Liability for compensation for damages outside of contracts involving foreign elements in Vietnam

Compensation for damages outside of contracts is a civil liability for the compensation relationship in which, before the damage occurs, the parties causing the damage and the damaged party do not have any agreement or contract. Unlike the liability for compensation for damages in contracts, the issue of compensation for damages outside of contracts is resolved on the basis of the actual damage that has occurred.
Liability for compensation for damages outside of contracts involving foreign elements is understood as: Compensation for damages outside of contracts is a civil liability for the compensation relationship in which, before the damage occurs, the parties causing the damage and the damaged party do not have any agreement or contract. Unlike the liability for compensation for damages in contracts, the issue of compensation for damages outside of contracts is resolved on the basis of the actual damage that has occurred.
Liability for compensation for damages outside of a contract involving foreign elements is understood as: the parties including the party causing the damage and the party suffering the damage have different nationalities or different places of residence (for individuals) or are headquartered in different countries (for legal entities); or the act causing the damage or the actual consequences of the act causing the damage occur abroad.
According to Vietnamese law, the issue of resolving conflicts of law on compensation for damages outside of a contract is stipulated in Article 773 of the 2005 Civil Code, Decree No. 138-CP dated December 15, 2005 of the Government and other relevant legal documents. Article 773 of the Civil Code stipulates as follows:
“1. Compensation for damages outside of a contract is determined according to the law of the country where the act causing the damage occurs or where the actual consequences of the act causing the damage arise.
Compensation for damage caused by aircraft or ships in international airspace or at sea shall be determined in accordance with the law of the country of which the aircraft or ship bears the nationality, unless otherwise provided by the law on civil aviation and the law on maritime of the Socialist Republic of Vietnam.
In the case where the act of causing damage occurs outside the territory of the Socialist Republic of Vietnam and the person causing the damage and the person suffering the damage are both Vietnamese citizens or legal entities, the law of the Socialist Republic of Vietnam shall apply”.
Thus, Vietnamese law stipulates the application of the law of the country where the illegal act occurred (Lex loci delicti commisi). This application demonstrates objectivity and fairness for each party because the party causing the damage and the party suffering the damage do not always have the same nationality or place of residence. Furthermore, this also creates favorable and easy conditions for the competent Court to investigate, collect evidence, verify actual damages, and thus the interests of the injured party are more closely guaranteed. Regarding the concept of the place where the violation of the law occurs, Vietnamese law stipulates that it can be the place where the act causing damage occurs or the place where the actual consequences of the act causing damage arise. However, there is a limitation that the legislator only generally stipulates that "determine according to the law of the country where the act causing damage occurs or where the actual consequences of the act causing damage arise" without providing the order of priority for applying the law. Therefore, this is an issue that needs clearer guidance to avoid the competent authorities applying the law arbitrarily and inconsistently.