Alternative legal bases for VieON’s lawsuit on MoMo

On September 18 it was announced that over-the-top (OTT) platform VieON was suing MoMo, stating that its rights and benefits had been seriously impacted due to the sudden contract cancellation by M_Service, the operator of the e-wallet platform. According to VieON’s parent company DatViet VAC, around 45 per cent of VieON users selected MoMo for their payments.

However, proving the bruises stemming from the interruption of e-payments could be tougher than initially thought because the e-wallet is not the only transaction option VieON offers its users. Indeed, in addition to MoMo, the OTT site also allows customers to pay by credit card, VNPay, and MoMo-like services such as ZaloPay, Moca, and even topping up via mobile accounts.

One VieON user told VIR that in comparison with e-wallets, mobile payments are much more convenient because she does not have to sign into her account each time whenever she makes a payment.

Thus, with plenty of available payment methods, VieON’s claim that almost half of its customers cannot extend their packages may not be watertight. In a recent response to VIR, a representative of the platform said that its staff members are guiding customers to transfer to other payment forms.

The contract between VieON and M_Service began only late last year.

After more than three years of operation, VieON has witnessed skyrocketing growth. According to the latest information published by Dzones Hub Corporation, a subsidiary of DatVietVAC, VieON last year reached VND284.1 billion ($12.35 million) in revenues and VND166.8 billion ($7.25 million) in after-tax profit. As of the end of last year, VieON recorded accumulated profits of VND171 billion ($7.43 million), as much as 34 times its initial capital of VND5 billion ($217,000) in 2017.

According to a report from social analysts YouNet Media, VieON ranks as the second most popular OTT platform in Vietnam, behind only Netflix. However, while Netflix leads the way globally and is famed for its mostly Western-themed entertainment categories, VieON has lured in customers through content from popular television shows in Vietnam.

Based on its strong performance, industry insiders find it hard to believe that VieON will suffer serious losses due to the MoMo payment interruption, especially in such a short time.

M_Service noted its intention of contract termination in July, saying it had “temporarily no demand for trading in the company’s products and services.” The following week, law firm Duane Morris LLC, representing VieON, noted its rejection of M_Service’s intentions.

According to Article 428.1 of the Civil Code, a party has the right to unilaterally terminate a contract without any compensation for damages when another party violates its obligations seriously, if so agreed by the parties, or so provided by law.

VieON has asserted that there was no violation of the contract, while a MoMo representative also insisted to VIR that no violations occurred on VieON’s side.

Hence, M_Service’s one-sided termination may be contrary to the Civil Code and VieON could base a lawsuit on this, instead of damages caused.

According to local law firm LawKey, “In this case, if the two sides cannot reach a common voice and the contract has no specific terms regarding compensation for termination, the court will base repayment on the damages caused by any violation.”