signatures help authenticate the signatory, ensure data integrity, and limit the possibility of transaction repudiation; securing the content of the data message still requires separate encryption mechanisms.
Regarding legal validity, Articles 23 and 25 of the Law on Electronic Transactions 2023 affirm that electronic signatures cannot be denied legal validity simply because they are in electronic form. Notably, digital signatures or secure specialized electronic signatures have legal validity equivalent to the handwritten signatures of individuals or the seals of organizations.
3. Potential Dispute Risks When Executing Electronic Contracts
Despite having a solid legal foundation, signing contracts via electronic signatures still carries risks that may lead to disputes:
First, risks regarding the subject and signing authority: Unlike handwritten signatures, digital signatures rely on account management and private key storage devices (tokens/passwords). The use of digital signatures by unauthorized persons to execute contracts can trigger disputes regarding the validity of the transaction or the liability of the business, depending on specific circumstances.
Second, risks of forgery and cyberattacks: Malicious actors may distribute malware, misappropriate authentication information, or exploit system security vulnerabilities to conduct unauthorized transactions in the name of the digital signature owner. When a signature is forged, businesses face immense financial and reputational damage, and the legal dispute resolution process becomes complex and prolonged.
Third, risks regarding integrity and storage: An electronic contract is only valid when the information remains unaltered after signing. If the storage system experiences technical failures, hardware damage, or is compromised by hackers, the business may lose critical evidence when disputes arise. Additionally, some common electronic signatures (such as image signatures or OTPs) have low security and are more easily repudiated compared to digital signatures.
4. Risk Prevention Measures and Dispute Resolution Methods
To mitigate risks, businesses need to implement synchronous management and technical measures:
– Select reputable providers: It is recommended to use services from public digital signature certification organizations licensed by the Ministry of Science and Technology, or businesses can use platforms connected to the Vietnam Electronic Contract Development Axis (CeCA) to support authentication and storage of transactional information, thereby enhancing the ability to provide proof when disputes arise.
– Establish strict internal procedures: Issue regulations on digital signature management, delegate specific authority to representatives, and apply two-factor authentication (2FA) to prevent unauthorized use.
– Ensure secure storage: Use cloud storage platforms that meet international standards (such as ISO 27001), perform regular backups, and ensure the ability to retrieve data within the statutory time limit (businesses must ensure the ability to store, retrieve, and use data within the time limits prescribed by specialized laws for each type of document/file).
When disputes over electronic contracts arise, parties can choose one of four resolution methods:
- Negotiation: Parties negotiate and agree on their own based on a spirit of voluntariness, cost-saving, and business confidentiality.
- Mediation: Involves the participation of an independent third party (mediator) to assist in finding a common solution.
- Arbitration: Arbitral awards are final, offering quick resolution and good information confidentiality.
- Court: The method with the highest level of enforcement, conducted according to legal procedures, ensuring fairness through various levels of trial.
5. Conclusion
The Law on Electronic Transactions 2023 has created a transparent and open legal corridor for electronic contracts in Vietnam. However, to effectively exploit this tool, businesses must continuously raise awareness of information security and strictly comply with technical requirements regarding digital signatures. Proactively building secure signing procedures and selecting reputable technology partners is a key solution to help minimize legal risks and improve the ability to protect business interests when disputes occur.
