Private International Law in Vietnam: On General Issues, Contracts and Torts in Light of ... European Developments 9783161541865, 9783161541858, 3161541863

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Studien zum ausländischen und internationalen Privatrecht 352 Herausgegeben vom

Max-Planck-Institut für ausländisches und internationales Privatrecht Direktoren:

Jürgen Basedow, Holger Fleischer und Reinhard Zimmermann

Thi Hong Trinh Nguyen

Private International Law in Vietnam On General Issues, Contracts and Torts in Light of European Developments

Mohr Siebeck

Thi Hong Trinh Nguyen, born 1983; 2005 Bachelor of Law at Hue College of Sciences (Vietnam); 2010 Master’s in Law with International Law Specialization at Hanoi Law School (Vietnam); 2011–2015 doctoral candidate in Law at Hamburg University; presently lecturer in Private International Law, Hue University School of Law.

The production of this book were generously funded by the Max Planck Institute for Comparative and International Private Law and the Johanna und Fritz Buch Gedächtnisstiftung. e-ISBN PDF 978-3-16-154186-5 ISBN 978-3-16-154185-8 ISSN 0720-1141 (Studien zum ausländischen und internationalen Privatrecht) Die Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliographie; detailed bibliographic data are available on the Internet at http://dnb.dnb.de. © 2016  by Mohr Siebeck Tübingen, Germany. www.mohr.de This book may not be reproduced, in whole or in part, in any form (beyond that permitted by copyright law) without the publisher’s written permission. This applies particularly to reproductions, translations, microfilms and storage and processing in electronic s­ ystems. The book was printed by Gulde Druck in Tübingen on non-aging paper and bound by Buchbinderei Nädele in Nehren. Printed in Germany.

Acknowledgements I would like to express my special thanks to my supervisor, Prof. Dr. Dr. h.c. mult. Jürgen Basedow, for his patient guidance and enthusiastic encouragement. I have particularly appreciated his willingness to give his time so generously to support me, from the planning to the development and accomplishment of this work. I am deeply thankful for his understanding and encouragement when I had a baby in the fourth year of the study. Without my priceless mentor, I would never have finished my dissertation. I would also like to thank his secretary, Ms. Schmitz-Krause, for her kind help. I wish to thank the staff of the Max Planck Institute for Comparative and International Private Law (Hamburg) for their valuable assistance during the approximately three and a half years in which I made use of the extensive library. I am very thankful to the Vietnamese International Education Development (VIED) – Ministry of Education and Training of Vietnam – for the funding granted for my Ph.D. Program in Hamburg, Germany. I wish to acknowledge the forward-looking support of the Dean and my many colleagues at the Hue School of Law, Hue University, Vietnam, and also my dear friends in Hamburg and in Vietnam for their support and encouragement throughout my Ph.D. journey. I am also incredibly grateful to my family: my mother, my father, my brothers and sisters, my mother-in-law, and my husband’s family. My deepest thanks are given to my husband, who has travelled countless times up and down from Hamburg to Göttingen, for his help and care not only for our little daughter but for me as well. I would like to thank the Max Planck Institute for Comparative and International Private Law and the Johanna und Fritz Buch Gedächtnis-Stiftung, Hamburg, for their publication cost grants. I also would like to thank the editorial services team of the Max Planck Institute for the kind help in the preparation of the publication of this book. Hamburg, July 2015

Trinh Nguyen

Table of Contents Acknowledgements ............................................................................................ V List of Abbreviations...................................................................................... XIII

Introduction ..................................................................................................... 1 Part 1 – General Principles of Vietnamese Private International Law.......................................................................... 5 I. II.

Historical Development ............................................................................... 5 Definition, Scope and Position of Private International Law in Vietnam...................................................................... 6

1.

Definition .................................................................................................... 6 a) Divergences ........................................................................................... 6 b) Subject defined ...................................................................................... 8 Scope ........................................................................................................... 8 Position ........................................................................................................ 9

2. 3.

III. Sources ...................................................................................................... 12 1. 2. 3. 4.

