SECURITIES CLASS ACTION IN THE UNITED STATES AND CHINA – EXPERIENCE FOR VIETNAM

ABSTRACT

The class action is a type of proceeding that is widely used around the world to settle class disputes, particularly those involving securities and consumption. Class action has a significant impact on social order, judicial resources, and the protection of society's most vulnerable members. Class actions in the stock market are an effective way to protect small investors from violations. Class action lawsuits in principal and class action lawsuits to resolve class disputes over separate securities, on the other hand, are not accepted in Vietnam. Based on experience in class action lawsuits on securities in the United States and China, the article outlines theoretical and practical bases and orientations for the promulgation of regulations and application of class action lawsuits on securities in Vietnam. The article also proposes the contents of the proceedings in Vietnam relating to the securities class action lawsuit.

АННОТАЦИЯ

Групповой иск — это тип разбирательства, который широко используется во всем мире для урегулирования групповых споров, особенно тех, которые связаны с ценными бумагами и потреблением. Групповой иск оказывает значительное влияние на общественный порядок, судебные ресурсы и защиту наиболее уязвимых членов общества. Групповые иски на фондовом рынке являются эффективным способом защиты мелких инвесторов от нарушений. Групповые иски по принципалу и групповые иски для разрешения групповых споров по отдельным ценным бумагам, с другой стороны, не принимаются во Вьетнаме. Основываясь на опыте групповых исков по ценным бумагам в США и ​​Китае, в статье излагаются теоретические и практические основы и ориентиры для принятия правил и применения групповых исков по ценным бумагам во Вьетнаме. В статье также предлагается содержание разбирательств во Вьетнаме, касающихся групповых исков по ценным бумагам.

Keywords: class action, civil litigation, representation, securities, Vietnam.

Ключевые слова: групповой иск, гражданское судопроизводство, представительство, ценные бумаги, Вьетнам.

1. Introduction of Class action lawsuit

* Origins and terms:

Class action originating in the United Kingdom. Courts have allowed plaintiffs, often victims of village, town, or parish rule violations, to join large groups to sue the violators since the 13th century. From the standpoint of humanity and fairness, these lawsuits are regarded as a principle to assist plaintiffs in pursuing lawsuits in the context of a lack of transportation at the time [21, p. 41].

Despite its origins in England, class action has evolved and become a phenomenon in the United States to the present day. Many countries around the world, including Southeast Asia, use class action lawsuits, including Malaysia, Singapore, the Philippines, Indonesia, and Thailand [17].

The term "class action" is a broad term that can be replaced by other terms such as "representative lawsuit" and "class action". The plaintiff (also known as the "class representative", "named representative" or "named plaintiff") in a class action [18, p. 2]. In general, a class action is a special procedure, a type of representation available only through litigation. The class action is an exception to the rigid party rules that are required to cover situations. Where there are so many parties involved that the Court believes it would be nearly impossible to bring them all before the Court, or where the matter is of common interest and a few can sue for the common good, or where the parties are members of a voluntary association for public or private purposes and may be deemed to fairly represent the rights of the remainde.

* Class action varieties:

Class action exists in many different forms, and each country applies it differently; in some places, it is used in conjunction with other forms. Each form has unique characteristics as well as advantages and disadvantages. The model to be used is determined by the legal structure and political characteristics of each country. "Opt-out" and "opt-in" are two common class action models.

When it is necessary to ensure the viability of class actions and the validity of substantive law, advocates defend the opt-out model. Opponents of the opt-out model argue that it is a poor proxy for class member consent and encourages excessive and ambiguous classes; these critics prefer the opt-in model [10]. For a long time, erudite and prominent scholars in civil and civil proceedings have debated the superiority and limitations of these two types of class actions. The author only generalizes two types of class actions without claiming that one is superior to the other. The model chosen for Vietnam is also determined by the country's legal and political characteristics.

Opt-out class actions:

Form of class action in which participants choose not to participate in common and popular in the United States, also known as US-style class actions [20, p. 54]. A lawsuit filed by one person in this form can affect hundreds of thousands of others. When a judge decides that a case should be moved to a class action or when a case is resolved, the attorneys working on the case will send a class action notice to anyone who has an interest in the case. The lawsuit may have an impact on their legitimate interests. These people are known as class members, and they are represented by the class action lawsuit because they have suffered similar harm to the person who filed the lawsuit.

Persons affected by the defendant's violation automatically become class action plaintiffs and will be assigned to the class unless they opt out and defend their right to personal litigation [10]. Class members in an opt-out class action are not required to go through a formal process (such as formal written consent, email, or other documentation) to be bound by the outcome. At the conclusion of a class action, the member is simply not required to do anything. When a class member falls within the scope of a specific group definition, that person is considered to be a member of that group.

If the action is "certified" as a class action, which means that the Court determines that the action to be instituted is a class action, any agreement or decision of the Court will apply to all members of the class unless the class member opts out. As a result, the right to withdraw from the action - opt-out - is critical and must be adequately communicated to all parties involved to notify them of the action and the opportunity to withdraw from it. It is critical to state the allegations about the lawsuit in this notice, as well as the definition of "class" because this is the basis for members to determine whether they are members of the class or not [16, p. 62]. Furthermore, the notice must be sufficiently informative, not only about the proceedings but also about the consequences of participation, to give members of the "class" a reasonable opportunity to choose not to participate.

