What should enterprises consider when negotiating data transfer agreements to mitigate legal risks?

Negotiating a data transfer agreement has increasingly become a pivotal issue in modern business operations. Such a process not only determines the scope of data usage but is also intrinsically linked to confidentiality obligations and the legal liabilities of the parties involved. If negotiations are conducted inadequately, enterprises may face disputes and administrative sanctions for violations of personal data protection regulations. Therefore, a proper understanding of the legal nature and regulatory framework governing data transfer agreement negotiations is indispensable.

I. The impact of negotiations of data transfer agreements on enterprises

Negotiations of a data transfer agreement directly affect an enterprise’s control over data, confidentiality obligations, and the level of legal risk it must assume. A well-structured negotiation process enables the enterprise to clearly define the categories of data to be shared, the purposes of use, each party’s responsibilities, and mechanisms for handling breaches.

Conversely, superficial negotiations may expose the enterprise to risks of data leakage, contractual disputes, or even regulatory sanctions for non-compliance with personal data protection laws.

II. Understanding negotiations of data transfer agreements

Negotiating a data transfer agreement is a critical step through which parties define their rights, obligations, and scope of data usage prior to executing a formal contract. A clear understanding of negotiable elements, types of data, and confidentiality regimes will assist enterprises in mitigating legal risks and preventing future disputes.

1. What is negotiation of a data transfer agreement? 

Pursuant to Clause 7 Article 2 of the Law on Technology Transfer 2017, as amended and supplemented by Point b Clause 1 Article 1 of the amended Law on Technology Transfer 2025, technology transfer refers to scientific, technological, and innovation activities performed through the transfer of ownership of technology or the transfer of the right to use technology from the lawful owner to the transferee for the purpose of practical application to create products, services, or new production methods.

Additionally, under Point b Article 4 of the Law on Technology Transfer 2017 (as amended by Clause 3 Article 1 of the amended Law 2025), transferable technology objects include information and data. Accordingly, regulations governing data transfer agreements are grounded in the spirit and provisions of the Law on Technology Transfer 2017.

Thus, negotiating a data transfer agreement is the process by which parties discuss and agree upon terms concerning the assignment or licensing of data (including scope of data, purpose of use, duration, confidentiality, and respective rights and obligations) prior to entering into a technology transfer agreement where data constitutes the subject matter of transfer.

2. Why is negotiating a data transfer agreement important in business?

Negotiating a data transfer agreement is essential to clearly delineate the rights and obligations of the parties, thereby preventing future disputes. Through negotiation, enterprises can safeguard sensitive data, trade secrets, and intellectual property rights, while ensuring compliance with laws on information security and technology transfer.

Thorough negotiations also clarify the scope of use, access rights, and data protection responsibilities, thereby minimizing financial and reputational risks. Such forms the foundation for safe, transparent, and efficient contractual performance.

3. Main factors to consider when negotiating a data transfer agreement

When negotiating a data transfer agreement, enterprises should carefully consider the following critical factors to ensure legal compliance and protect their legitimate interests:

• Scope of data and usage rights: Clearly identifying the categories of data to be transferred, scope of permitted use, access rights, and any restrictions applicable to the recipient.
• Confidentiality and data protection: Agreeing on security measures and responsibilities to prevent unauthorized access, leakage, or loss, in compliance with the Cybersecurity Law and the Law on Personal Data Protection.
• Intellectual property rights: Where data is associated with intellectual property, clearly define ownership, exploitation rights, and transfer conditions in accordance with the Law on Intellectual Property.
• Legal liability and indemnification: Stipulating liability in the cases of contractual breaches or damage arising from improper use of data.
• Duration and termination: Determining the effective term, renewal or termination conditions, and post-termination data handling procedures.

These elements enable enterprises to minimize risks, protect critical information, and ensure transparent and lawful contractual implementation.

4. Common types of data addressed in negotiating data transfer agreements

Under Article 3 of the Law on Data 2024, negotiations of data transfer agreements commonly involve the following categories of data:

• Digital data: Data concerning objects, phenomena, or events expressed in the form of sounds, images, digits, text, or digital symbols (Clause 1).
• Shared data: Data accessible and usable among Party agencies, State authorities, the Vietnam Fatherland Front, and socio-political organizations (Clause 2).
• Internal-use data: Data accessible and usable solely within internal organizational scopes and not externally disclosed (Clause 3).
• Open data: Data that any agency, organization, or individual may access, exploit, and use (Clause 4).
• Original data: Data directly generated in the course of operations of agencies, organizations, or individuals, or digitized from original hard-copy documents (Clause 5).
• Important and core data: Data capable of directly impacting national defense, security, macroeconomic stability, or public health, as identified in the list promulgated by the Prime Minister (Clause 6).

