You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 25, 2015

Air Carrier Liability in Vietnam

Subscribe to Updates

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.

Related Professionals

Industries

Aviation

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

August 28, 2024
Attorneys from the aviation team in Tilleke & Gibbins’ Bangkok office have contributed the Thailand chapter for Aviation Finance & Leasing 2024 from Chambers and Partners. The guide covers the key legal issues affecting aircraft lessors, lessees, and financiers in 37 jurisdictions worldwide. In addition to the Thailand chapter, Tilleke & Gibbins also provided the Vietnam chapter to Aviation Finance & Leasing 2024. The Thailand chapter provides in-depth details on the country’s legal regime affecting all aspects of aircraft sale and purchase, aircraft and engine leasing, and aircraft debt finance, including sale and lease agreement terms; taxation; lease registration and enforcement; lease assignment/novation; insurance and reinsurance; debt structuring; securities; liens; and many other matters that have implications for day-to-day operations in the aviation industry. Chambers and Partners’ Global Practice Guides provide in-house counsel with expert legal commentary focusing on practical legal issues affecting business, enabling readers to compare legislation and relevant procedures across a range of key jurisdictions. The Thailand chapter of Aviation Finance & Leasing 2024 is available as a PDF through the button below, courtesy of Chambers and Partners. The full guide is accessible for free on the Chambers and Partners website.
Read More
April 2, 2024
Aircraft lease agreements are commonly governed by the law of England and Wales, New York, or another common-law jurisdiction. This article examines the challenges of applying these and other foreign laws to an aircraft lease dispute in Thailand. The applicability of foreign law in Thailand is subject to the Conflict of Laws Act B.E. 2481 (1938). Section 8 of the Conflict of Laws Act states, “Whenever the law of a foreign country which is to govern is not proved to the satisfaction of the court, the internal law of Thailand shall apply.” According to this section, the burden of proof is on the party that claims the foreign law. The claiming party must prove to the court the existence of the foreign law and how the law applies. However, in aircraft lease disputes, especially those that involve seizing or repossessing aircraft, generally only Thai law will apply. Seizing or repossessing an aircraft involves Thai government authorities such as the Civil Aviation Authority of Thailand (CAAT) and the Airports of Thailand (AOT), among others, and these authorities will only comply with Thai law. Moreover, foreign court judgments are not enforceable in Thailand. This means that any action to seize or repossess an aircraft in Thailand must be initiated in Thailand and using Thai law. Foreign court judgments, however, can be used as evidence and may be helpful in convincing the CAAT or court that the lessor is entitled to repossess an aircraft, and in proving damages. The Thai laws relevant in a hostile repossession or seizure action include the Air Navigation Act, the Civil and Commercial Code (CCC), and the Civil Proceedings Code (CPC). The CCC provides guidelines on contract termination and the rights of parties in lease agreements. Specifically, it outlines the conditions under which a lessor can terminate
Read More
December 15, 2023
As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2023. This guide outlines the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Country Guides series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource for planning international business strategy and researching new markets. The full Guide to Doing Business in Thailand is available through the button below.
Read More
October 25, 2023
Sale and leaseback structures and pledges of an aircraft are primary tools in Thailand for lenders to secure aircraft financing. However, these prevalent approaches come with certain limitations. Sale and leaseback structures usually require lots of documentation, while the use of pledges requires delivery of the pledged property to the pledgee and the pledged property must always remain in the possession of the pledgee or a third-party custodian as agreed to by the parties, because the pledge will be legally discharged if the pledged property is returned into the possession of the pledgor. Since 2015, there has been another alternative for securing aircraft financing in Thailand. This came with the introduction of the Business Security Act B.E. 2558 (“BSA”). The BSA allows creation of a security interest over movable property (including aircraft) as collateral to secure debt repayment or other obligations without having to deliver the property to the secured party. Therefore, it is now possible for a security interest to be created over an aircraft on a non-possessory basis. To realize this type of security interest, the BSA requires that a business security agreement be made in writing and registered with the Business Security Registration Office. Unless the parties agree otherwise, the security providers still retain the right to transfer or dispose of the secured property. However, the BSA prohibits the security providers from transferring or selling the secured property when there is a cause for enforcement of the secured property and the security receivers have notified the security providers about this cause in writing. According to the BSA, entities that are eligible to be a security holder and take business security as a secured creditor include financial institutions and other persons prescribed in ministerial regulations issued by the Ministry of Commerce or the Ministry of Finance. However,
Read More