The benefit of an opt-out class action is that the lawsuit can be filed without the absent members' consent, resulting in a larger number of members. At the same time, it brings significant economic benefits by reducing small and duplicate individual lawsuits. Avoiding litigation duplication reduces the burden on court resources and eliminates the possibility of inconsistent decisions on the same issue in different proceedings [16, p. 71]. Members' rights to object are still protected in the meantime by opting out of being bound by an adverse ruling.

Opponents of this model argue that the opt-out mechanism does not explicitly protect members who are absent from class [10, 173], and that it violates democratic principles as well as the autonomy of the parties.

Opt-in class actions:

This is a common type of class action in European countries. In general, European countries oppose US-style class actions, arguing that "the class-action mechanism whereby the victims are not identified before a judgment is issued would be contrary to the legal order of the United States", and that many member states may violate victims' rights because they participate in the case and are bound by the Court's decision [12]. Each plaintiff must confirm his participation in the co-plaintiff class by filing a petition with the Court in this form. If they do not comply, they will be forced to sue as individuals [21, p. 42]. When deciding to join a class action, the Court's decision will be binding on the participant. It means they receive a portion of the benefit of the judgment's settlement or award. However, if the case is dismissed by the Court, they will be unable to sue again.

Due to validation for collective actions, there is clearly greater cohesion among class members and a stronger representative quality of the opt-in classes in the opt-in form. Do the assertion of participation or not in a specific sequence and at a specific time? At the same time, determining the number of class members is simple. As a result, because class members have firmly agreed to participate, it is easier for the class to obtain court certification (determining a specific class of action). Meanwhile, due to the broader scope and uncertainty of class participants, opt-out class action lawsuits face difficult certification obstacles.

The opt-in form also supports the principle of the parties' right to self-determination. Opting in ensures that an individual participates in litigation only voluntarily and that a person's legal rights are not determined without the person's express consent [16, p. 68]. As a result, absentee members' rights to sue individually are protected.However, because the class action is much smaller than the opt-out procedure, this type of class action has a significant limitation. The above limitation is due to a variety of factors. Other reasons for the aggrieved person's lack of interest or failure to notify the affected person of participation, in addition to the aggrieved person's lack of interest or failure to notify the affected person of participation, include social and psychological barriers; fear of participating in the legal process; unfounded concerns about legal costs; and fear of legal sanctions from employers and others [16, p. 68]. Because of the small number of class members, it is possible that an insufficient number of people will participate in representing the group, which does not guarantee access to justice for all who fall within the class definition and does not accurately reflect the damage that occurred.

2. Class action lawsuits in the United States and China

2.1. Class action lawsuits in the United States

Class action lawsuits exist in the United States because of the influence of Associate Justice of the Supreme Court Joseph Story, who introduced it into US law through discussions summarized in his two equity treaties and his opinion in West v. Randall (1820). The Federal Fair Rule, specifically Fair Rule 48, enacted in 1842, is the oldest predecessor to class action rules in the United States. Fair Rule 48 has been superseded by Fair Rule 38. When the federal courts' due process and fairness systems were merged in 1938, Fair Rule 38 became Rule 23 of the Federal Rules of Civil Procedure. It is the general rule governing class actions in the United States.

In the United States, the default rule is that a lawsuit is brought solely by or on behalf of the named parties. Class action lawsuits, on the other hand, are an exception to this rule. According to the US Federal Supreme Court, a determination may bind members of a class who are not present as parties to a proceeding that the courts fully take them present - members of the class who are present have the right to make decisions over those who are not present.

Article 23 of the Federal Rules of Civil Procedure has been revised several times but remains the central provision governing the US class action system. To gain a better understanding of class actions in the United States, the author examines Rule 23 of the United States Federal Code of Civil Procedure (Rule 23).

To begin, the Court must certify the class under Rule 23 in order to initiate and maintain class action lawsuits in federal court. State courts in the United States follow rules similar to Rule 23. A lawsuit cannot proceed as a class action under federal law 23 unless it is certified [13, p. 500]. In the United States, the decision of a court to grant or deny class certification is usually the defining moment of a class action. To be certified, the plaintiff must show that the presumptive case follows Rule 23. A class action does not bind absent members unless and until the court "certifies" the proposed class action under Rule 23 [18, p. 7]. If the Court determines that the case meets the certification requirements, Rule 23 directs the Court to issue a certification order identifying the case and appointing a case counsel. The Court may not certify a case unless and until the following conditions are met:

1. The proposed action meets each of the four mandatory requirements established by Rule 23(a);

2. The proposed class action falls into at least one of the three classes of class action established by Rule 23(b);

3. The proposed class of action is “identifiable”.

The criteria in Rule 23(a) are called broad, common, typical, and complete, as follows:

“ Article 23. Class action

(a) PRIORITY CONDITIONS. One or more members of a class may sue or be sued on behalf of all members of that class if and only if:

(1) That class has too many members, making it impossible for all members to participate in the lawsuit;

(2) The legal issues or the facts of the case are similar to that of the class;

(3) The claims or defences of the representative parties are representative of the claims or defences of that class; and

(4) The representative will fairly and fully protect the collective's interests”.

In terms of numbers, the class action must have a sufficient number of members to be certified. The plaintiff must show that the proposed group has many members. While there is no universal standard for determining enough in Rule 23, classes with hundreds of members are generally considered large enough, and numbers are generally satisfactory if the lawsuit class has more than 40 members. Of course, there are still cases where more than 40 members do not meet the requirements for a class action, in which case the Court must consider a few other factors.