International treaties .................................................................................. 12 Domestic legislation .................................................................................. 16 Custom ...................................................................................................... 18 Judicial practice ......................................................................................... 19

IV. Characterisation........................................................................................ 21 1. 2. 3.

A factual situation or a legal rule is characterised ..................................... 22 Characterisation by lex fori or lex causae ................................................. 22 Codified rules on characterisation and tentative characterisation of certain legal institutions............................................................................. 26

VIII

Table of Contents

V.

The Incidental Question ............................................................................ 27

1. 2.

Vietnamese practice .................................................................................. 27 Theoretical basis ........................................................................................ 30

VI. Connecting Factor for Personal Status ..................................................... 32 1.

2.

Nationality ................................................................................................. 32 a) Historical development of nationality as a connecting factor .............. 32 b) Scope of utilisation of nationality in Vietnamese legislation............... 34 c) Dual nationality ................................................................................... 35 (1) Vietnamese policies regarding dual nationality ............................. 35 (2) Dual nationality in jurisdiction and applicable law ........................ 36 d) Stateless person.................................................................................... 39 e) Nationals of countries with a composite system of private law ........... 40 Permanent residence, domicile, and habitual residence ............................ 40 a) Residence in role of connecting factor................................................. 41 b) Residence in jurisdictional rules .......................................................... 43 c) In recognition and enforcement issues ................................................. 44 d) Some suggestions ................................................................................ 45 e) Illegal resident ..................................................................................... 46 (1) Illegal Vietnamese residents abroad............................................... 46 (2) Illegal foreign residents in Vietnam ............................................... 47

VII. The Application of Foreign Law ............................................................... 48 1. 2. 3. 4. 5. 6.

The duty of ascertaining foreign law in Vietnam ...................................... 49 Means used to ascertain the content of foreign law................................... 51 Interpretation of foreign law...................................................................... 53 In the event that foreign law cannot be ascertained – the application of the lex fori .......................................................................... 53 Cassation and review of the application of foreign law ............................ 54 Some solutions .......................................................................................... 55

VIII. Renvoi........................................................................................................ 56 1. 2. 3.

Statutory bases........................................................................................... 56 Renvoi in contract ...................................................................................... 57 Future of renvoi in Vietnam ...................................................................... 58

IX. Public Policy ............................................................................................. 60 1. 2.

Codification of public policy in Vietnam .................................................. 60 Form of public policy in Vietnam and the distinction between public policy and mandatory rules ............................................................ 61

Table of Contents

3.

IX

4. 5. 6. 7.

Relative character of public policy ............................................................ 63 a) The need to consider the actual circumstances of the case .................. 63 b) Connection between the dispute and forum jurisdiction ...................... 63 Standard of public policy .......................................................................... 63 Effect of public policy ............................................................................... 66 In recognition and enforcement of foreign judgments .............................. 67 Some reflections on Vietnamese public policy ......................................... 68

X.

Concluding Remarks ................................................................................. 69

Part 2 – Contracts ........................................................................................ 73 I. Overview ................................................................................................... 73 II. Scope of the Law Governing the Contract................................................. 74 III. Party Autonomy ......................................................................................... 79 1. 2. 3. 4. 5.

6.

Modality and form of choice ..................................................................... 82 a) Dispute-resolution clause ..................................................................... 83 b) Other indicators of a tacit choice of law .............................................. 86 Multiple choice of law for a single contract .............................................. 89 Variation of the chosen law ....................................................................... 91 Validity of the choice of law ..................................................................... 94 Choice of non-state law ............................................................................. 97 a) Concept of non-state law ..................................................................... 97 b) Vietnamese legislation on non-state law as the applicable law ........... 98 c) International treaties in Vietnamese choice of law rules ..................... 99 d) International commercial practices as the chosen law ....................... 102 e) Choice of other sorts of non-state law ............................................... 103 f) Proposing a position on choice of non-state law for Vietnam ........... 104 Limitations on the power to choose the applicable law ........................... 106 a) Connection to the law chosen ............................................................ 107 b) Domestic contracts............................................................................. 109 (1) The foreign elements of the contract ............................................ 110 (2) The technique of limiting the choice of law as regards domestic contracts ........................................................................ 113 (3) The unilateral character of the limitation under Vietnamese law ............................................................................ 114 c) Other contracts where the choice of law is restricted ........................ 115 (1) Foreign investment in Vietnam .................................................... 115 (2) Contracts entered into and performed entirely in Vietnam .......... 115 (3) Contract relating to immovables in Vietnam ............................... 116 d) Contract where one party is presumed to be weaker.......................... 116

X

Table of Contents

IV. The Proper Law in the Absence of an Effective Choice of Law by the Parties ............................................................................................... 118 1. 2. 3.

