August 25, 2015

Air Carrier Liability in Vietnam

Amendments to Vietnam’s Civil Aviation Law (2006) (Aviation Law) became effective on July 1, 2015. The Aviation Law and the amendments regulate air carrier liability in Vietnam. Vietnam is not a signatory to the Convention for the Unification of Certain Rules for International Carriage by Air, adopted in Montreal on May 28, 1999 (the Montreal Convention). However, the legal framework for liability under the Aviation Law is generally consistent with the Montreal Convention, creating protection for consumers and predictability for air operators and their insurers.

Liability for Bodily Injury or Death

Under the Aviation Law, an air carrier is liable for a passenger’s death or injury when the accident occurred on board the aircraft, or during embarkation or disembarkation. In the event of an accident, the carrier is strictly liable for damages of up to 100,000 Special Drawing Rights (SDR) (about USD 137,000) per passenger. The air carrier cannot limit its liability except where there is contributory negligence. Plaintiffs, however, cannot bring claims for losses over the maximum damage amount if the damage was not caused by the carrier or was due to a third party’s fault. The compensation amount will be converted into Vietnamese dong at the official exchange rate publicized at the time of payment by the State Bank of Vietnam.

The Aviation Law further requires the air carrier to promptly make advance payments to passengers or persons having the right to claim compensation in case of an accident in accordance with carriers’ rules of carriage. The law also states that these payments should not be construed as an admission of liability and can be offset against any subsequent damages paid by the air carrier. Importantly, the carrier cannot “contract out” of its liability with a passenger. Any such contracts are considered void.

Liability for Damage Caused by Flight Delays

An air carrier is also liable for damage caused by flight delays. To escape liability, the carrier must prove that its staff and agents took or were unable to take all measures to avoid the damage. The carrier’s liability for damage to passengers caused by flight delays is limited to SDR 4,150 (about USD 5,690) per passenger. For baggage-related damages caused by similar reasons, the carrier’s liability is limited to SDR 1,000 (about USD 1,370).

Liability for Passengers’ Baggage

An air carrier is liable for the full or partial loss of passengers’ baggage, as well as damage to the baggage. This applies to both checked and carry-on baggage. The level of compensation payable by the carrier is calculated subject to the following:

  1. As agreed by the parties but not exceeding the actual damage value.
  2. Based on the declared value upon receipt of the checked baggage at the destination. If the carrier can prove that the declared value is higher than the actual value, the compensation will be made based on the actual damage value.
  3. Based on the actual damage value for: (a) checked baggage with non-declared value; and (b) hand baggage. The carrier’s liability for damage in this case is limited to SDR 1,000 (about USD 1,370). If the passenger has declared the value of the checked baggage at the destination and paid an additional fee, the carrier must compensate based on the declared value. The carrier will not enjoy the limit on liability if the carrier and its staff and agents intentionally or recklessly committed acts causing damage and must have been aware of the damage.

Liability for Cargo Losses

An air carrier’s liability for cargo delays, destruction, loss, or damage is limited to SDR 17 (about USD 19) per kilogram. The carrier is only responsible during a certain time period. Liability attaches to the carrier when the liability event occurred from when the consignor delivered the cargo to the carrier, to when the carrier delivered the cargo to the recipient. The carrier is not liable during the time when the cargo is transported by sea, land, rail, or inland waterways outside an airport or airfield.

Time Limit for Filing an Action

The Aviation Law contains time limits and other requirements that must be complied with before initiating any court action. Before filing a lawsuit against an air carrier for cargo or baggage delays, destruction, loss, or damage, a written complaint must be sent to the carrier. The complaint must be sent within: (a) 7 days from the receiving date in case of loss (including partial loss) or destruction; (b) 14 days from the delivery date in case of cargo loss (including partial loss) or destruction; or (c) 21 days from the receiving date of cargo or baggage in case of delays. If the carrier does not reply to or satisfy the demands of the entitled parties within 30 days from the date the complaints are received, a plaintiff can file a lawsuit.

The time limit to file a court action for any type of damage is two years from the aircraft’s arrival date, or the date which the aircraft ought to have arrived, or the date in which the carriage was cancelled, whichever is later.

Jurisdiction and Arbitration

The Aviation Law applies to both Vietnamese and international airlines carrying out air carriage operations in Vietnam. For claims arising out of international carriage involving cargo, baggage, and other nonbodily injury incidents, Vietnamese courts have jurisdiction, at the plaintiff’s option, when the carrier has its main office in Vietnam; has a place of business where the carriage contract was concluded; or Vietnam was the destination of the cargo.

For passenger bodily injury or death claims arising out of international carriage, the Vietnamese court has jurisdiction when the passenger has his or her main residence in Vietnam at the time of the accident and the air carrier uses its own aircraft or another aircraft pursuant to a contract or the carrier’s head office is in Vietnam or uses another carrier’s Vietnam head office, with which it has a joint contract. For damage claims arising out of domestic carriage, the plaintiff can only initiate a lawsuit at a Vietnamese court after making a complaint with the airline.

Parties can also agree to arbitration for claims involving cargo or baggage losses in limited circumstances. The law is silent on bodily injury claims, but it is unlikely that a Vietnamese court would accept an arbitral award for such claims. Arbitration is allowed only in disputes arising from international carriage for cargo and when related to the carrier’s liability. Also, the arbitration must be held in Vietnam.

Conclusion

As Vietnam’s economy grows, the number of airline passengers will also increase. There are now 49 foreign and 4 local airlines operating in Vietnam. While this is good news for air carriers, it also means greater risk of liability. The Aviation Law gives predictability to air carriers and their insurers, as well as protection to passengers. This helps air travel in this fast-growing emerging market.

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