In terms of similarity, there must be a common requirement of the applicable law and a common loss caused by the infringement. Plaintiffs must demonstrate that all parties in the case experienced the same violations and damages.

In terms of scoring, the proposed class representation in action must satisfy the requirement of so-called typology, which means that the agent's statements or defenses are typical of the representation's claims or defenses class, including the absent members the agent seeks to represent in the case. The typicality requirement's main goal is to ensure that "the interests of the class and the representations are aligned so that the latter will work to the benefit of the class as a whole".

In terms of full representation, the named plaintiff is required to represent the interests of the class fairly and adequately. The plaintiff must be fully represented as a representative, and class counsel is proposed. The examination of adequate representation involves determining whether the representatives of the class sueing and litigating have disagreements and conflicts with one another, as well as whether the representative has any private interests that reduce the effectiveness of the class action lawsuit.

In addition to the preceding, Rule 23 of the United States Federal Rules of Procedure contains additional provisions on class action conditions and procedures.According to class action research in the United States, class action is a successful legal system. It has played an indispensable role in resolving numerous new economic and social problems. The analysis, commentary, and case law on class actions, as well as the analysis, commentary, and case law on US civil procedure law in general and Rule 23, are rich and effective theoretical bases in Vietnam's research and application process model.

2.2. Class action lawsuit in China

"Class action lawsuits" have been recorded in China since 1991, when the People's Republic of China's Civil Procedure Law (now referred to as China's Civil Code) was first promulgated, after realizing that the implementation of the trial under the representative litigation system has significantly saved costs for litigants, saved the State's litigation resources, facilitated the public, and created favourable conditions for adjudication. China's Civil Procedure Law incorporates and draws on legislative experience from class action lawsuits in the United States and Japan's party selection system [23, p. 51]. To create rules for representative proceedings. The most recent amendment to China's Civil Procedure Law in 2017 clearly stipulates two systems of representation: one with a fixed number of representatives and the other with an indefinite number of representatives. The basic principles of various types of lawsuits are also outlined in China's Civil Procedure Law. A representative chosen by such people may carry out a joint action in which a party consists of several people. Such representative's actions are binding on all members of the party he represents. The People's Court's judgment or decision is binding on all claimants who have registered with the Court. According to the provisions of China's Civil Procedure Law, if the plaintiff is of the same type and one party consists of many people, and the lawsuit remains unidentified, the Court may issue a public notice stating the details of the case and the petitioner registers with the Court within a specific time frame. These provisions are common in class action lawsuits.

The Supreme People's Court of China issued "Regulations on some issues related to the representation of lawsuits" on July 31, 2020, which is a step forward in perfecting the class-action mechanism in China. The Chinese version of the securities class action system was officially implemented with 42 articles in the "Litigation in Securities Disputes" (Regulation). Based on provisions in Articles 53 and 54 of the Chinese Civil Code on representation and Article 95 of the Securities Law, the Supreme People's Court of China promulgated practical regulations for People's Courts of all levels to strictly implement the law, uphold adjudication standards, and improve the quality of the trial, as well as the effect of securities institutions. The regulation clearly defines the goal of further perfecting the securities class-action lawsuit system, creating favorable conditions for investors to file and participate in lawsuits, and lowering the cost of protecting the State's interests, protecting investors' legitimate rights and interests, effectively punishing violations of laws and regulations in the capital market, and maintaining the capital market's healthy and stable development.

Even though it only governs securities-related proceedings, the Regulations' content as a representative procedure includes all authority, forms, and procedures for initiating representative lawsuits. The following are the main points of the regulation:

(1) Regulate the proceedings of ordinary and special representatives comprehensively. An ordinary representative lawsuit is defined in Articles 53 and 54 of the Chinese Civil Code as a lawsuit in which a party has a certain number of people at the time of the lawsuit and the number of people at the time of the lawsuit. Representative lawsuits have not been identified; special representation lawsuits have been filed under China Securities Law Article 95, paragraph 3. The provision combines the two types of class action opt-in: general representation proceedings and special representation proceedings.

(2) The procedural rules for the two types of representative cases, including preliminary examination, representative selection, trial and sentencing, enforcement, and arbitration, are detailed.

(3) Determining the conditions for initiating representative litigation, the method of selection of the representative, the scope of the representative's powers, consideration of the draft mediation agreement, consideration of the main litigation issues, and the representative's failure to waive the appeal; special representation procedures...

Like class action lawsuits on securities in the United States, the above regulation is not widely applied in China. However, the content of the regulation has had a positive impact in China. On November 12, 2021, the Intermediate People's Court of Guangzhou, China, issued a first-instance judgment on the dispute over Kangmei Pharmaceutical Securities' false declaration of liability. It is the first special representation class action lawsuit initiated by an investor protection agency since the establishment of China's stock market, with the highest compensation and number of investors in China's history. The Guangzhou Intermediate People's Court used the country's first securities case special representation procedure. As a special representative of over 55,000 investors, China Securities Small and Medium Investor Service Center Co., Ltd. has joined the class action.

The responsibility of each defendant is determined by the court ruling as follows: Kangmei Pharmaceutical is liable for 2.459 billion yuan; the company's actual controller, Ma Xingtian, and his wife, Qiu Xiwei, and four other former senior executives organized and planned to commit financial fraud, which was a deliberate act subject to 100% joint liability and some indemnification liability; the other 13 senior executives bear 20%, 10%, and 5% of the liability, respectively. The auditing firm, certified public accountant Genzon Zhujiang, did not follow basic audit procedures and is liable for full compensation.The case is a watershed moment in the Chinese judicial history of representative proceedings, with far-reaching and positive implications for the stock market's healthy development.

