final report business law topic the challenges to the exercise of free commercial rights in vietnam

The meaning of Free Commercial Rights Free Commercial Rights refer to the legal rights of individuals and organizations to engage in commercial activities freely and without undue interf

MINISTRY OF FINANCE UNIVERSITY OF FINANCE —- MARKETING

VÀ s0) /01)//)2)434/))1Q TRUONG DAI HOC FINAL REPORT BUSINESS LAW

TOPIC:

THE CHALLENGES TO THE EXERCISE OF FREE

COMMERCIAL RIGHTS IN VIETNAM

Full Name: Tran Lê Quỳnh Thư

Student ID: 2121013394

Class: IP_21DMA01 Instructor: Huynh Thién Tw

Ho Chi Minh City, May 6%

TABLE OF CONTENTS

I INTRODUCTION 3

Ai co 4

2 Overview of Free Commercial Rlighifs - 2 22 222122211121 11111115115112 +2 5 2.1 The definition of Free Commercial Rights . 2c 222 2221221222 222222zxszx+2 5 2.2 The meanming of Free Commercial Riglhits - 52 222 22222221 2321222122222zx+zx+2 5 2.3 The content of Free Commercial Righits - c2: 22 222111211121 112 11115122 x+2 6

I THE CHALLENGES TO THE EXERCISE OF FREE COMMERCIAL

1 Property Rlglis - 2 2.11210112011101 1111111 111111111111 1111111111111 1 tk 7

3 Contractual Rights - 2 2.10220112011211 151 1211111111111 1 11111111111 111k key 9

4 — Personality Riglis - 2L 2 12112011211 121115211 121118111811 1811 8111k 10

IV RECOMMENDATIONS AND SUGGESTIONS cceceSeseeeree 11

VY CONCLUSION 12

I INTRODUCTION

Vietnam, a rapidly growing economy, has been attracting investors from all over the world, including the United States, European Union, Japan, and South Korea However, Vietnam’s intellectual property laws and regulations remain a challenge for many foreign investors, particularly in the area of free commercial rights

One of the biggest challenges is the lack of transparency in the business environment The government's policies and regulations are often unclear, and the enforcement of laws and regulations can be arbitrary and unpredictable This creates a lot of uncertainty for businesses, especially foreign investors, who are unsure about how

to navigate the complex regulatory environment Another challenge is weak intellectual property protection Piracy and counterfeiting are rampant in Vietnam, and many businesses struggle to protect their intellectual property rights This is especially true in industries such as technology, where intellectual property is a key asset Without strong protection, businesses may be hesitant to invest in research and development or bring new products and services to the market Bureaucratic red tape is another obstacle to free commercial rights in Vietnam The process of starting and running a business can

be cumbersome and time-consuming, with numerous permits, licenses, and approvals required This can be a significant barrier to entry, especially for small and medium- sized enterprises (SMEs), which may not have the resources or expertise to navigate the bureaucratic maze These challenges have significant implications for businesses operating in Vietnam They can lead to increased costs, reduced competitiveness, and lower levels of investment They can also create an uneven playing fields, with some businesses able to leverage their connections and resources to overcome these obstacles, while others are left behind

This essay will explore these challenges and their implications for businesses operating in Vietnam Also, it will discuss potential solutions and strategies that can help overcome these obstacles and promote a more conducive environment for free commercial nghts in Vietnam

Il, FREE COMMERCIAL RIGHTS

1 The “Rule of Law”

The concept of the “Rule of Law” is closely connected to protection of free commercial rights in Vietnam In a system based on the rule of law, all individuals and entities are subject to the same laws and legal principles, and businesses are not exempt from legal requirements This ensures that businesses operate in a transparent, predictable, and stable legal environment, which provides them with the certainty they need to invest and grow According to resolution No 27-NQ/TW, the party clearly defines the characteristics of the rule of law state as follows:

“1 The State of the people, by the people, for the people;

2 Human rights and citizen rights are regconized, respected, guaranteed, and protected under the Constitution and the law;

The state is organized and operates according to the Constitution and the law, managing society by the Constitution and the law;

State power is unified, delegated in a clear and specific manner, tightly coordinated and effectively monitored among state agencies in carrying out legislative, executive, and judicial functions;

The legal system is democratic, fair, humane, comprehensive, consistent,

implemented strictly and consistently;

The independence of the court in Jurisdiction, adjudication, and trial by jury is respected and ensured, and only follows the law;

Respect and ensure the implementation of international treaties to which the Socialist Republic of Vietnam is a member, ensuring the highest national and ethnic interests based on the basic principles of the United Nations Charter

,

and international law.’

