Electronic devices are increasingly replacing ‘paper documents’ in commercial transactions in Vietnam. Email, mobile phones, and even messaging apps are increasingly being utilized by enterprises for information exchange, contract execution and implementation. Generally, the trend has been for enterprises to prioritize the use of electronic means over the exchange of ‘paper documents’ as a ‘defensive’ measure in dispute resolution. There are also certain enterprises that completely adopt electronic documentation, abandoning the use of paper records altogether. Quick, convenient, cost-effective, and efficient are among the advantages of using electronic means to conduct transactions. However, there are certain hidden risks arising from this practice which may prove to be extremely costly to the business. Issues concerning the identity of the sender, the recipient, the time of sending, the receipt of goods or documents, and the authority to sign, etc. are sources of endless disputes. If reasonable precautions are not taken, companies may potentially face severe consequences such as penalties, payment of compensation and interest, or even considerable damage to the enterprise’s reputation on the market.

Given the growing predominance of electronic documents in transactions, a number of legal questions arise: How can the risks be controlled? Will electronic means completely replace ‘paper documents?’ Can data extracted from electronic means serve as evidence in disputes? What is the significance of electronic evidence in commercial contracts and dispute resolution?

Understanding of electronic evidence

What is electronic evidence under the laws of Vietnam?

The current law does not provide a definition for ‘electronic evidence’. Instead, this is a term commonly utilized by Vietnam litigators, legal practitioners, and the disputing parties.

However, the 2015 Civil Procedure Code does define ‘electronic data’ as a ‘source of evidence’. Essentially, this definition serves as the equivalent of ‘electronic evidence’:

• Article 93 of the 2015 Civil Procedure Code provides that: “Evidence in civil cases comprises factual things provided by the parties, agencies, organizations and other individuals to the Court during the litigation process or collected by the Court in the order and procedures prescribed in this Code and is used by the Court as bases to determine objective details of the cases as well as to determine whether the claims or protests of the involved parties are well grounded and lawful.”
• Further, Article 94 of the 2015 Civil Procedure Code stipulates: “Evidence shall be collected from the following sources: 1. Readable, audible, visible documents, electronic data. […].”
• In addition, Article 95.3 of the 2015 Civil Procedure Code states: “Electronic data messages are presented in the form of electronic data exchange, electronic documents, electronic mail, telegram, telegraphy, fax and other similar forms in accordance with laws on electronic transactions.”
• Finally, the 2005 Law on Electronic Transactions specifies that: “Data is information in the form of symbols, letters, numbers, images, sounds or similar forms.”

The above regulations can be summarized as follows: ‘Electronic evidence’ is all information or data collected from computer networks such as the Internet, e-mail, facsimiles, messaging apps, or electronic devices by means such as computers, mobile phones, cameras, etc.

The traits of electronic evidence

The following are some of the universal characteristics of electronic evidence:

• It cannot be seen by the naked eye: Electronic evidence is found by the use of certain codes, which means that it can only be discovered by experts, or special tools are required to access it.
• It is easy to conceal or disappear: With certain devices and in certain conditions, the computer memory (the data that stores the evidence) may be overwritten (or modified) by the device’s normal functions or operations. This could be caused by the sudden shutdown of the system, the lack of memory storage during the process of overwriting old information with new data, or environmental factors such as high temperature or humidity which can damage the memory.
• It can be modified or destroyed: During their normal operation, electronic devices constantly shift their memory status to meet the user’s demands during the process of updating information, saving the changes made, or auto-updating.
• It is easy to duplicate: Electronic data may be duplicated infinitely with countless copies being identical to the original.

The difference between electronic evidence and traditional evidence (mainly in paper form)

Electronic evidence in commercial transactions

Electronic contract and other types of electronic evidence

In commercial transactions, the use of electronic evidence is quite common as well as diverse in form. It may include: electronic contracts, electronic documents, electronic mails, announcements on enterprises’ websites, phone messages, computer files, information exchanged via messaging apps, social media, photos, audios, video recordings, and numerous other examples.

An Electronic Contract is the most important item of electronic evidence. It essentially memorializes the execution of the contract as well as formally initiates electronic communication between the parties. This is followed by the creation of numerous other items of electronic evidence connected to the performance and termination of the contract. Electronic contracts are increasingly widespread and are often preferred over paper contracts in commercial transactions, especially in international commerce. Article 33 of the 2005 Law on Electronic Transactions stipulates that: “Electronic contracts mean contracts established in the form of data messages in accordance with this Law”. Thus, an electronic contract may be executed via electronic means via devices such as phones, facsimiles, emails, messaging apps, and others.

