How to sign electronic contracts to seize opportunities from EVFTA

Many companies in developed countries have switched from using fresh signatures on paper contracts to using electronic signatures. Most Vietnamese businesses are still operating on physical signatures. The government has announced directives and guidelines to promote and regulate the signing of electronic contracts and digital signatures. Electronic contracts and digital signatures can help businesses reduce the administrative burden of sending documents back and forth, save time and money, and be more secure to protect their legitimate rights and interests.

Previously, the 2005 Law on Electronic Transaction was unclear and not sufficiently updated on the issue of digital signatures and electronic contracts. As a result, adoption of electronic contracts are stymied as there is a lack of clarity and future-ready regulations on electronic contracts that can provide businesses with the certainty they need to adopt electronic contracts. This caused many Vietnamese businesses to miss the opportunity to implement electronic contracts in their operations then and so remain unfamiliar with the technology. This lack of familiarity with digital signatures and electronic contracts and dependence on physical contracts could lead to contestation over the authenticity of the contracts signed and the traceability of the signatories.

Since then, Decree No. 130/2018/ND-CP on digital signatures and digital signature authentication services has put in place a regulatory framework that provides reassurance on the validity of digital signatures and electronic contracts.

- Physical signing of contracts and then disseminating and storing the digitized copy of the contract (e.g. scanned PDF, photo).
- Signing e-contracts via fax/email with secret codes on faxed documents or password attached with email according to the agreement between the parties.
- Signing e-contracts with digital signatures per provisions of Law on Electronic transactions and Decree No. 130/2018/ND-CP on digital signatures and digital signature authentication services.

Although electronic contracts are more secured and time-efficient, many Vietnamese businesses revert to the old methods because they are skeptical about the level of security of electronic contracts and their familiarity with physical signatures. Using physical signatures for contracts expose Vietnamese businesses to risks and potential losses:

1. One party denies the contract: claims that the email with the data message of the contract is not sent by them (this is especially so since many Vietnamese businesses use publicly available and free email accounts such as Gmail, and does not provide evidence of the registered domain name of the company) but the other party does not have sufficient evidence to prove otherwise.

2. One party claims that a part of the content in the contract has been changed.

3. One party claims that the sender of the email is an unauthorized person: the contract is sent by the staff in charge instead of the person authorized to sign the contract. 

4. One party claims that the email is sent to an unauthorized person: the contract is sent to the employee in charge instead of the person authorized to sign the contract.

Reasons for Vietnamese businesses to sign e-contracts with digital signatures

Businesses can be assured that digital signatures are recognized under Vietnamese law in legal documents and contracts signed using digital signatures are valid as legal evidence. The recognition of digital signatures is found in the 2005 Law on Electronic Transactions and Decree No. 130/2018/ND-CP. The National Electronic Authentication Center (NEAC) recognizes digital signatures issued by a certified service-providing organization that is able to meet the mandatory technology standards (follow Circular No.16/2019/TT-BTTTT):

1. Digital signature creation data are attached only to the signatory in the context that such data are used;
   

2. Digital signature creation data are under the control of only the signatory at the time of signing;
   

3. All changes to the digital signature after the time of signing are detectable;
   

4. All changes to the contents of the data message after the time of signing are detectable.

Digital signatures leave a digital trace and have digital records imprinted into the electronic contracts so it is easier to provide proof to transactions compared to contracts that are signed physically, where proving the origin may be difficult. This is because electronic contracts signed with digital signatures contain digital traceability of timestamps and IP addresses of the signatories. By using a digital signature based on Public Key Infrastructure (PKI), the contract gets hashed and signed using an asymmetric encryption key pair. The integrity of the contract is thereby protected so that even a slight change in it, e.g. change of a comma, a point, or space, would create a different hash value, thereby revealing that a change has occurred. This means that any tampering or modifications made to the contract after it has been signed digitally cannot be hidden and will be known. As a result, digital signatures are able to ensure the integrity of electronically signed documents and provide reassurance to signatories.

The users can perform digital signatures on all types of e-documents across different devices. Thus, not only is printing reduced but the submission and exchange of contracts are simplified to save time and effort for both the sender and receiver of the document.

Businesses in the EU-27 are at least a decade ahead of us in digital technology. E-contracts signed with digital signatures are common practices for business in EU-27. Applying digital signature helps Vietnamese enterprises to enter into contracts with businesses in these countries more quickly and safely.

At a time when Vietnam actively participates in free trade agreements like EVFTA, businesses need to quickly adapt to modern and effective solutions and abandon old and inefficient habits. Migrating to electronic contracts is only a small part of the cooperation between enterprises but can serve to further support Vietnamese enterprises in accessing foreign markets quickly and safely to improve the rate of the successful signing of commercial contracts.

References:

1. Law on e-transactions 2005

2. Decree No.130/2018/NĐ-CP on guidelines for of the Law on E-Transactions of digital signatures and digital signature authentication..

3. Circular No.16/2019/TT-BTTTT on lists of mandatory standards to be applied in digital signatures and digital signature authentication services in form of mobile PKI and remote signing.