In Vietnam, citizens enjoy freedom of enterprise as determined by law and have the right to engage in sectors and trades that are not prohibited by law, as stated in the Constitution Moreover, the state is organized and operates according to the Constitution and the law, and state power is delegated in a clear and specific manner, which helps

ensure that businesses can operate in a predictable and stable legal environment Additionally, the independence of the court in jurisdiction, adjudication, and trial by jury 1s respected and ensured, which means that businesses can have confidence in the legal system and trust that disputes will be resolved fairly and impartially The respect and implementation of international treaties also contribute to a stable and predictable legal environment, which is crucial for attracting foreign investment and promoting international trade

2 Overview of Free Commercial Rights

2.1 The definition of Free Commercial Rights

Free Commercial Rights in Vietnam is protected by law and is recognized as a fundamental right of individuals and organizations in the country According to Article

57 of the Constitution 1992: “The citizen enjoys freedom of enterprise as determined by law’, this means that the right to freedom of enterprise is subject to limitations and regulations as determined by law While citizens have the right to engage in commercial activities, this right may be restricted by laws and regulations aimed at protecting the public interest or preventing harmful practices In contrast, according to Article 33 of the Constitution 2013: “Everyone has the right to freedom of enterprise in the sectors and trades that are not prohibited by law”, this formulation emphasizes the broad scope

of the right to freedom of enterprise and suggests that individuals have the nght to engage in any commercial activity that is not explicitly prohibited by law However, both articles recognize the importance of protecting human rights to engage in commercial activities within the context of the rule of law and the public interest 2.2 The meaning of Free Commercial Rights

Free Commercial Rights refer to the legal rights of individuals and organizations

to engage in commercial activities freely and without undue interference from the state

or other entities These rights allow individuals and organizations to choose the business sectors they want to operate in, the business models and scales, the forms and methods

of capital mobilization, and the customers they want to deal with They also allow for freedom in negotiating and agreeing on the terms and content of contracts and the method of resolving commercial disputes

In Vietnam, free commercial rights are enshrined in the Law on Enterprises, the Law on Investment, and other related laws and regulations The Vietnamese government has been implementing policies and measures to further promote and protect free commercial rights in order to create a more favorable business environment and attract more domestic and foreign investment

2.3 The content of Free Commercial Rights

Free Commercial Rights refers to the legal rights and freedoms granted to individuals and businesses to conduct commercial activities in a free and competitive market In Vietnam, these rights include:

- The right to freely choose the business sector: Individuals and businesses are allowed to choose to do business 1n sectors that are not prohibited by law, either in

a single sector or multiple sectors

- The right to freely choose the business model and scale: Individuals and businesses are allowed to decide the investment capital level and choose a suitable business model such as individual business household, private enterprise, partnership, limited liability company, or joint-stock company

- The right to freely choose the form and method of capital mobilization: Individuals and businesses are free to decide on increasing loan capital or charter capital and choose ways of mobilizing capital through loan contracts or issuing bonds, stocks

- The right to freely contract: Individuals and businesses are free to choose customers, negotiate, agree, and unify the terms of the contract, and agree on the form or content of the contract

- The right to freely choose the form and method of dispute resolution: Individuals and businesses are free to decide on the method of resolving commercial disputes through negotiation, mediation, court, or arbitration

- The right to fair competition: Individuals and businesses are protected by law if there are unfair competition practices that affect their business operations

I THE CHALLENGES TO THE EXERCISE OF FREE COMMERCIAL RIGHTS IN VIETNAM

1 Property Rights

The exercise of free commercial rights in Vietnam is a fundamental right guaranteed by law, allowing individuals and businesses to freely engage in commercial activities in various sectors and choose their own business models and methods of capital mobilization However, there are several challenges to the exercise of these rights, particularly with regards to property rights

The exercise of free commercial rights in Vietnam is subject to a complex set of laws and regulations that can pose significant challenges for individuals and businesses According to Article 158 of the Civil Code 2015, ownership rights comprise the rights

of an owner to possess, use and dispose of the property of the owner in accordance with the law This means that ownership rights refer to the legal rights that an owner has over their property These rights include the right to possess the property, the right to use the property, and the right to dispose of the property

However, compliance with legal requirements can be difficult for individuals and businesses seeking to exercise their free commercial rights, particularly if they are not familiar with the local legal system In addition, limited access to finance can be a major challenge for those seeking to exercise their free commercial rights, as banks and other financial institutions may be reluctant to lend to individuals and businesses without a track record of success or collateral to offer

Furthermore, the Vietnamese market can be highly competitive, particularly in certain sectors such as manufacturing and retail Businesses seeking to exercise their free commercial rights may face stiff competition from other companies operating in the same sector Corruption is also a significant challenge in Vietnam and can affect the exercise of free commercial rights Businesses may be subject to bribery and other forms

of corruption when seeking permits or approvals from government agencies However, while the government has taken steps to address these challenges, there is still much work to be done to ensure that individuals and businesses are able to exercise their free commercial rights in a fair and equitable manner By continuing to strengthen the legal

framework surrounding property rights, reduce barriers to entry and growth for businesses, and improve the overall business environment in Vietnam, it is possible to overcome these challenges and support the continued growth and development of the country's economy