Do electronic contracts have legal validity?

• Article 34 of the 2005 Law on Electronic Transactions recognizes the legal validity of an electronic contract: “The legal validity of an electronic contract cannot be disclaimed for the sole reason that it is expressed as a data message.”
• Article 5 of Decree 30/2020/ND-CP provides: “Electronic documents signed digitally by a person of authority and signed digitally by agencies or organizations in accordance with the law shall have the same legal validity as the original paper version.”
• Article 15 of the Commercial Law recognizes the legal validity of data messages in commercial activities: “In commercial activities, data messages which satisfy all technical conditions and standards provided by law shall be recognized as legally valid as a paper document.”

From the above regulations, in our point of view, electronic contracts executed or performed via electronic devices carry the same legal validity as those executed as a ‘paper document’ in Vietnam.

A successfully executed electronic contract forms the basis for the creation of other electronic evidence related to the performance and termination of the contract. This may include the exchange of information between personnel in various departments of both enterprises regarding opinions and decisions made via email, phone, or messaging apps. Topics may include the progress of payments, goods delivery, service provisions, quality supervision, complaints, warranties, penalties, suspension of contract performance, termination of contract, and numerous others.

Methods used to create electronic evidence in commercial transactions

Enterprises often use an ‘electronic signature’ on documents relating to the execution, performance and termination of commercial contracts (contract, notification, official dispatch, drawings, designs, receipts, documents, etc.). These comprise important evidence in the dispute resolution process.

Electronic signatures have many variations. However, some of the more common forms are digital signatures and other types of electronic signatures created by users on Microsoft Word, Microsoft Excel, or PDF files through the use of computer techniques or applications. The purpose of these electronic signatures is often to verify the identity of the signee as well as his/her acceptance of the terms in the data message.

A digital signature is the most reliable and secure form of an electronic signature:

Anyone can create an electronic signature by using computer techniques which are cost-free. Because of this, other types of electronic signatures have a considerably higher rate of utilization compared to digital signatures. However, in the event of dispute, the conclusiveness of a digital signature shall prevail due to its higher security and authentication features.

Aside from documents with electronic signatures (the most common evidence), other data messages may also be considered electronic evidence. For example: information exchange emails, audio/video recordings of online meetings, images/videos created with mobile phones, etc. However, the conclusiveness of each item of electronic evidence depends on the enterprises’ ability to convince the trier of fact of the veracity of the evidence and defend against any challenges.

Common legal scenarios and risk assessment

Case 1: Inability to determine the sender and recipient of the data messages

Company A successfully entered into an e-commerce contract with Company B. Pursuant to the contract: Company A was required to make a deposit equivalent to 50% of the value of the goods on September 01, 2021. Company B was to deliver the goods on October 01, 2021, and Company A then would pay the remaining 50% goods value on the same day. If Company A violated the deposit term, Company B would have the right to unilaterally terminate the contract, not to deliver the goods nor return the deposit. On the other hand, if Company B violated its delivery obligation then it was to return the deposit as well as pay an amount equivalent to the deposit. On August 20, 2021, the Director of Company A sent an email to Company B requesting to move the deposit day to September 10, 2021 and received an email in response which simply replied ‘agree’. On September 10, 2021, Company A sent the deposit to Company B. Nevertheless, on October 01, 2021, Company B sent an email to Company A, announcing its unilateral termination of the contract, as well as its refusal to deliver the goods or return the deposit.

Company A’s viewpoint

The extension of the deposit term was agreed upon by Company B à Company B must continue to implement the contract. If not, Company B shall be required to return the deposit as well as pay an equivalent amount to the deposit.

Company B’s viewpoint

• Company B never agreed to an extension of the deposit term.
• The email address which replied ‘agree’ on August 20, 2021 presented by Company A belonged to an accounting employee of Company B, who was not authorized by the Company to negotiate the terms of the contract and thus did not have the authority to agree to the contract modification.
• Company B checked its internal email system and failed to find the email sent by this employee. Therefore, Company B refuses to acknowledge the validity of the email presented by Company A.
• This employee confirmed that no such email was sent, contrary to Company A’s claim.

Our viewpoint: Company A will be at a disadvantage regarding this electronic evidence and may potentially lose the deposit.

