1. Legal Recognition of NDAs
Non-disclosure agreements (NDAs) are widely accepted under Vietnamese law, though the term itself is not explicitly defined in legislation. Instead, NDAs are treated as civil contracts governed by the Civil Code 2015. Article 3 and Article 388 of the Civil Code affirm the freedom of contract principle, allowing parties to enter into agreements that establish or restrict rights and obligations, as long as they are not contrary to law or social ethics.
An NDA is valid if it clearly defines confidential information, outlines the obligations of the receiving party, and complies with general contract requirements under Article 117 of the Civil Code (lawful purpose, competent parties, correct form). The agreement can exist as a standalone contract or a clause within a broader contract (e.g., employment or service contract).
2. Enforceability and Limitations
Vietnamese courts and arbitration bodies such as VIAC have generally upheld NDAs, especially when they are clear and proportionate. In commercial transactions, NDAs are common during investment negotiations, joint ventures, and technology transfer. The Law on Intellectual Property 2005 (amended 2022) also protects trade secrets, provided businesses take reasonable steps to keep information confidential—NDAs serve as such evidence under Article 84 of the IP Law.
In employment relationships, NDAs are permitted under Article 15 and Article 21.2 of the Labor Code 2019, which allow employers and employees to agree on protecting trade secrets and business know-how. However, overly broad or indefinite obligations (especially after employment ends) may be deemed unenforceable. Courts often require that post-employment NDAs be reasonable in scope and duration, typically not exceeding a few years.
Vietnamese law does not specifically regulate non-compete clauses, but courts will only enforce them if they are narrowly tailored and necessary to protect legitimate business interests. NDAs should not serve as a disguised form of non-compete agreement unless such restrictions are clearly justified.
3. Drafting and Business Considerations
To ensure enforceability in Vietnam, NDAs should:
– Clearly define what constitutes confidential information.
– Set a reasonable duration for the confidentiality obligation.
– Specify exceptions (e.g., public domain, prior knowledge).
– Outline remedies for breach, including possible penalties or compensation. In commercial contexts, fixed penalties must comply with Article 300 of the Commercial Law 2005, which caps penalties at 8% of the breached obligation’s value.
Dispute resolution clauses are strongly recommended, especially for cross-border contracts. Vietnam recognizes arbitration under the 2015 Law on Commercial Arbitration and the New York Convention, and arbitral awards are enforceable in practice.
From a procedural standpoint, ensure that NDAs are signed by legally authorized representatives. Failure to comply with formality or authority requirements may render the agreement invalid under Article 117 of the Civil Code.
Conclusion
NDAs are fully valid and enforceable under Vietnamese law when drafted properly. While Vietnamese law lacks a dedicated statute on NDAs, the Civil Code, Labor Code, and IP Law collectively provide a strong legal foundation. Businesses should use NDAs strategically to protect sensitive information, but ensure that the terms are reasonable, lawful, and clearly documented to withstand legal scrutiny.
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