2 Incorporate and choose a form

One of the key challenges associated with the right to freely choose the business model and scale in Vietnam is related to the registration process While individuals and businesses are free to choose their business model and investment capital level, they are required to register their business with the relevant authorities to obtain legal recognition and protection (Clause 12 Article 4 of the Law on Enterprises 2020) Failure to register can result in fines, legal disputes, and other difficulties (Clause 3 Article 16 of the Law

on Enterprises 2020)

In Vietnam, the registration process for businesses can be complex and time- consuming, especially for those who are unfamiliar with the local legal system This can present a significant challenge to individuals and businesses exercising their right to freely choose their business model and scale The registration process requires applicants to provide a range of information and documents, including proof of identity, business plans, financial statements, and tax registration

Moreover, the process can be subject to corruption and bureaucratic red tape, leading to delays and additional costs This can be particularly challenging for small and medium-sized enterprises (SMEs) with limited resources and capacity to navigate the complex registration process As a result, many SMEs may resort to informal or unregistered business activities, which can leave them vulnerable to legal and financial risks

Furthermore, the registration process is not the only challenge facing businesses exercising their right to freely choose their business model and scale in Vietnam Access

to finance can be limited, particularly for new and smaller businesses without a track record of success or collateral to offer This can hinder their ability to start or expand their business, and limit their competitiveness in the market

In addition, certain sectors of the Vietnamese economy can be highly competitive, which can present challenges to businesses seeking to establish themselves and compete effectively This can be particularly daunting for SMEs, who may lack the resources and expertise to compete with larger, established companies

To address these challenges, the Vietnamese government has taken steps to simplify the registration process, reduce corruption, and increase access to finance for SMEs However, more work needs to be done to ensure that individuals and businesses can exercise their right to freely choose their business model and scale without unnecessary barriers and challenges

3 Contractual Rights

The free contractual rights is an essential element of free commercial rights, and it allows individuals and businesses to negotiate and agree upon the terms of a contract without any undue interference from the government or other parties However, there are several challenges associated with the exercise of this right, particularly with respect

to the form of the contract and liability exemptions

Regarding the form of the contract, Vietnamese law recognizes various forms of contracts, including written, oral, and implied contracts However, written contracts are generally preferred in commercial transactions as they provide more certainty and clarity regarding the terms of the agreement such as when the contract involves the transfer of real estate, intellectual property, or the establishment of a joint venture One

of the challenges associated with the form of contract in free commercial rights is ensuring that the terms of the contract are clear, unambiguous, and enforceable This is particularly important in international business transactions, where the parties may be from different countries with different legal systems and cultural norms Different legal systems may have different requirements for the form and content of contracts, which can create challenges for parties trying to negotiate and agree on terms Additionally, there may be challenges related to the negotiation process itself For example, in situations where one party has significantly more bargaining power than the other, they may be able to impose unfair terms on the weaker party This can be particularly

problematic when the weaker party is a small business or an individual without much negotiating experience

Exemption of liability refers to the ability of parties to limit or exclude their liability for certain events or circumstances under a contract While the right to freely contract allows individuals and businesses to negotiate and agree on the terms of their contracts, the Civil Code of Vietnam also provides for limitations on the validity of contracts involving certain groups of people, such as minors, legally incapacitated persons, and those with limited legal capacity (Article 125) In cases where a civil transaction is established or performed by a person with limited legal capacity, a court may declare the transaction invalid if it is not established and performed by or with the consent of the representative of that person, except in certain cases as outlined in Clause

2 of Article 125 This can present a challenge for businesses seeking to enter into contracts with individuals who may not have full legal capacity, as it may be difficult to determine whether a contract will be considered valid and enforceable under the law Additionally, the ability to exempt liability in contracts may also be subject to certain limitations or restrictions under the law For example, the Law on Consumer Protection

in Vietnam 2010 prohibits businesses from limiting or excluding their liability for damages caused to consumers as a result of their products or services (Article 24)

4, Personality Rights

In addition to property rights, the exercise of free commercial rights in Vietnam also faces challenges related to personality rights Personality rights refer to the rights

of individuals to protect their own image, name, reputation, and privacy In the context

of business, personality rights are essential to protect the interests of business owners and prevent unauthorized use of their names, trademarks, and other intellectual property One of the challenges in exercising personality rights 1s the prevalence of counterfeit products and unauthorized use of trademarks in Vietnam The lack of effective enforcement mechanisms has led to an increase in the production and sale of counterfeit goods, resulting in significant losses for legitimate businesses The unauthorized use of trademarks and other intellectual property has also become a