It can be seen that China has class action regulations ranging from general law to specialized law, as well as flexible, mixed, but very reasonable regulations based on practical and cultural conclusions and learning from the world's class action experience. Regulations on representative proceedings in China's Civil Procedure Law, as well as specialized laws in China such as the Law on Securities, the Law on Protection of Consumer Rights and Interests, and particularly "Regulating many issues related to legal representation in securities disputes," are valuable documents for our reference in the legislative process relating to representation and class action.

3. Theoretical and practical grounds for the adoption of regulations on procedures for class action securities lawsuits in Vietnam

3.1. Current legal regulations in Vietnam suggest a mechanism for class action securities lawsuits

According to the 2013 Constitution, the Court's responsibility is to protect human and civil rights through adjudication activities. Following the adoption of the 2013 Constitution, this spirit was specifically institutionalized in the Law on Organization of the People's Court in 2014 and the 2015 Civil Code.The provisions on the right to file lawsuits are recorded in the 2015 Civil Code, specifically Articles 186, 187, and 188, with the following main contents: (i) Agencies, organizations, and individuals have the right to initiate a lawsuit at a competent court to request protection of his/her legitimate rights and interests; (ii) Agencies, organizations, and individuals, as prescribed by law, have the right to initiate civil lawsuits to protect the legitimate rights and interests of others, public interests, and the interests of the State; and (iii) Agencies, organizations, and individuals, as prescribed by law, have the right to initiate civil lawsuits to protect the legitimate rights and Many agencies, organizations, and individuals may join forces to file a lawsuit against another agency, organization, or individual over a legal relationship or a series of related legal relationships in order to settle a case.

Although Vietnam's law does not yet permit class action or representative lawsuits, these are prerequisites for the development and application of class action lawsuit regulations in Vietnam, particularly in recognizing the right to initiate a lawsuit and the possibility of many people using Clause 2, Article 188 of the 2015 Civil Code. In fact, the Court uses the provisions on merging cases in Article 42 of the Civil Procedure Code 2015 (CPC) to combine the cases into one, but there are no grounds or conditions for the case to be entered; only that "the settlement in the same case is legally correct". Aside from the law governing the right to sue, one of the fundamental and specific principles of civil procedure is that "the court may not refuse to settle a civil case because there is no applicable law”. When there is no applicable law, the Court applies the basic principles of civil law, case law, and fairness to settle civil cases when customary, similar laws cannot be applied. It is regarded as "proposals for the acceptance and settlement of class action lawsuits for the sake of fairness" [21, p. 47]. In addition to fairness, Supreme People's Court case law is a suggestion for implementing the class action mechanism in Vietnam. However, in order to use a class action lawsuit, specific and clear legal provisions in a legal document are required because Vietnam still primarily uses written laws to regulate social relations.

3.2. Practical grounds

Many disputes in today's society extend beyond the scope of a few subjects or one or two different locales. There are instances where one subject violates the rights of thousands of other entities in a variety of locations. Real estate, securities, consumption, and information are all popular. The emergence of mass protests and collective grievances is an unavoidable byproduct of economic development. Although its presence has a negative impact on social stability, people are powerless to stop it [23, p. 53]. We can now make every effort to establish a legal corridor for resolving disputes and collective complaints via the representation mechanism.In the past, Vietnam had many large cases, with many people being harmed, affected, and defendants, such as the case of Trinh Van Quyet manipulating the stock market and fraudulently appropriating property; the case of Tan Hoang Minh Hotel Trading Service Co., Ltd. fraudulently appropriating assets when "manipulating" bonds.

3.3.  Difficulties and limitations of class action lawsuits in Vietnam

In addition to the difficulties and limitations of class action lawsuits in Vietnam, the development of class action regulations faces many difficulties and challenges because the legal provisions on representation proceedings are not yet complete. In the Civil Code, there is also the imposition and identification with representatives; constructing a representative mechanism is still difficult when there is no separation. Inadequacies in the time-consuming civil procedure procedures for providing, collecting evidence, and litigating are also barriers to class action lawsuits if not overcome. In Vietnam, awareness of representative lawsuits is still low; few people, including those in the legal profession, are aware of class action lawsuits. At the same time, many legislators and managers' subconscious fear of democracy being shaken or abused through class action lawsuits is a barrier. Courts and commentators are concerned that plaintiffs' lawyers may not always act in the best interests of the class [18, p. 16]. As a result, extensive analysis, experimentation, and evaluation are required to find social support for the collective action mechanism.

In comparison to other countries, Vietnam's legal culture is still underdeveloped. Anyone, regardless of their educational level, can participate in court proceedings as a representative of the Court's litigants. Law firms have not focused on developing a trend of professional representation in legal proceedings, but rather on specific cases and products. It is uncommon to see the so-called "investment" for large civil cases, and class action lawsuits benefit from the results after the case is won.