Case 2: Inability to determine the time or location indicated in the data evidence

Pursuant to the executed commercial contract, Company A had the right to unilaterally terminate the contract on the condition that Company A sent Company B a notice 30 days in advance. On May 01, 2021, Company A signed and sealed the Notice of Contract Termination from June 01, 2021, enclosed it in an envelope, and had one employee called X deliver that envelope to Company B directly. When X arrived at Company B, the security refused to allow X to meet with the Board of Directors and asked that X hand over the envelope to him for deliverance to the Board of Directors. X agreed and took a photo of him handing the envelope over to the security to deliver to Company A. On July 01, 2021, Company B contacted Company A via email, asking it to perform under the contract. Company A refused, stating that the contract had been terminated on June 1, 2021.

Company A’s viewpoint

The contract had been terminated on June 01, 2021. Company A sent the photo taken by X to Company B as proof.

Company B’s viewpoint

• Company B did not receive any notice from Company A.
• The photo sent by Company A showed that it was taken on May 01, 2021. But this did not prove whether it was the actual date, given that anyone can set the time and date on his/her phone before taking a photo and the time and date displayed on the image file will be the one set by the phone user.
• The photo shows Company A’s employee and Company B’s security both holding an envelope, but it did not show the location of this action nor the contents of the envelope.=
• Company B’s security confirmed that there was an envelope from the man pictured in the photo but he cannot remember when or where this took place and claimed that the envelope contained the security guard’s personal mail, which he no longer kept.

Our viewpoint: Company A will be at a disadvantage regarding the evidence and may be forced to continue performing under the contract and/or be subject to a penalty/late payment interest/compensation (if any).

Risk avoidance measures in commercial transactions

• Enterprises should utilize electronic mails as the primary form of communication during the execution, performance and termination of a commercial contract. They should also refrain from using certain forms of communication such as phone calls, calling/messaging via messaging apps, and social media à hard to collect evidence, little conclusiveness.
• Enterprises should use the company’s email(s) to exchange information; avoid using personal email such as Gmail, Yahoo, etc. à hard to collect evidence and impossible to identify the user.
• It is recommended that you use, and request the other party to use, digital signatures instead of other types of electronic signatures, on important documents and evidence in commercial transactions such as: contracts and its appendices, reports, purchase orders, notifications of contract suspension or termination due to its high authenticity à highly conclusive.
• After the execution of the contract and exchange of documents via electronic devices, both parties should sign supplemental physical documents for recordkeeping purposes à In the event that the electronic devices are lost or damaged, there would still be evidence for dispute resolution. As there is no dispute at the time of contract signing, it should be easy for both parties to confirm their intentions on paper documents.
• Enterprises should require the other party’s person of authority to confirm and decide on important matters to avoid cases where the decision-maker lacks the ability to change or modify the transaction.
• The content of a commercial contract must clearly indicate:
  • The email addresses which both sides designate to use for information exchange in the execution and performance of the contract;
  • How to identify the time period when the information was sent – received via electronic devices;
  • The person of authority from both parties who will decide on important matters (creating purchase orders, prices, payment, suspension and termination of the contract).

Electronic Evidence in Dispute Resolution

The conclusiveness of electronic evidence in dispute resolution

The electronic evidence used in commercial transactions is also used in dispute resolution before a Court or Commercial Arbitration.

Collecting, submitting evidence and proving the case are the obligations of the disputing parties, namely the Claimant. The dispute resolution agency shall only provide support for the parties in the collection and verification of evidence in cases where they cannot do it by themselves. The role of the Court/Commercial Arbitration is to examine and evaluate evidence submitted by parties and deliver a judgement.

Generally, electronic evidence is less conclusive compared to traditional evidence (mainly paper documents). In many cases, the disputing parties cannot prove the integrity of electronic evidence and cannot identify the person who created and transferred the data, meaning they are unable to prove whether the evidence is objective.

In certain cases, the involved parties fail to record electronic evidence sufficiently during the performance of the contract. This often leads to the evidence being non-conclusive as the information is non-linear or contradictory to the other pieces of evidence in the case file.

Electronic evidence provided by one party may also be countered by the logical, scientific reasoning of the other party. While winning or losing a case often depends on the techniques of collecting and utilizing the evidence, it also depends on the reasoning, counter-reasoning, and presentation of the facts by each party.

Electronic evidence will be of great conclusiveness when the involved parties use it in tandem with other evidence, and timely reasoning and counter-reasoning appropriate to the law. It also depends on the skills and experience of the person representing the enterprise during the dispute resolution process and it is best that this person is a lawyer.

The risks of using electronic evidence in dispute resolution

Case 1: Company A (the buyer) and Company B (the seller) entered into a sale and purchase agreement, with the term of contract from 2015-2025. During the performance of the contract, both parties delivered the goods and paid as agreed. However, information regarding the purchase ordering, delivery, payment, and warranty was mostly exchanged via mobile phone, text messages, email by the business employees of both enterprises. Prior to the expiration of the contract, Company A and Company B agree to terminate the contract in 2021 and pay all remaining debts. Company A demanded that Company B pay the remaining goods value which was VND 10 billion. Company B refused on the grounds that the debt was only VND 05 billion. Company A filed a lawsuit at Court.

