Pham Diem
State and Law Institute of Vietnam
Under the feudal regime, Vietnam was a self-sufficient society in which agriculture was highly valued and commerce was restricted. Traders could not form themselves into a socially recognized caste and did not have their own legal status, so there was no separate law for them. Commercial transactions were sometimes governed by the criminal and/or administrative law of the feudal states. Transactions between traders were regulated largely by ethical norms, customs and practices as well as business habits in craft guilds and villages.
When Vietnam became a French colony at the end of the 19th century, ideas of commercial liberalization and European commercial laws started to be diffused into Vietnam. Under colonial rule, the French administration and the feudal Nguyen dynasty promulgated three separate civil codes: The “Bo Luat Nam Ky Gian Yeu” (the Summarized Cochinchina Code) in 1883, the “Bo Dan Luat Bac Ky” (The Tonkin Civil Code) in 1931 and the “Hoang Viet Trung Ky Bo Luat” (The Royal Code of Central Vietnam) in 1936, were applied separately to three different regions of the country, Southern, Northern and Central Vietnam. The codes prescribed various forms of capital pooling for establishment of professional associations such as the partnership associations, the private cooperative associations, mutual benefit associations, and joint stock holders’ associations. In various national reform movements, many local bourgeois democrats demanded encouragement of industrial and commercial development. Greatly influenced by France’s Commercial Code, King Bao Dai, on June 12, 1946, issued an order promulgating the Commercial Code for application in Central Vietnam. It was the first Commercial Code in Vietnam. Yet, the political upheavals in the early 20th century and protracted fierce wars delayed the country’s economic restoration and trade expansion.
In 1972, the Saigon administration also promulgated a commercial law, the effect, efficiency and practical value of which was, however, no better than that of the 1942 Commercial Code. That commercial code and law were more or less the initial experiment in introducing the ideas of European commercial law into Vietnam even though in reality they were unable to deeply root themselves in Vietnamese society then and their scope of application was limited, often within urban centers.
Following the victorious August 1945 Revolution, the Democratic Republic of Vietnam (now the Socialist Republic of Vietnam) was set up. Yet, for a long period (from 1945 to 1986), the highly centralized economy and the allocation mechanism based on plan targets gradually left no room for commercial activities to thrive. Moreover, the methods of regulating the economic relations within the national economy were imported from the former Soviet Union and other East European socialist countries by Vietnamese lawmakers. As a result, the contractual relations between economic units were regulated mainly by the law on economic contracts, and a commercial law proved to be unnecessary. The concept of commercial law generally did not appear in the jurisprudence of Vietnam or of other socialist countries, except for domains related to external economics.
In a nutshell, during this period there existed in Vietnam no commercial law either in a narrow or a broad sense.
In 1986, Vietnam embarked on the course of “doi moi dat nuoc” (national renewal), built up the market economy, opened up the country for international integration. The 1992 Constitution recognized the existence of various economic sectors and the rights to business freedom and to equality before law of subjects participating in business activities. The commercial restoration and development needed to be regulated by law. In such a context, the Commercial Law was enacted by the National Assembly on May 10, 1997, and took effect on January 1, 1998. It was a fundamental landmark in the process of formulating the commercial law in Vietnam, helping incrementally put the commercial activities in order, encouraging and developing lawful commercial activities, preventing and handling illegal acts which adversely affect the commercial environment and contributing to the cause of national renewal and international integration.
However, after several years of implementation, the 1997 Commercial Law revealed its limitations and inadequacies, failing to satisfy the process and development of practical commercial activities at home and abroad. This required a new commercial law, which was elaborated on the following principles:
-Institutionalizing the Vietnamese state’s guidelines and policies on development of the market economy under the State’s management, focusing on the development of commodity and service markets.
-Respecting and promoting the rights to freedom in commercial activities.
-Complying with the principles set forth in the Civil Code, of which the principle of respecting the freedom to, and voluntariness in, making commitments and agreements is identified as the foundation of commercial activities.
-Complying with the current laws on commerce, of which the commercial law governs the general principles and institutions of trade in goods and services.
-Complying with international treaties on commerce, which Vietnam has signed or acceded to, as well as with international commercial laws and practices.
-Ensuring transparency and raising the efficiency of state management, without obstructing lawful commercial activities in the market.
The new commercial law was passed by the National Assembly on June 14, 2005, and came into force on January 1, 2006. It comprises 9 chapters with 324 articles. Compared to the 1997 Commercial Law, the new law’s scope of regulation has been expanded to cover not only trade in goods but also service-providing activities and trade promotion activities.
Under the 1997 Commercial Law, commercial activities were restricted to three groups of acts: goods purchase and sale; service provision in association with goods sale and purchase; and trade promotion activities. It enumerated 14 specific commercial acts. Yet, with a broader scope of regulation to suit international laws and practices, the 2005 Commercial Law has not specified commercial acts but has identified commercial activities in a more general and broader sense and set a frame for such activities. Under the new law, commercial activities are understood as those for profit-generating purposes, including goods sale and purchase, service provision, investment, trade promotion and other profit-generating activities. Besides, it has also covered commercial activities conducted outside the territory of the Socialist Republic of Vietnam in cases where the involved parties choose to apply this law or foreign laws, or where treaties to which the Socialist Republic of Vietnam is a contracting party provide for application of this law.
As far as the principles of commercial activities are concerned, the 1997 Commercial Law specified a number of principles such as the rights to equality before law and co-operation in commercial activities and the protection of the legitimate interests of producers and consumers. However, these provisions failed to clearly express the nature of commercial activities and failed to state whether these were principles or policies. To redress this shortcoming, the 2005 Commercial Law has redefined the basic principles of commercial activities to suit the principles set forth in the Civil Code, practical commercial activities in Vietnam and international practices. These include such principles as:
-Traders’ equality before the law in commercial activities.
-Freedom and voluntariness of contract in commercial activities.
-Application of practice in commercial activities which have been established between parties.
-Protection of consumers’ lawful rights and interests.
-Recognizing the legal validity of data messages in commercial activities.-