The Criminal Code No. 100/2015/QH13, adopted by The National Assembly XIII on the 10th Session dated November 27, 20151 (“the 2015 Criminal Code“), has taken a new step forward in criminal legislative thinking in terms of codifying criminal responsibility for a commercial legal entity (“CLE“). This has raised several legal issues and controversies surrounding the application of crimes and punishment for the CLE as well as the legal responsibility of the CLE’s legal representatives.
The Necessity of Criminal Responsibility for CLE’s and the need to examine the application of the law
In the context of international integration, Vietnam has become a member of many international conventions on crime prevention and control, requiring Vietnam to supplement the criminal responsibility of CLE’s to be in line with the international commitments of which Vietnam is a member. In Vietnam, violations of the law conducted by CLE’s take place quite commonly in many different areas of socioeconomic life and has tended to increase in quantity, nature, extent and consequence over time. Although the level of sanctions for administrative violations has been increased higher than ever before, it has not been a sufficient deterrent. Therefore, enacting criminal responsibility for CLE’s is considered to be an effective measure to deter and prevent crimes committed by the CLE.
In fact, the management activities of enterprises are not solely decided by Directors or operators of enterprises, but in many cases are also decided (including decisions that violate the law) by collective discussion and voting. Therefore, it is unfair to only require some individuals to bear criminal responsibility while the decision was made by a vote of the Council and was for the benefit of the entire group.
In addition, codifying criminal responsibility for CLE’s also transfers the burden of proof from individual parties suffering the damage to the State, i.e. the authorities will be responsible for requiring the legal entity to provide compensation for the damage caused to citizens.
For the above reasons, the fact that the 2015 Criminal Code now provides for a CLE’s criminal responsibility is consistent with practice and reasoning. However, it should be noted that the application of the provisions of the 2015 Criminal Code regarding CLE’s has faced a number of difficulties and inadequacies. The most obvious has been that up to the present date there have been only 02 Decisions in the entire country that have resulted in criminal proceedings being initiated against a suspect that is a CLE committing a crime2. This issue has also been discussed and examined at the parliament hall of the National Assembly.
When are Criminal Proceedings Instituted against a CLE?
According to the provisions of Article 74 and Article 76 of the 2015 Criminal Code, it can be determined that only a CLE that commits a crime will be considered a criminal. The CLE is a legal entity with the primary goal of seeking profits for distribution to its members3. As such, enterprises and economic organizations having legal status in Vietnam are legal entities that may be prosecuted for criminal liability.
The CLE only bears criminal responsibility when the following conditions are met: (i) The offense is committed on behalf of the CLE; ii) The offense is committed for the benefit of the CLE; (iii) The offense is committed under the direction, operation or approval of the CLE and; (iv) The statute of limitations for prosecution of criminal responsibility has not expired. As such, the CLE only bears criminal responsibility in the event that the offense is committed on behalf of and for the benefit of the CLE, under the control and approval of such CLE.
The CLE only bears criminal responsibility for an offense that constitutes one of the 33 crimes specified in Article 76 of the 2015 Criminal Code. These crimes can be divided into three groups: (i) economic crimes such as “Smuggling”; “Illegally transporting goods or money across the border”; “Manufacturing or trading banned commodities”; “Tax evasion”; “Hoarding”; “Infringement of industrial property rights”; … (ii) environmental crimes such as “Causing environmental pollution”; “Violations of prevention, response and remedy of environmental problems”; “Importing waste into Vietnam’s territory” and; (iii) public safety crimes such as “Financing terrorism” or “Money laundering”.
A precedent of Criminal Proceedings Instituted against a CLE
Facts of the case
According to the investigation, Sai Gon Vietnam Beer Group Joint Stock Company (Saigon Vietnam Beer Company) signed a contract to cooperate with BiVa Company in the production of beer having the “Sai Gon Vietnam” trademark. Accordingly, BiVa Company was only allowed to produce “Sai Gon Vietnam” beer with the trademark and quality provided by Saigon Vietnam Beer Company.
In June 2020, BiVa Company had produced and sold to Saigon Vietnam Beer Company 4,200 beer crates having the “Sai Gon Vietnam” trademark and collected more than 365 million dongs. Saigon Vietnam Beer Company had sold 3,300 beer crates to customers and collected more than 578 million dongs, the rest were used as gifts for promotion.
On June 23, 2020, The Market Management Department of Ba Ria – Vung Tau Province inspected BiVa Company’s production facility at Bac 2 Hamlet, Hoa Long Commune, Ba Ria City, Ba Ria – Vung Tau Province owned by Mr. Vu Tuan Chau and found 4,712 crates of finished Saigon beer products (SAIGON VIETNAM BEER), 116,700 beer cans (330ml type) and 3,300 boxes of beer crates (cardboard cartons).
The Intellectual Property Office of Vietnam determined the above-mentioned processed goods had the design and trademark that was likely to cause confusion concerning the origin of the product having the SAIGON BEER trademark which was protected and under the ownership of Saigon Beer – Alcohol – Beverage Corporation (“SABECO“).
The appraisal showed that the “Sai Gon Vietnam” beer that Sai Gon Vietnam Beer Company hired BiVa Company to produce displayed an identical trademark which was confusingly similar to the protected trademark of SABECO.
Thereafter, the Investigation authority issued the Decision on initiating a criminal case and criminal proceedings against the suspect, Saigon Vietnam Beer Company, for “Infringing on industrial property rights” stipulated in Article 226 of the 2015 Criminal Code.