The use of the law of the place of performance in Vietnam .................... 118 Difficulties in ascertaining the place of performance .............................. 118 Development orientation for Vietnam regarding the law applicable to contracts in the absence of a choice of law ........................ 123 a) Adopting the principle of closest connection..................................... 123 b) Adopting the characteristic performance test..................................... 128 (1) Identifying the characteristic performance ................................... 128 (2) Geographical location of the characteristic performance ............. 129 (3) Limitation of doctrine of characteristic performance for the circumstances of Vietnam ...................................................... 131 (4) Suggestion for Vietnam ............................................................... 132 c) Whether or not to have fixed rules? ................................................... 133 d) How to cope with contracts not falling into the list of fixed rules ................................................................................................... 134 e) The order and co-ordination of the closest connection principle, the characteristic performance test, and fixed rules ........... 136 f) Escape clause ..................................................................................... 139 (1) The danger of misapplying the escape clause and practical worries for Vietnam ..................................................................... 139 (2) Demand for cautious application and stricter wording................. 140 (3) Appropriate approach for the displacement ................................. 141 (4) Concerns regarding the connecting contracts. .............................. 144 g) Default rule ........................................................................................ 145

V.

Concluding Remarks ............................................................................... 147

Part 3 – Tort ................................................................................................ 153 I. Introduction ............................................................................................. 153 II. Vietnamese Conflict Rules for Tort ......................................................... 155 III. Approaches to Tort Conflicts .................................................................. 158 1. 2.

3. 4.

Double actionability rule ......................................................................... 158 Lex loci delicti as a universal encounter .................................................. 160 a) Place of acting ................................................................................... 161 b) Ubiquity approach ............................................................................. 162 c) Place of damage – Approach of Rome II ........................................... 163 Place of residence of the victim............................................................... 165 Proper law approach ................................................................................ 168

Table of Contents

XI

IV. Proposal for Vietnamese Law ................................................................. 171 1. 2.

4.

Place of harm as the primary rule ............................................................ 171 The suitable connecting factor for the tort conflicts rule from the perspective of the international jurisdiction of Vietnamese courts over tort cases .......................................................................................... 172 Direct/indirect damage and locating direct damage ................................ 175 a) Differentiating between direct and indirect damage .......................... 175 b) Locating damage (direct) ................................................................... 178 (1) Personal injury and damage to property....................................... 179 (2) Economic loss .............................................................................. 181 (3) Suggestion for Vietnam ............................................................... 184 c) Maritime torts .................................................................................... 185 Damage in different countries ................................................................. 188

V.

Flexibilisation.......................................................................................... 193

1. 2.

Exceptions for specific torts .................................................................... 193 Common habitual residence .................................................................... 203 a) Vietnamese rule of common nationality ............................................ 203 b) Proposed common habitual residence rule for Vietnam .................... 205 Escape clause........................................................................................... 209 a) Accessory connection: pre-existing relationship ............................... 211 b) Suggestion for Vietnam ..................................................................... 219

3.

3.

VI. Concluding Remarks ............................................................................... 221

General Conclusion................................................................................... 227 Annex – Translation of Relevant Provisions ..................................... 229 Vietnamese Civil Code 2005........................................................................... 229 Vietnamese Civil Procedure Code 2004 ......................................................... 235 Vietnamese Law on Marriage and Family 2000 ............................................. 241 Bibliography.................................................................................................... 245 Index ............................................................................................................... 263

List of Abbreviations AC ALI All ER Art. ASEAN AWD

Law Reports; Appeal Cases, House of Lords and Privy Council American Law Institute The All England Law Reports Article Association of Southeast Asian Nations Außenwirtschaftsdienst des Betriebsberaters (Journal)

BGH Brussels I Regulation

Bundesgerichtshof (Federal Supreme Court of Germany) Council Regulation (EC) No. 44/2001 of 22 Dec. 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters

CA CESL Ch. Chinese Act 2010

CLC CLR Clunet

Court of Appeal Common European Sales Law Chancery Statute on the Application of Laws to Civil Relationships Involving Foreign Elements of the People’s Republic of China United Nations Convention on Contracts for the International Sale of Goods (1980) Commercial Law Cases Commonwealth Law Reports Journal du Droit International, founded by Clunet

DP

Dalloz périodique (Journal)

ECHR ECJ ECR ER EU EU Succession Regulation

European Convention on Human Rights Court of Justice of the European Union European Court Reports English Reports European Union Regulation (EU) No. 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession Europäische Zeitschrift für Wirtschaftsrecht (Journal) England and Wales Court of Appeal High Court of England and Wales

CISG

EuZW EWCA EWHC

XIV

List of Abbreviations

FOB

Free on Board

German Introductory Act 2011 Giuliano & Lagarde Report

German Introductory Act to the Civil Code, last amended by Law of 12 April 2011 Mario Giuliano/Paul Lagarde, Report on the Convention on the Law applicable to Contractual Obligations (O.J. C 282 of 31 Oct. 1980).

HCA

The High Court of Australia

ICC ILPr Incoterms Inter-American Convention IPRax

International Chamber of Commerce International Litigation Procedure International Commerce Terms Inter-American Convention on the law applicable to international contracts, done at Mexico on 17 March 1994 Praxis des Internationalen Privat- und Verfahrensrechts (Journal)

Japanese Act 2006

Japanese Act on the General Rules of Application of Laws, Law No. 10 of 1898 (as newly titled and amended 21 June 2006)

LG Lloyd’s Rep

Landgericht (Regional Court, Germany) Lloyd’s Law Reports

MüKo

Münchener Kommentar

NJW NIPR No.

Neue Juristische Wochenschrift (Journal) Nederlands Internationaal Privaatrecht (Journal) Number

OLG

Oberlandesgericht (Court of Appeals, Germany)

PECL PICC PIL PILA 1995

Principles of European Contract Law Unidroit Principles of International Commercial Contracts Private International Law United Kingdom Private International Law Act 1995

QB

Law Reports ; Queen’s Bench Division

Rev. crit. dr. int. dr. RG RGZ

Revue Critique de Droit International Privé (Journal) Reichgericht Amtliche Sammlung von Entscheidungen des Reichsgerichts in Zivilsachen Recht der Internationalen Wirtschaft (Journal) Rome Convention on the law applicable to contractual obligations of 19 June 1980 Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)

RIW Rome Convention 1980 Rome I Regulation

List of Abbreviations Rome II Regulation Rome III Regulation

XV

Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to noncontractual obligations (Rome II) Council Regulation (EU) No. 1259/2010 of 20 December 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation.

Swiss Private International Federal Act on Private International Law of 18 December 1987 Law Code 1987 The Hague Conference

Hague Conference on Private International Law

UCC UCP UK UN UKHL US

Uniform Commercial Code (United States of America) The Uniform Customs and Practice for Documentary Credit United Kingdom United Nations United Kingdom House of Lords United States of America

VAL 1991 VAL 2006 VCA 2010 VCC 1995 VCC 2005 VCL 1997 VCL 2005 VCPC 2004 VCPL 2010 VIAC VLA 2010 VLC 1994 VLEC 2005 VLI 2005 VLN 2008 VMFL 2000 VMC 2005 VOA 2003 VOPC 1999 VRL 2006

Vietnamese Civil Aviation Law 1991 Vietnamese Civil Aviation Law 2006 Vietnamese Law on Commercial Arbitration 2010 Vietnamese Civil Code 1995 Vietnamese Civil Code 2005 Vietnamese Commercial Law 1997 Vietnamese Commercial Law 2005 Vietnamese Civil Procedure Code 2004 Vietnamese Law on Consumer Protection 2010 Vietnamese International Arbitration Centre Vietnamese Law on Adoption 2010 Vietnamese Labour Code 1994 Vietnamese Law on Enforcement of Civil Judgments 2005 Vietnamese Law on Investment 2005 Vietnamese Law on Nationality 2008 Vietnamese Law on Marriage and Family 2000 Vietnamese Maritime Code 2005 Vietnamese Ordinance on Commercial Arbitration 2003 Ordinance on Protection of Consumer Interests 1999 Vietnamese Residence Law 2006

