Penal Code gets reboot in new year

January 28, 2017 | 14:00
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To keep up with the times, even the bedrocks of society must adapt to stay relevant – which is why the newly updated Penal Code should give hope to new-generation businesses. Freshfields Bruckhaus Deringer managing partner Tony Foster, and associate Nguyen Viet, explain what the business community has to look forward to in the new law.
The new Penal Code clears up grey areas in the most basic legal document the local court system has to offer

Lawyers are sometimes thought of as steadfast traditionalists wielding quill pens. This is largely false. Anyone who thinks that innovation in Vietnam is the province of tech geeks could benefit from some re-education. The law in Vietnam is a living, breathing, dynamic, possibly hydra-headed, beast. It changes, mutates and evolves as swiftly as society – and through this lens, the past year was notable in several respects.

Jail for companies?

Can a company go to jail? Until 2016, this was not a possibility in Vietnam. Indeed, it is a bit difficult anywhere in the world to put an abstraction into jail, but in many countries they can be convicted of crimes. The consequences are often more fatal than jail, as the post-Enron conviction of the Arthur Andersen accounting firm demonstrated.

The new Penal Code, which was expected to take effect on July 1, 2016 (but has been temporarily postponed), will allow commercial entities to be prosecuted for 31 offences, including 22 for violating economic management orders. Even more importantly, given the sad state of the environment, nine offences relating to violation of environmental protection regulations have also been written in.

Three major criminal sanctions may apply to a legal entity, including fines. There is temporary suspension of operation, which is the equivalent of jail, and permanent suspension of operation – equivalent to the death sentence. This should encourage shareholders to monitor the activities of those they empower more closely.

Liability for driverless cars?

But we should be fair. What happens if you are innovating away in your laboratory and release a dangerous pollutant? No big deal, you might say – the cities are so polluted that a little extra bit does no appreciable harm. Yet under the current law you could be a criminal. This hinders the risk-taking that is inherent in innovation.

When the car was developed, it was seen as more dangerous than a horse-drawn cart. When the driverless car comes to Vietnam, should you go to jail if it causes an accident?

Now, the new Penal Code provides you an exemption from criminal liability in case of risks in research, experiments, and the application of technological developments, as long as you have complied with necessary technical processes.

Startups’ narrow escape

And what about startups? Article 292 of the new Penal Code criminalises the act of conducting unlicensed business on computer communication networks.

This would potentially affect the entrepreneurial world, many of whose businesses provide services via the internet.

Fortunately, the government has proposed that the National Assembly remove this article after encountering widespread objections.

Courts can no longer duck new issues

Possibly even more important to the startup is this scenario. Say you enter into a “repo synthetic derivative strata alliance” agreement with another company, relating to a piece of “tripartite visceral semiotic bleached code”. The other company does not live up to its side of the bargain. Can you enforce through the courts?

Until this year, the courts would probably not take the case because the law does not cover either the agreement or the product – and so the judges, unsurprisingly, would not know what to do. But in 2016 there was a new Civil Procedures Code. The most significant change might be that the court will no longer have the right to refuse to handle a civil case due to lack of legal provisions on point. Instead it will have to base a decision on relevant practices and/or analogy of law.

Big data

Leaping forward into this brave new world, the courts, long the heartland of the fusty, ledger-driven scribe immortalised by Bartleby, are now going to accept electronic data as evidence. Whether the judge will be able to assimilate this data in stride is to ruminate on where sci-fi, law, and philosophy – and possibly comedy – intersect.

Presumed innocent

We cannot conclude this romp through innovations in criminal law without a glance at where the past meets the future. The presumption of innocence when accused of a crime dates back to the days of the Roman Empire. And in England two hundred years ago, while presiding over a case of false-oath, administration Judge Gillies said: “The presumption in favour of innocence is not to be replaced by mere suspicion. I am sorry to see that the public prosecutor treats this too lightly; he seems to think that the law entertains no such presumption of innocence. I cannot listen to this. I conceive that this presumption is to be found in every code of law which has reason, and religion, and humanity, for a foundation. It is a maxim which ought to be inscribed in indelible characters in the heart of every judge and juryman.”

The new Penal Procedures Code now expressly recognises the principle according to which the accused person is deemed innocent until their offence is proved pursuant to the procedures and proceedings provided in the Code, and a court passes a valid conviction.

A 10-year innovation

Civil Codes also date back to Roman times, the first well-known compilation being that of Justinian. But they need to be creatures of their times or else they fade into irrelevance. The Justinian Code had articles relating, for example, to the correction of slaves. These are no longer necessary in modern slave-free states. So the poor legislator has to stay up with the times.

The first Civil Code in post-Doi moi Vietnam was passed in 1995, about 10 years into the new era. This document was the foundation stone of Vietnamese personal and business law. After another 10-year interval, a new Civil Code was passed in 2005. And, as many changes occurred in the last 10 years, 2016 needed a new Civil Code.

These codes set the ground rules. Some rules should stay firm for aeons (if you break a contract without a fair excuse, you should compensate). Others are not so firmly anchored. One that annoyed a lot of people was that certain contracts had to meet specified formal criteria in order to be valid – they had to be notarised.

Now the failure of a contract to comply with the required form (it should have been, but was not made in writing or notarised) will not automatically invalidate it. Indeed, if a party has fulfilled at least two-thirds of their obligations under the contract, it will be deemed valid. If the circumstances relating to a contract have substantially changed, a party to a contract can request the other party to re-negotiate it or request a court to terminate or amend the contract.

And the best thing about this timely update? We have evidence that the National Assembly and government will continue innovating in 2017 and beyond.

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