Confidentiality agreements in financial services: Key considerations in Vietnam

Confidentiality agreements, also known as non-disclosure agreements (NDAs), are essential in the financial services industry to protect sensitive information, including client data, proprietary financial models, and business strategies. In Vietnam, these agreements are particularly important due to the increasing globalization of financial transactions and the need to comply with both local and international legal frameworks. 

In this post, we will explore key considerations for drafting and enforcing confidentiality agreements in Vietnam’s financial services sector, focusing on regulatory compliance, scope of protection, and enforcement mechanisms.

1. Compliance with Vietnamese Laws and International Standards

Vietnamese law provides a framework for confidentiality agreements, primarily governed by the Civil Code 2015 and Law on Credit Institutions 2010. However, confidentiality agreements in the financial sector must also adhere to international standards, particularly when dealing with cross-border transactions or multinational financial institutions. 

Key Legal Requirements: 

• Personal Data Protection: Vietnam has recently introduced regulations on personal data protection through Decree No. 13/2023/ND-CP, which strengthens the protection of personal and sensitive data. Financial institutions must ensure that confidentiality agreements comply with these regulations. 

• Banking Secrecy Laws: Under the Law on Credit Institutions, financial institutions are required to maintain the confidentiality of clients’ information. Any confidentiality agreement must align with these banking secrecy laws to ensure that client data is properly protected. 

Example: 

A Vietnamese bank entering into a partnership with an international investment firm must ensure that its confidentiality agreement covers not only Vietnamese regulations but also global data protection standards such as GDPR for clients in the European Union. LTS LAW ensures that confidentiality agreements comply with both local and international regulations. 

For more details on compliance with Vietnamese law, visit our legal services page.  

2. Scope and Definition of Confidential Information

The scope of protection in a confidentiality agreement is essential to its effectiveness. In the financial services sector, the agreement must cover a wide range of sensitive information, from financial data to proprietary algorithms. 

Best Practices for Defining Confidential Information: 

• Specific and Broad Definitions: The agreement should include a broad definition of confidential information, while also listing specific examples relevant to financial services, such as client financial records, transaction data, and financial forecasts. 

• Exclusions from Confidentiality: Clearly define what is not considered confidential, such as information that is publicly available, information already known by the receiving party, or information that becomes known through legal channels other than the agreement. 

Example: 

A Vietnamese asset management firm sharing proprietary investment strategies with a foreign partner should define confidential information to include trade secrets, investment models, and client data. LTS LAW helps financial institutions draft comprehensive NDAs to protect such sensitive information. 

For more details on drafting confidentiality agreements, visit our contract services page. 

3. Duration of Confidentiality Obligations

The duration of confidentiality obligations must be clearly defined in the agreement. In the financial services sector, where sensitive information such as financial strategies or client data retains value over time, long-term or even indefinite confidentiality clauses may be necessary. 

Considerations for Duration: 

• Fixed Term or Indefinite Protection: Depending on the type of information being protected, confidentiality obligations may extend beyond the duration of the business relationship. For example, client data and financial reports often require indefinite protection. 

• Termination of the Agreement: The contract should specify what happens to confidential information if the agreement is terminated. Typically, parties are required to return or destroy any confidential information after the agreement ends. 

Example: 

An international bank entering into a financial services agreement with a Vietnamese institution may stipulate that confidentiality obligations remain in effect for five years after the termination of the agreement. LTS LAW ensures that confidentiality terms are clearly defined and enforceable. 

For more details on long-term confidentiality obligations, visit our legal services page. 

4. Enforcement and Legal Recourse

Enforcement of confidentiality agreements is critical in the financial sector, where breaches of confidentiality can lead to significant financial losses or legal liabilities. The agreement should include clauses outlining the remedies available in the event of a breach. 

Enforcement Mechanisms: 

• Injunctive Relief: Include a clause allowing the disclosing party to seek an injunction to prevent further breaches of confidentiality. This is especially important in the financial services industry, where immediate action may be required to prevent further damage. 

• Damages and Penalties: Specify the types of damages that the disclosing party can seek, including compensatory damages, punitive damages, or liquidated damages. The agreement should also address whether the breaching party is liable for any indirect or consequential damages. 

• Dispute Resolution: Given the cross-border nature of many financial agreements, the contract should include clear dispute resolution mechanisms, such as arbitration through the Vietnam International Arbitration Centre (VIAC) or other internationally recognized arbitration bodies. 

Example: 

A foreign financial institution working with a Vietnamese partner may include clauses allowing for injunctive relief and monetary damages in case of a breach. LTS LAW helps financial institutions enforce their confidentiality agreements and seek remedies in case of violations. 

For more information on enforcing confidentiality agreements, visit the Vietnam International Arbitration Centre (VIAC).  

Conclusion 

Confidentiality agreements are critical for protecting sensitive information in Vietnam’s financial services sector. LTS LAW provides expert legal services to help financial institutions draft, review, and enforce confidentiality agreements that comply with Vietnamese and international regulations, protect intellectual property, and mitigate risks. 

For expert legal assistance with confidentiality agreements in the financial sector, visit LTS LAW’s services page or contact us directly for personalized support.