WAR WASC WL WLR

Western Australia Reports Supreme Court of Western Australia Westlaw The Weekly Law Reports

Introduction Introduction

Introduction

Nowadays many civil relations such as marriage, contracts, and labour are no longer limited to the borders of a country. Accordingly, the number of private international disputes has increased significantly in recent years. Vietnamese private international law, which regulates civil relations beyond the borders of Vietnam, is therefore facing a new wave of demand for improvement. Vietnamese private international law, over a sixty-year long journey, has achieved certain developments. The first significant milestone could be dated to 1995, when private international law was first codified in thirteen articles in the Vietnamese Civil Code 1995. The next step was seen in 2000, when the Marriage and Family Law 2000 provided for, in its eleventh chapter, marriage and family relations with foreign elements. The most significant development was made in 2005, when the new Civil Code 2005 increased the number of provisions regarding civil relations with foreign elements to twenty. At nearly the same time, the Civil Procedure Code 2004 reunited scattered provisions relating to international civil procedure in two chapters, namely international civil jurisdiction and the recognition and enforcement of foreign judgments. All the provisions listed above constitute the backbone of currently effective Vietnamese private international law. However, Vietnamese private international law is still young and incomplete in terms of modern codifications. While some countries (such as China, Japan, some Latin American countries and many European states) have enacted comprehensive private international law statutes, Vietnam is still quiet in the field. The provisions of Vietnamese private international law are scattered in numerous documents such as the Civil Code, Civil Procedure Code, Law on Marriage and Family, Commercial Law, and Labour Code. Unfortunately, some of the provisions are hard to understand and apply. Some even contradict others. Besides the matter of the body of the laws, in their practical application the courts often neglect the private international law perspective. In most cases the applicable law is Vietnamese law, without a reason for it being provided, and without a conflicting rule cited. Meanwhile, because of the increasing need for international legal assistance in the civil and commercial matters before the Vietnamese courts, the Vietnamese Government has made the effort to sign a considerable number of

2

Introduction

relevant treaties and agreements. Several countries with whom Vietnam wishes to sign legal assistance treaties are contracting states of certain conventions of the Hague Conference. In this context, Vietnam became the 73rd member of the Hague Conference in 2013. In respect of regional cooperation, in recent years Vietnam has played a dynamic role in ASEAN. Nevertheless, with the exception of a treaty of legal assistance in criminal matters between ASEAN members in 2004, the movement for treaties in civil matters has been slow. Vietnamese jurisprudence on private international law has not kept pace with the increasing level of international civil relationships and requires improvement and updating. There have been a limited number of dissertations and journals written about private international law, and these works mainly focus on some aspects of private international law such as marriage and family relations or some basic issues of contract. There has not been any doctoral thesis studying Vietnamese private international law under a comparitive approach in which innovations and lessons of developed countries are considered with the purpose of finding a proper way to foster Vietnamese private international law. This thesis, therefore, is an original dissertation that studies European and Vietnamese private international law under a comparative perspective. It will focus on evaluating the stage of development of Vietnamese private international law in respect of the general principles and main issues of contracts and torts. Based on that analysis and together with the knowledge of European private international law, the thesis will propose future development of Vietnamese private international law with respect to those issues. The thesis consists of three parts. Part 1 will examine the general principles of Vietnamese private international law and will cover a number of issues, from the historical development, definition, scope, position and sources of Vietnamese private international law to technical matters of incidental questions, connecting factors for personal status, the application of foreign law, renvoi, and public policy. Regarding each matter, the thesis will assess the level of theoretical acknowledgement in Vietnam, as well as the relevant practice of Vietnamese courts. A suggested approach for each matter will be made at the end of each sub-section. Part 2 will deal with contracts. It will nevertheless emphasise certain aspects, including the scope of the applicable law, party autonomy, and the law applicable in the absence of choice. It does not discuss, for example, specific contracts such as consumer contracts, insurance contracts, or individual employment contracts. This part will introduce the current private international law of Vietnam on international contracts. Having pointed out its shortcomings, the part will search for the most appropriate approaches or provisions that are suitable for the Vietnamese situation.