Legal issues arising from the case
In Vietnam, acts similar to that of Saigon Vietnam Beer Company occur very often, however, most of them are only sanctioned as administrative violations due to the difficulty in establishing fault and determining the statute of limitations regarding the criminal responsibility of the CLE. In the case of “Infringing on (the) industrial property rights” of SABECO, the Investigation Police Authority only initiated criminal proceedings against the CLE suspect, Saigon Vietnam Beer Company, without also instituting criminal proceedings against the relevant individuals, such as the Company’s legal representatives. The reason for not initiating criminal proceedings against relevant individuals, according to the author, is because the authorities conducting the proceedings were worried that one offense might be prosecuted twice if criminal proceedings were initiated against both individuals and a legal entity. However, the result was that it was impossible for the authorities conducting the proceedings to determine the fault of the legal entity when they did not initiate criminal proceedings against the individual committing the offense because the CLE could not commit an offense on its own. As such, it was unclear on which ground the Investigation authority would establish the CLE’s fault in this case. Since the incident had just occurred, there was no requirement to determine the statute of limitations. However, if it was compulsory to determine the statute of limitations for criminal prosecution of the CLE, the Investigation authority would also likely have no basis for determination.
The author will herein analyze some provisions of the 2015 Criminal Code on the criminal responsibility of legal entities to elucidate the difficulties in initiating criminal proceedings against a CLE.
Why is it Difficult to Initiate Criminal Proceedings against a CLE?
From a legal perspective, the CLE is an independent legal entity with full capacity to carry out legal acts and transactions on its own behalf. Therefore, it is accepted that a CLE must take criminal responsibility for its actions. However, under the 2015 Criminal Code, in order to determine the criminal responsibility of a CLE, it is necessary to prove the legal entity’s fault. Meanwhile, the CLE cannot perform an act on its own, but rather all acts of the CLE are performed through the legal entity’s legal representatives, authorized representatives or owners. The line of separation between the legal responsibility of an individual and that of a CLE is currently unclear. Article 8.1 of the 2015 Criminal Code stipulates that “Crime means an act that is dangerous for society… deliberately or involuntarily committed by a person who has capacity of criminal responsibility or the CLE infringing …”. Thus, it can be understood that the subject of crime includes not only an individual but also a CLE. This regulation contradicts Article 75.1 of the 2015 Criminal Code stipulating that the condition for the CLE to face criminal responsibility is that “the offense is committed on behalf of the CLE”. By this it can be understood that the CLE is not the subject directly committing the offense, which is actually committed by the individual on behalf of the CLE; in other words, the subject of crime is still an individual.
In the author’s opinion, in the case of placing criminal responsibility on the CLE, we first need to understand that the regulations do not give rise to a second type of crime committed by the CLE. It just means that there is only one subject of the crime – the individual committing the crime and the two subjects of criminal responsibility – the individual and the CLE. Because a crime is committed by an individual (or a group of individuals) and such individual (or group of individuals) commit(s) it on behalf, for the benefit, and under the operation and direction of the CLE, the CLE shall take criminal responsibility for acts committed by such individual (or group of individuals). The nature of stipulating the criminal responsibility of the CLE is only the addition of a second subject of criminal responsibility besides the individual being prosecuted for the same offense committed by the individual. This understanding is also in accordance with Article 75.2 of the Criminal Code, specifying that: “The fact that a CLE takes criminal responsibility does not exclude the criminal responsibility of an individual”. Thus, Article 8 of the 2015 Criminal Code needs to be amended to state that only an individual is the subject of a crime.
In addition, the provisions of the 2015 Criminal Code on the statute of limitations for criminal prosecution of a CLE are also unclear and cannot be applied. Article 9.2 of the 2015 Criminal Code stipulates the classification of crimes committed by the CLE in accordance with the classification of crimes committed by an individual. The classification of crimes committed by an individual is based on the highest level of punishment range (including the following punishments: fines, community service, imprisonment, life imprisonment, death penalty). However, these punishments cannot be applied to a CLE committing a crime except for fines – which is generally applied to both individuals and the CLE. Therefore, if the punishment range applied to a CLE only includes a fine, the CLE will only be able to be prosecuted for a less serious crime. However, in cases where the authority imposes a punishment range on the CLE that includes a definite or permanent suspension of operations, the crime cannot be classified. Therefore, there is no basis to determine the statute of limitations for criminal prosecution of a CLE for such offense.
Therefore, the statute of limitations for criminal prosecution of a CLE needs to be redefined based upon the statute of limitations for the prosecution of the individuals committing such offense. The nature of the enactment of criminal responsibility for a CLE is only to establish regulations on the second subject of criminal responsibility, in addition to the criminal responsibility of the first subject, the individual, for the same offense committed by such individual. Further, such an amendment would also ensure consistency with the regulations on fault mentioned above.
- Amended and supplemented by the Law amending and supplementing a number of articles of Criminal Code No. 12/2017/QH14, adopted by the National Assembly XIV on the 3rd session dated June 20, 2017, which took effect on January 01, 2018.
- Viet Phap Aluminum Joint Stock Company – Viet Phap Aluminum Factory was prosecuted by the Investigation Police Authority, Phu Tho provincial police; Sai Gon Viet Nam Beer Group Joint Stock Company was prosecuted by the Investigation Police Authority, Ba Ria – Vung Tau provincial police.
- According to Article 75 of the Civil Code No. 91/2015/QH13, adopted by the National Assembly XIII on the 10th session dated November 24, 2015.