3.4. Preparation for the development of regulations governing representative proceedings and class actions in Vietnam

First, ensure the subjects participating in the proceedings have human rights and equal rights and obligations.Ensuring human rights in legal proceedings is a critical requirement in the strategy of judicial reform and the establishment of a rule of law state. Continue to promote and raise a common understanding of human rights protection in legal proceedings. One of the key issues discussed in developing the project "Strategy to build and perfect the socialist rule of law state in Vietnam to 2030," with an eye toward 2045, is the need to respect and protect human rights. In both general and procedural law, the law must be developed to ensure human rights, with people at the center, for the sake of people. Among human beings' natural rights are procedural rights, which include the right to use, the right to be represented by another person, and the right to perform procedural rights and obligations on behalf of and on behalf of oneself. Other countries' and Vietnam's laws all recognize that everyone has the right to file a lawsuit in a competent court, either alone or through a legal representative, to seek the protection of his or her legitimate rights and interest.

When it comes to lawsuits, the subjects are not always of equal strength, making it difficult to ensure "equal rights before the law" [19, p. 162] of the affected people if no suitable mechanism exists. As a result, in order to protect citizens' legitimate rights and interests, the state must develop an appropriate representation mechanism and expand the right to representation. The right to be represented as a fundamental right to social justice[8, p. 9].Individuals cannot or are not confident in bringing about their own interests with small lawsuits and high costs in lawsuits where the other side is the subject of great economic and political power. Because they cannot afford to pursue the case, natural rights are lost. We must acknowledge that people are denied justice simply because they are poor and cannot afford a lawyer as well as the costs of pursuing a case [8, p. 9].

Many disputes between many small but weak individuals with large economic groups and powerful companies occur more frequently in modern society, particularly in labor, consumption, securities, and so on. Meanwhile, court proceedings are a complicated process that necessitates full civil act capacity, legal knowledge, and experience in order to participate [14, p. 151]. As a result, not everyone can fully protect their rights. The majority's right to sue and access to justice is frequently overlooked.The law must be flawless and tailored to a specific social context. The existence of the need for access to justice has resulted in the formation and development of class actions. The class action mechanism has proven to be an effective means of bringing about social law change [16, p. 71]. Vietnam has to also recognize modern society's demand for human rights and access to justice through representative processes. Collective lawsuits seek to address the aforementioned issues and will have a positive social impact, bringing justice to all.

Second, legal representation of the involved parties appears only in civil procedure legal relations. Participation of a representative in the Civil Code, including that of a legal representative or trustee under a contract, is done in the name of exercising rights [9, p. 52]. The right to participate in the proceedings is translated as "action" - "denunciation"[22, p. 56]. With this Study, the representative's primary purpose is to act on behalf of the litigant in order to exercise the litigant's procedural rights, rather than to be the subject of those procedural rights. In civil proceedings, representation is also limited to a specific case with fixed procedural rights and obligations. In civil proceedings, the nature of the relationship between the involved parties and their representatives is the performance of rights and obligations on behalf of the involved parties[15]. Sometimes the representative in court does not represent all the rights and obligations. Legal representation in civil law, on the other hand, means representing the rights and obligations as well as the legal consequences of the act of representation. As a result, a separate regulation on representation in civil proceedings is required, detailing, and separating the provisions on representation in proceedings from the provisions on representation in substantive law.There are separate provisions on representation in proceedings that can fully document the legal norms governing the representation proceedings as well as the class action's conditions and procedures. Regulations can be found in a legal document known as a Resolution of the Council of Judges of the Supreme People's Court, and the class action is one of the chapters in that resolution.

Third, make certain that the procedural order is fair and consistent. This guarantee applies not only to the plaintiff, but also to the respondent and the class action participants. We always aim to build a standard, reasonable, and legal procedure when developing a rule-of-law state strategy. Fairness in procedures and fair decisions in trials are required for the rule of law. Everyone has the right to a fair and open hearing before a competent, independent, and impartial court [4].Class actions should be simple, progressive, and standard, and cases arising from general legal issues or avoidable factual issues should be adjudicated in the same way by different courts. The same defendant in a class action lawsuit will not have to receive different results based on the subjective will of the judge or the agency conducting the proceedings.At the same time, class-action litigation must adhere to the spirit of the 2013 Constitution [7], establishing conditions for involved parties to actively gather documents and evidence and argue in Court; the Court is merely an arbitrator adjudicating the case. The adoption of a Resolution on online adjudicationby the National Assembly[3], as well as the establishment of an electronic court, is an important foundation for developing a class-action lawsuit mechanism in Vietnam, overcoming the limitations of related class-action procedures, rights to litigation, access to information, feedback, supervision of legal proceedings, and so on.

In comparison to the traditional method of proceeding, class action brings flexible and convenient proceedings, economic efficiency, reducing pressure on the Court, while still ensuring the basic principles, safety and security, and a fair and uniform due process.

Fourth, the development of regulations in Vietnam on representative proceedings and class action lawsuits ensures that the principle of self-determination is not violated, and democratic rights are not violated.The risk of class action lawsuits is that they affect the self-determination and autonomy of other subjects, particularly those named, who directly participate in the lawsuit but are still plaintiffs in the lawsuit. More than that increases the risk of losing democracy or becoming too democratic, both of which are unsuitable for country's political system Vietnam. The aforementioned risk necessitates the development of collective action regulations that are sufficient and specific in terms of conditions and procedures. Determining which civil lawsuit is a class action and determining the representative's status must be clear.The class action mechanism must include provisions to ensure the involved parties' right to self-determination, such as the right to request the Court to revoke the representative status; the right to supervise the main decisions made by the representative in the case; and the right to not participate, file lawsuits, and appeals on their own.

