Articles
More rights are handed to consumers against vendors

24 - 05 - 2011
By Bui Ngoc Hong and Huynh Tan Loi*

With the significant evolution of the Vietnamese economy in the past decade, more consumers can now afford to buy a wide range of goods and services. Together with that development, increasing violations of consumer rights have been observed. However, in conflicts between vendors and consumers, the latter are normally in the weaker position. Therefore, in November 2010, Vietnam issued the Law on Consumer Protection, to replace Ordinance 13/1999/PL-UBTVQH10 on the same subject, to give more protections relating to the consumer rights.

Among others, the new law provides for four methods of dispute resolution between businesses and consumers: claim, mediation, arbitration, and court. Claim and mediation are less time-consuming and complex, but only the arbitration panels and courts may issue awards and decisions that can be enforced by the authority of the State.

Of note, according to Article 30.2 of the law if a dispute causing loss and damages to "many consumers", claim and mediation cannot be used as a dispute settlement method. This provision may cause confusion because it is difficult to determine how many people should be considered "many". If no clarification is given, vendors should be even more cautious to this provision. The reason is that in such a "dispute causing loss and damages to many consumers", the vendor may not have a chance to get the dispute resolve peacefully to quiet a case. Especially when court procedure is used, the case can be exposed to public awareness, and it would be too late for a vendor to get justified once the dispute is released to a larger public.

For arbitration to become the primary method of dispute resolution under the new law, the vendor is required to receive informed consent from the consumer. This stringent requirement is unclear by which legally acceptable method such information may be provided, and consent obtained. For example, it is impracticable for a supermarket or retail shop to give notice and obtain consent from each individual consumer that disputes will be decided by arbitration.

Normally, arbitration prevails over courts for resolution of disputes in cases in which the parties have agreed to be governed by arbitration. Under Article 38 of the law, however, an individual consumer may still opt to file suit in a court if a standardized arbitration clause is introduced by the vendor.

With respect to the burden of proof, Article 41.1 waives the consumer's responsibility to prove the fault of the vendor in causing loss or damage. Instead, the vendor has the onus of proving they were not at fault. Moreover, a consumer plaintiff is not obliged to deposit courts fees and charges in advance, a factor likely to encourage consumers to pursue a court proceeding in cases in which the amount in dispute is considerable.

Together with other provisions, these dispute resolution provisions of the law compel the vendor to be more responsible. Vendor should now be more cautious, to avoid costly disputes with consumers.
 
(*) Please contact the authors at hong.bui@indochinecounsel.com and loi.huynh@indochinecounsel.com or our partners if you wish to have more information or specific advice for the topic of this article.
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