Introduction

3

Part 3 will present Vietnamese private international law regarding torts, together with an assessment of its level of development. Unlike part 2, part 3 will focus on the law applicable to tort relations in the absence of choice, with particular emphasis given to the search for a suitable connecting factor for the general tort conflict rule. Apart from that, the proposal for Vietnamese law also covers the flexiblisation from the lex loci damni, which includes the exceptions for specific torts, the common habitual residence rule, and the escape clause. The general conclusion will then give a summary of the suggestions for the future development of Vietnamese private international law. It is necessary to note a particular feature of the Vietnamese cases referred to in this thesis. Vietnamese cases, in particular those regarding private international law (with the exception of the cassation decisions of the Council of Judges of the Supreme People’s Court), have not, until very recently, been collected and commented on in any systematic and official way in a periodical or review such as IPRax. Some authors, through their individual contacts with the courts, gather cases and comment on them. Consequently, some of the cases cited in this thesis are collected by the present author or crossreferred from other Vietnamese authors. The coverage of cases, therefore, is not comprehensive and cannot present the overall practice of Vietnamese courts in reality, although most of the cases are indicative and significant. The promising news is that there has been, from 2012, a project focused on developing the case law of the Supreme People’s Court, which plans to uphold the use of case law and to sort and publish cases in specialised collections, accompanied with the commentary of experts. This movement is expected to facilitate research into the practice of the courts on private international law matters.

Part 1

Part 1 – General Principles of Vietnamese Private International Law Part 1 – General Principles of Vietnamese Private International Law

I. Historical Development

I. Historical Development

In comparison to other countries, private international law rules appeared in Vietnam relatively late. The first milestone was a statutory rule (Art. 33) contained in the Gia Long Code of 1812.1 The rule provided for the application of local laws to foreigners. Although the rule itself had a criminal law basis, it was extended by the courts to be applied to civil matters as well.2 The influence of Chinese law on Vietnamese law, at this stage of the history, is noticeable: the Gia Long Code of 1812 was nearly a copy of the Chinese Code of the Qing Dynasty.3 Nevertheless, there was not enough evidence to affirm this influence in the field of private international law. One reason is possibly that the Chinese system of private international law itself in this period was not developed.4 The second rule was found in the Bộ Luật Dân sự Giản yếu [Simplified Civil Code],5 published in 1883. This rule (Art. 3(3)) regulated the extraterritorial application of local laws to Vietnamese citizens resident abroad. Later, the same rule was embodied in Art. 2 of the Bộ Hoàng Việt Trung kỳ Hộ Luật [Hoàng Việt Middle Region Code], issued in 1936. It is noticeable that the French authority imposed the second and third rules during their colonisation period,6 and the content of those rules was identical to French law.7 The influence of French private international law was so extensive that it penetrated the South Vietnam Civil Code of 1972,8 when South Vietnam was under the control of the United States of America. Accordingly, Arts. 5, 6 and 7 of this Code nearly replicated the principles embodied in Art. 3 of the French Civil

Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 37. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 57. 3 Vũ Văn Mẫu 1975, pp. 252, 258, 259. 4 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 52. 5 This Code applied to Nam Kỳ [South Region] and three Cities of Hà Nội, Hải Phòng and Đà Nẵng. 6 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 57. 7 Phạm Xuân Chánh 1964, p. 25. 8 The French period of colonisation ended in 1954. 1 2

6

Part 1 – General Principles of Vietnamese Private International Law

Code. Moreover, Arts. 189 and 1910 imported Arts. 14 and 15 of the French Civil Code to grant the Vietnamese courts with far-reaching jurisdiction.11 In North Vietnam, because of the war, private international law did not develop in the period from 1945 to 1974. From 1975 (the year in which the two parts of the country were unified) until 1986, civil relations with foreign elements mainly arose out of relationships with other socialist countries. Private international law rules were mostly unified conflict, substantive, and jurisdictional rules contained in legal assistance treaties. In addition, there were some random national conflict rules, which were unilateral.12 From 1986 until present day, because of the “Open Policy”, civil relations with foreign elements have begun to blossom. A system of rules on private international law has been developed in a number of Acts. Moreover, Vietnam has strived to sign, or join, a significant number of international treaties and organisations, which has contributed to the improvement of private international law in the country.13 The influence of French private international law nowadays is no longer as significant. Vietnamese legislators have shown their independence in referring to foreign law and selecting rules that they consider appropriate for the circumstances of the country.14