Fifth, the class action regulation seeks to strengthen the role of the state, courts, and lawyers in assisting people in obtaining justice.The State provides institutional support for the adoption of class action regulations and the administration of fair proceedings [8, p. 10]. Furthermore, state management agencies and social organizations involved in class action cases, such as the State Securities Commission, the Ministry of Natural Resources and Environment, the Vietnam Consumer Protection Association, and unions, must improve their understanding of collective action and strengthen their community-based actions. Courts, which play an important role in the application of the law, are also the subject of decision-making on whether a lawsuit should be classified as a class action to approve and supervise the selection and appointment process agent, or the Court appoints a representative.Judges, mediators, and court clerks provide diligent, dedicated, and precise assistance in class-action lawsuits. The class action structure is relatively complicated; class action lawsuits have many plaintiffs and a large amount of compensation, so the judge's quality is high.Lawyers representing or protecting the plaintiff's legitimate interests in class-action lawsuits must also be highly professional and qualified. Law firms improve training and cultivate a team of ethical and professional lawyers to participate in class-action lawsuits. When plaintiffs are pitted against "heavyweight" opponents, the pressure on class-action lawsuits is immense. The more power the litigant has against him, the more vulnerable he is [11, p. 81]. As a result, class representatives and class action lawyers must be people of courage and high professional qualifications.

Sixth, the development of regulations on representative and class action proceedings is based on absorbing legislative advances and drawing lessons from countries around the world that have implemented class action procedures. The author proposes the class action model based on the provisions of the Chinese Civil Procedure Law and the "Specification of some issues related to the representation of legal representatives in securities disputes" as the foundation for the construction of the law to develop regulations on class action lawsuits in Vietnam. Of course, many adjustments must be made to suit the country's socio-political characteristics and situation, as well as the goal of establishing a socialist rule of law state.

4. Possibility of applying the securities class action regime in Vietnam

4.1. Securities class action

A securities class action is a lawsuit brought by investors who purchased or sold publicly traded securities of a company during a specific time. Investors then suffer economic losses because of securities law violations. Rather than each shareholder taking individual action, one or more shareholders can sue on behalf of all shareholders against companies and/or individuals accused of violating securities laws. Through the class action mechanism, only one person sues, and the final victory or settlement agreement is made available to all shareholders as prescribed.Class action lawsuits have played a significant role in market stabilization in developed stock markets such as the United States. A federal securities class action is a lawsuit filed in federal court on behalf of a group of shareholders under Title 23 of the United States FederalCode of Civil Procedure.In a securities class action, shareholders who purchased or sold a company's securities during a specific time, known as the class period, often accuse the company and its officers and directors of violating federal and state securities laws. While shareholders may be members of a class, you are not required to participate in a class action [8, pp. 18-20]. Shareholders may choose not to participate in the lawsuit if they do not wish to do so. One or more securities investors, known as the "Principal Plaintiff" on behalf of all others who have suffered financial loss because of purchasing shares of a company that is the subject of a class action lawsuit. The main plaintiff is the person or entity appointed by the Court to represent and act on behalf of the other members of the case. To appoint a principal plaintiff, the Court must find that the proposed principal claimant's claims are typical of the claims of other class members and that the principal plaintiff will adequately represent the interests of the entire group. In some cases, more than one class member may serve as lead plaintiff. Plaintiffs have control over the lawsuit's course and direction.If a person files the lawsuit and wins, the victory belongs to all shareholders. Small and medium-sized shareholders in the United States do not have to pay to sue a publicly traded company because if the case is won, approximately 30% of the settlement fee will go to the attorney; if the case is lost, the shareholders will not be asked to pay the costs that lawyers will bear, and many lawyers are willing to do so [25].

A class action on securities was only recently introduced in China. China's newly revised Securities Law, which goes into effect on March 1, 2020, has established a legal foundation for securities class action litigation with Chinese characteristics. Article 54 of China's Civil Procedure Law of 2017 establishes the fundamental principles of class actions, and Article 95 of China's Securities Law addresses securities class-action lawsuits specifically.On July 31, 2020, the Supreme People's Court of China issued the "Regulation on Some Issues Relating to the Litigation of Representatives in Securities Disputes" and the China Securities Regulatory Commission issued the "Notice of Good Work in Investor Protection Organizations Involved in Special Representation Litigation in Securities Disputes" completing China's securities class action system [26].Ordinary and special representation proceedings are included in the China securities class action lawsuit. The "opt-in" class action with a minimum of more than ten people is typical of representative proceedings [1], to participate in the class action as a plaintiff, the subject of infringing interests must register with the Court for a certain period.The provisions on special representation proceedings, which have some similarities to the US "opt-out" class action, are a distinguishing feature of the Chinese securities class action. If the investor expressly declines to participate in the lawsuit, he must notify the Court within 15 days of the notice period's expiration to withdraw the application. Those who do not withdraw will be considered to have agreed to participate in the act of representation. The primary distinction between China's special representative proceedings and the US class action lawsuit is that it only accepts representatives from investor protection agencies or organizations that have been authorized by 50 investors.Special representation proceedings in China have yielded numerous positive results in terms of protecting investors in the Chinese stock market. In the future, this system of proceedings will play an important role in China's diversified securities dispute settlement mechanism [8, pp. 18-20].However, regulators must continue to pay attention to the shortcomings of the representative justice system, such as excessive litigation and overexploitation, because they are not without potential risks. Simultaneously, complete the legal infrastructure, including the lawyer mechanism, mediation mechanism, and abuse prevention and control mechanism [27, p. 150].

