Law to protect consumer rights

28 - 03 - 2011
By Morgan Gizardin & Huynh Tan Loi*

In conflicts between businesses and consumers, the latter are always in the weaker position and their rights often require the protection of the State.

The new Law on Consumer Protection, passed in November of last year, is designed to protect consumer rights and replaces Ordinance No 13/1999/PL-UBTVQH10 which had been on the books since April 1999. The new law attempts to keep pace with the significant evolution of the Vietnamese economy in the past decade, particularly the emergence of a distinct middle-class which can now afford to buy a wide range of goods and services. With that economic advance, increasing violations of consumer rights have been observed.

The new law, therefore, provides for four methods of dispute resolution between businesses and consumers: negotiation, mediation, arbitration, and lawsuits. Negotiation 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.

Article 30.2 of the law states that a dispute causing loss and damage to "many consumers" may not be resolved by negotiation or mediation. This provision may cause confusion because it is difficult to determine how many people should be considered "many". Further guiding documents should provide thresholds or at least clarification. Since negotiation and mediation are simpler and faster than arbitration and/or lawsuits, they should be encouraged to save time and expense.

However, the resulting conflict settlement is a matter of contract, so its effectiveness will depend on the good faith of the parties. If one party does not fulfill its obligations, the other will need to go to court to enforce the settlement agreement.

For arbitration to become the primary method of dispute resolution under the new law, the enterprise is required to receive informed consent from the consumer. This stringent requirement needs more guidance. It 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.

Arbitration shall therefore prevail over lawsuits for resolution of disputes in such cases in which the parties have lawfully agreed to be governed by arbitration. Under Article 38, however, an individual consumer may still opt to file suit in a court of law if the general terms of the agreement, or a standardised agreement, allow it.

The new law substantially changes court proceedings involving consumer cases in order to enhance their protections. "Civil consumer protection cases" are recognised as those in which the plaintiff is a consumer or a social organisation representing consumers in accordance with the law. Article 41.1 waives the consumer's responsibility to prove the fault of the vendor in causing loss or damage. Instead, the vendor shall have 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.

Another major innovation is the provision of "simplified civil procedures" to such cases, another factor designed to encourage consumers to pursue enforcement of their rights in court proceedings.

Together with other provisions of the law, the dispute resolution provisions compel enterprises to be more responsible and cautious to avoid unnecessary disputes with consumers. Guiding regulations are expected to supply clarification of some issues in the law.

(*) Please contact the author at and or our partners if you wish to have more information or specific advice for the topic of this article.

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