Clear classification assists in determining transfer scope, confidentiality levels, and legal responsibilities.

III. Legal provisions governing negotiations of data transfer agreements

Parties engaged in negotiating a data transfer agreement must comply with the Law on Technology Transfer 2017, the Civil Code 2015, the Law on Data 2024, and relevant information security regulations. Proper legal understanding safeguards rights and ensures lawful data transfer.

1. Is a written agreement required when sharing personal data?

Under Clause 1 Article 22 of the Law on Technology Transfer 2017, technology transfer agreements (including those involving data) must be made in writing or in legally recognized written-equivalent forms. Contracts must bear signatures and seals, or page-by-page initials where applicable.

Article 119 of the Civil Code 2015 provides that civil transactions may be established verbally, in writing, by specific acts, or via electronic means. Where the law requires notarization, certification, or registration, such formalities must be observed.

Accordingly, a data transfer agreement must be established in writing or an equivalent lawful form to ensure enforceability and legal protection.

2. Confidentiality obligations during negotiation

Article 387 of the Civil Code 2015 stipulates:

• A party possessing material information affecting the other party’s decision to contract must disclose such information fully and honestly.
• A recipient of confidential information must maintain confidentiality and refrain from using such information for personal or unlawful purposes.
• Any violation causing damage must be compensated.

Compliance with these obligations ensures transparency and mitigates legal risks.

3. Sanctions for breaches in negotiations of data transfer agreements

The Law on Technology Transfer 2017 prescribes liability and remedies for contractual breaches:

• Article 23 requires technology transfer agreements to include provisions on sanctions and liability for breach.
• Point b Clause 2 Article 25 and Point a Clause 2 Article 26 require parties to perform contractual commitments and compensate affected parties or third parties in case of breach.

Available remedies include:

• Contractual penalties as agreed.
• Compensation for direct damages to affected parties or third parties.
• Specific performance to safeguard contractual rights.

These measures ensure legal enforceability and transparency.

IV. Questions regarding negotiations of data transfer agreements

1. How can both parties’ interests be protected?

Protection requires:

• Compliance with statutory obligations under Articles 25 and 26 of the Law on Technology Transfer 2017.
• Clear determination of rights, obligations, scope of transfer, intellectual property rights, and data retention rights.
• Inclusion of confidentiality and breach provisions according to Article 387 of the Civil Code 2015 and Article 23 of the Law on Technology Transfer 2017.
• Clear dispute resolution mechanisms (Court or Arbitration).

2. May additional clauses be added during negotiation?

Clause 14 Article 23 of the Law on Technology Transfer 2017 permits inclusion of “other contents as agreed by the parties”. 

Pursuant to Article 421 of the Civil Code 2015, contract amendments require mutual consent and must comply with lawful form requirements consistent with the original contract.

3. Must customers be notified of negotiation outcomes?

Where transferred data involves personal data, notification is required. Point a Clause 1 Article 17 of the Law on Personal Data Protection 2025 requires consent from data subjects. Article 7 of Decree 356/2025/ND-CP mandates notification of purpose, scope, recipients, and data subject rights.

4. Common mistakes in negotiation

• Unclear definition of transfer scope.
• Non-compliance with confidentiality obligations under Article 387 of the Civil Code 2015.
• Omission of breach and indemnity clauses under Articles 23, 25, and 26 of the Law on Technology Transfer 2017.
• Inconsistency with intellectual property or digital technology laws.

5. Can damages be claimed for breach?

Point đ Clause 1 Article 25 and Point d Clause 1 Article 26 of the Law on Technology Transfer 2017 permit compensation claims. Article 360 of the Civil Code 2015 requires full compensation unless otherwise agreed.

V. Are you seeking experienced and reputable legal counsel for negotiations of data transfer agreements?

If your enterprise encounters challenges in negotiating a data transfer agreement, NPLaw, with its team of experienced lawyers, provides consultation, drafting, and contract review services to ensure legal compliance and safeguard your interests. We assist enterprises in addressing legal issues ranging from confidentiality compliance to indemnification claims, ensuring safe and efficient data transfer processes.

The above information is for reference only. For detailed advice tailored to your specific case, please contact NPLaw Law Firm for prompt consultation.