4.2. The need for securities class action regulations in Vietnam

Since the establishment of the State Securities Commission more than 20 years ago, Vietnam's stock market has been developing (November 28, 1996).It should be noted that Vietnam's stock market has continuously improved in structure and developed strongly, becoming an important capital mobilization channel for the economy, with capital mobilization through the stock market reaching nearly VND 2.9 million billion in the period 2011-2020, nearly ten times higher than in the 2001-2010 period, contributing 19.5% of total social investment capital on average; contribute to restructuring Vietnam's financial system.However, Vietnam's stock market has limitations and weaknesses, including: market information lacks publicity and transparency, and it is not managed and monitored on time, exposing investors to significant risks such as insolvency, fraud, and securities manipulation. Due to increasingly sophisticated and complex law violations in the market, supervision, inspection, and inspection activities continue to face numerous challenges.

The case of FLC's Trinh Van Quyet manipulating the stock market is a landmark case:

Mr Trinh Van Quyet's stock market manipulation techniques: Mr Quyet and the defendants, according to the allegations, engaged in market manipulation. The goal is to raise the FLC stock price from 14,650 VND/share on December 1, 2021, to the highest "ceiling" price of 24,050 VND/share (average is 22,586 VND/share, a 64% increase). Following that, Mr Quyet continued to direct the accused and others to place orders to sell 175 million FLC shares and matched the order to sell 74.8 million FLC shares at the price of 22,586 VND/share but did not disclose information, illegally obtaining an amount of approximately VND 530 billion with the amount of VND 1,689 billion. According to the investigating agency, Mr Trinh Van Quyet and the defendants' actions harmed investors who purchased more than 60 million FLC shares on the stock exchange on January 10.Thus, those who purchased FLC shares between December 1, 2021, and January 10, 2022, are affected.This is not the first time Mr Quyet and FLC's group have been sanctioned for stock price manipulation. FLC Faros Construction Company was sanctioned by the State Securities Commission in 2017 for illegally selling nearly 14 million AMD shares (a subsidiary of FLC Group) without disclosing it. Mr Quyet illegally sold 57 million FLC group shares the same year.

The FLC competition is only the tip of the iceberg. The current state of the market is still rife with violations of information disclosure, insider trading, falsification or illegal selling of financial reports, and stock price manipulation. These are long-term, systematic activities that incite public opinion and cause significant harm to investors, harming the image of Vietnamese securities in the international financial market. It is worth noting that no lawsuits have been filed by investors because of these activities. It demonstrates that there is currently no suitable procedural mechanism in place to protect the interests of investors.

A similar incident occurred in the Chinese stock market and was resolved using the proper legal mechanisms. Some investors sought advice from the China Investment Service Center, which filed a petition with the Guangzhou Intermediate People's Court in China to participate in the lawsuit as a representative. According to the Guangzhou Intermediate People's Court, Pharmaceutical Co., Ltd. Kangmei products must compensate securities investors. According to the Guangzhou Intermediate People's Court's decision, the liability of each defendant is determined as follows: Kangmei Pharmaceutical is liable for 2.459 billion yuan as a listed company; the company's de facto controller, Ma Xingtian and his wife, Qiu Xiwei, and four other former senior executives organized and planned to commit financial fraud, which was a deliberate act and subject to 100% joint liability and some indemnification liability; the other 13 senior executives bear 20%, 10%, and 5% liability, respectively, and some degree of error. The legal decision in the case of Kangmei Pharmaceutical is an effective measure to strictly combat illegal securities activities. The incident has boosted investor confidence and the reputation of the Chinese stock market. Vietnam has similar violations, but there is no legal regulation, so it is impossible to sue and get results like in China.

4.3. Regulations on securities class actions

The first thing has to do is to allow for representative and class action lawsuits in the Civil Code, as well as to distinguish between representatives in the 2015 Civil Code and representatives in the 2015 Civil Code. Next, draftinga CPC regulation on the procedure for filing and settling class-action lawsuits, or a separate Supreme People's Court resolution on representation in the Civil Code. There is no need to amend the Securities Law, as Article 95 of the China Securities Law does, to allow class action or representative lawsuits because the procedural provisions clearly state that the substantive law is only grounds for the Court to make judgments in specific cases.

The "opt-in" method of collective action was proposed and found to be appropriate to the conditions in Vietnam, ensuring freedom and democracy under Vietnam's political system. We have justification for circumventing the limitations of the "opt-in" class action method: The advancement of information technology, the foundation of the e-Court model, and online trial regulations [3]; increasing investor understanding; support from securities agencies and organizations.

Proposing the following civil procedure content for the securities class action lawsuit:

First, the Court must meet the following conditions to use the securities collective representation procedure:

(i) There are 40-50 people who claim the same lawsuit or more, the lawsuit must comply with the Civil Code 2015 provisions, and they are eligible to file a lawsuit together. When the legal relationships or circumstances of the plaintiffs' (co-plaintiffs') cases are similar, the settlement in the same case ensures the law.This recommendation is based on the number of plaintiffs in the US class actionand the minimum number of plaintiffs who authorize the investor protection agency, a special representative under Chinese law, in the lawsuit. When the Court has not previously experienced class-action lawsuits, the number of plaintiffs and legal relationship requirements avoid procedural abuse or "procedural explosion".

(ii) A representative is proposed in the petition, and the representative meets the requirements for a representative as prescribed, specifically: the representative agrees to act as the representative; the representative will defend the plaintiffs' rights fairly and fully; has certain professional qualifications (with a bachelor's degree in law or higher, must be a lawyer); and does not fall into the case of not being allowed to act as a legal representative.