Company A’s viewpoint: has provided every relevant email, text message, list of phone calls made, and payment statements to the Court.

Company B’s viewpoint: Company B claims to have received only some of the emails provided by Company A. Further, the phone calls on the list were mostly made with personal phone numbers and the identity of the callers and the details of the phone calls were unknown. Thus, Company B only agreed to pay for the orders that Company B kept from the received purchase order emails and the signed receipt of goods. The total amount owed was VND 05 billion.

Our viewpoint: Company A will be at a disadvantage regarding evidence and may lose the case, as well as a total compensation amount of VND 5 billion.

Case 2: Company A (the seller) sold paint additives to Company B (the buyer). During the transaction, the parties did not sign a contract but instead communicated via phone. The payment process was that Company A would issue value added invoices, and Company B would pay upon receiving the invoices. From December 01, 2019 to December 01, 2020, Company B had contacted Company A to make purchases multiple times in the total amount of VND 02 billion. Up until March 01, 2021, Company B had paid a total amount of VND 1 billion but still owed VND 01 billion. Company A contacted Company B multiple times to demand the payment of the remaining debt but Company B refused to pay. Because of this, Company A filed a lawsuit at Court.

Company A’s viewpoint: provided the Court with 05 value added invoices with a total value of VND 01 billion which Company B had not paid.

Company B’s viewpoint: provided the Court with emails proving that the goods that Company A sold were insufficient quality and did not satisfy the conditions for payment. The invoices were issued by Company A at its own initiative and Company B did not confirm the issuance. Up until the present, the goods were taken directly from Company A’s warehouse for export (without involvement from any third party). However, later Company B’s foreign business partner (the consumer of the goods) inspected and confirmed that the goods were not of sufficient quality, demanded to return the goods and penalized Company B (the minutes were sent via emails). Thus, when the goods were returned to Vietnam, Company B wished to return the goods to Company A’s warehouse and refused to pay the amount of VND 01 billion.

Our viewpoint: Company B will be at a disadvantage regarding the evidence. The exchanged emails and confirmation minutes sent via email by the foreign partner did not prove the identity of this foreign partner, whether this entity was truly Company B’s partner, whether this foreign entity received the goods produced by Company A, or whether the extracted emails reflect the veracity of the information. Company B failed to prove that the foreign business partner’s quality standards were mentioned in the agreement between Company A and Company B. Thus, Company B may lose the case and be required to pay the remaining VND 01 billion.

Risk avoidance measures

• Electronic evidence must be accurately and regularly recorded from the execution of the contract through the entire process of contract performance.
• Enterprises should prioritize using digital signatures for high-ranking personnel and for important documents (contracts and appendices, reports, purchase orders, payments, notifications of contract suspension or termination) due to its reliability and security. Further, in case of loss or questions on cross-examination, enterprises can verify the information from a third party.
• To save time, important documents may be sent via electronic devices first and then be signed and sealed later for recordkeeping. These documents have a high rate of conclusiveness in litigation and are especially useful for identifying the signee and holding them accountable during examination.
• Electronic evidence needs to be collected in a systematic manner and meet the requirements of procedural law on the validity of evidence. For example: emails made in English need to have a notarized translation, extraction of important electronic evidence should be accompanied by a bailiff certificate to prove that the data extracted from the computer is authentic, objective, etc.
• To achieve a positive result in dispute resolution, electronic evidence should not be the sole evidence utilized, but should to be considered in combination with other evidence such as: paper documents, testimonies of people involved, witnesses, etc.
• Evidentiary strategy is one of the crucial factors protecting an enterprise. Whether to recognize or disclaim evidence from the opposing party depends on the strategies and goals of the enterprise in the dispute and the representative of the enterprise must carefully consider these before making a decision.
• When a commercial dispute arises, enterprises should request reliable lawyers to represent them. Being fluent with the current law and having practical experience, lawyers provide useful support to the enterprise in collecting, submitting, analyzing and evaluating evidence, as well as choosing the right opportunities and submitting counter-arguments.

Should you have any questions about electronic evidence, please feel free to contact our Lead Trial Lawyer, Stephen Le, at hoangchuong.le@letranlaw.com . Stephen is the top-gun lawyer who masters cross-examination and the evidence rules of Vietnam at courts and arbitration.