Second, the notice of participation as a co-plaintiff in the securities class action, as well as the scope of the plaintiff's representation:

The Court issues a notice of registration of participation as a plaintiff in the securities class action case to the entities having related registration within the specified period after receiving the petition and determining that the petition is eligible to accept a class action (30 days). The following information is included in the notice of registration of participation: the case circumstances and compensation claims; basic information of the respondent; the scope of the lawsuit; the registrant's interests in the case; registration deadline; basic information of the person appointed as the representative identified in the petition; and other matters that the Court deems necessary.This notice should clearly state the scope of representation for the plaintiff, including the right to represent the plaintiff in the proceedings, to exercise the plaintiff's rights and obligations; the right to amend and supplement the lawsuit claim; the right to agree or reject the defendant's, persons with related interests and obligations' requests; the right to decide the contents of conciliation with the defendant; and the right to file or waive an appeal. Participation in the registration will be regarded as special authorization for the representative throughout the course of the case.The notification implementation makes use of the e-advantages Court's and accepts registration via electronic platform, digital signature, and email.

Third, the co-plaintiffs' (investors') rights in the securities class action lawsuit: (i) The authority to select and propose a representative; (ii) Right to be informed: the representative will promptly notify all claimants of material matters, such as the decision to withdraw the claim, reach a settlement agreement, change or waive the claim, or waive or decide to appeal; (iii) Right to object: If the investor believes that the representative is unqualified, he may petition the Court to have the representative's status revoked; the investor may object to the representative's decision to withdraw the application or change the contents of the lawsuit; and oppose the draft mediation agreement; (iv) Right to withdraw: If the investor is dissatisfied with the representative, he or she has the right to withdraw his or her participation application and file a separate lawsuit; if the investor does not agree with the draft mediation agreement reached by the representative, he or she has the right to submit an application to the Court to withdraw the application; (v) Right to appeal: the investor has the right to file an appeal if the representative waives the appeal; if the representative decides to appeal, the investor has the right to waive the appeal.

Fourth, there are court fees and agency costs to consider:

(i) The court fee advance and court fee will be waived if the representative is an investor protection organization or a social organization. If the representative is another person or organization, the court fee advance is waived, but the representative is responsible for all court costs if the lawsuit is lost.

(ii) specific and detailed formulation of attorney's fees and additional representation costs in class-action securities lawsuits based on attorney's fees specified in Article 168 of the CPC 2015. This content is required to encourage third-party participants in class action lawsuits, such as lawyers, foundations, and social organizations. Build a system of professional representatives’ step by step, being clear about future remuneration and expenses.

Fifth, in securities class-action cases, monitor representative activities:

(i) Jurisdiction of the Court to consider the basic facts of the case of violation of securities regulations being sued to determine the scope of the right holder (co-plaintiffs) (co-plaintiffs).

(ii) Jurisdiction of the Court to supervise the selection and appointment of a representative: if a representative cannot be selected, the Court shall appoint a representative from among the proposed. The Court may decide to dismiss the representative if the representative falls into the case of being unrepresented or incapacitated for procedural acts or for other reasons that affect the objective trial of the case or may cause damage the interests of the plaintiffs.

(iii) Court's jurisdiction in considering the mediation agreement: If the plaintiff objects to the draft mediation agreement, the Court must hold a trial to determine the legality, suitability, and feasibility of the draft mediation agreement, as well as whether or not to recognize the mediation's content.

(iv) The Court's authority to consider important procedural issues such as the representative changing or abandoning the lawsuit claim and admitting the opposing party's lawsuit claim, the Court shall decide whether to accept or reject the lawsuit in accordance with the law.

Sixth, other proceedings-related content is carried out in accordance with civil law provisions and relevant legal documents.

The proposals above only address the specifics of the proceedings for the securities class action lawsuit. If approved, legislators will create detailed regulations based on community feedback and international experience.

5. Conclusion

The stock market is unique in that there are many investors, up to millions, if not tens of millions of people, including individual and institutional investors, both professional and professional investors are frequently in a weak position compared to a company issuing stocks and bonds. When this rule is broken, no one stands out to sue the violating company or individuals because the damage to each individual is minor. As a result, the investor must bear the consequences, while the violator remains unconcerned and continues to violate the law because he is not afraid of being sued and compensated. It is one of the reasons why securities fraud and manipulation are becoming more prevalent in the Vietnamese stock market.

To build the image of a transparent, fair, and professional stock market, an appropriate dispute resolution mechanism in the form of a class action is required to learn from the experiences of other stakeholders around the world.A comparison of securities class-action lawsuits in the United States and China reveals that the countries have distinct legal pathways for class-action lawsuits. As a result, the analysedcountries have effective mechanisms in place to protect stock market investors, creating a deterrent against violations, which is an important step in the maturation of the stock market. Furthermore, class action lawsuits will lower the cost of protecting rights by making it easier for investors to sue and participate in lawsuits, improving litigation efficiency, and encouraging the resolution of various securities disputes. The lack of class action regulations in general, and class action on securities, in Vietnam's legal system can be a serious institutional limitation.

Promulgating regulations on securities class actions is a must for perfecting the legal framework for stock market operations and litigation. As a result, it is necessary to complete the principles and legal framework to promote the securities market's deep and broad development in the direction of transparency and synchronization, while also ensuring the legitimate rights and interests of investors and investors and assisting in conformity with international standards.

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