II. Definition, Scope and Position of Private International Law in Vietnam II. Definition, Scope and Position of Private International Law in Vietnam

1. Definition

a) Divergences Private international law is the subject for which “dispute starts from the title page”.15 Surpassing some labels such as “inter-municipal law”, “transmunicipal law”, “private transnational law”, “law of multi-state problems”, or “law on collision of laws”, the two competing terms “private international law”

9 Art. 18 South Vietnam Civil Code 1972: “An alien, even if not residing in Vietnam, may be cited before Vietnamese courts for the performance of obligations contracted by him in Vietnam with a Vietnamese person; he may be called before the courts of Vietnam for obligations contracted by him in a foreign country towards Vietnamese persons.” 10 Art. 19 South Vietnam Civil Code 1972: “Vietnamese persons may be called before a court of Vietnam for obligations contracted by them in a foreign country, even with an alien.” 11 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 53. 12 Nguyễn Trung Tín 2005, p. 16. 13 Nguyễn Trung Tín 2005, pp. 20–23. 14 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 54. 15 Mance 2005, p. 185.

II. Definition, Scope and Position of Private International Law in Vietnam

7

and “conflict of laws” are widely used nowadays by continental and common law writers respectively. Nevertheless, most temporary writers acknowledge that “no name can command universal approval”16 or that “terminology is ephemeral”;17 therefore, they tend to be neutral. However, some strictly favour the term “private international law” and see it as descriptive and more idealistic.18 Conversely, others perceive it as “potentially misleading”19 and insist on the term “conflict of laws”.20 In fact, there is a crucial misunderstanding between the two sides. The authors that reject the term “private international law” attack the word “international”, pointing to the confusion between private international law and public international law,21 but the expression “international” just implies the nature of disputes handled by this branch of law. Meanwhile, although the opponents of “conflict of laws” claim that it is too broad,22 the term traditionally does not cover public law subjects such as criminal law.23 Therefore, “the title of the subject is of little important”.24 Admittedly, however, more countries, world conferences, and even some common law writers use the term private international law.25 Vietnam writers use both terms, but to describe different issues. The term currently in use for the university subject is “Tư pháp quốc tế”, which is correctly translated into English as private international law. The use of “private international law” results from the influence of the leading Vietnamese textbooks of Hanoi Law School, Hanoi National University, and Ho Chi Minh Law School. The term used in the South before 1975 was however different. One leading book published in Sai Gon26 before 1975 was titled “Quốc tế tư pháp”,27 meaning “international private law”, which conveyed the idea of “a supranational body of private law”.28 Vietnamese academics also mention “conflict of laws” as the part of “private international law” that designates which substantive law is applicable to legal relations with foreign elements, rather than relating to jurisdiction and Fawcett et al. 2008, p. 16. Kegel 1985, para. 1-4. 18 Scoles 2004, p. 2. 19 Morris et al. 2009, p. 4. 20 Clarkson / Hill 2011, p. 3. 21 Fawcett et al. 2008, p. 17. 22 Kegel 1985, para. 1-4. 23 Morris et al. 2009, p. 5. 24 Fawcett et al. 2008, p. 16. 25 Fawcett et al. 2008, p. 18. 26 Saigon was the former name of Ho Chi Minh City before 1975. 27 Nguyễn Huy Chiểu before 1975. 28 Juenger 2001, p. 206. Using this term, private international law seems to emphasise its universal character. 16 17

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Part 1 – General Principles of Vietnamese Private International Law

enforcement of judgments. In other words, in Vietnam “conflict of laws” is not interchangeable with “private international law”. b) Subject defined To formulate a definition of private international law, different writers have based it on different factors. Those focusing on the function of private international law define it as the branch of law that determines one of several simultaneously valid legal systems applicable to a given set of facts.29 This definition, based on the referral method, prevails in Germany.30 With the primary purpose being to identify the applicable law, procedural issues are not given sufficient attention.31 Others who emphasise the subject matter of the discipline point out that private international law is the part of the private law of a particular country that deals with cases which have foreign elements.32 England and France are two representatives, amongst others, of this approach. Nevertheless, the French perception also includes the law regulating the status of foreigners.33 The second approach is so far the most widely adopted. Vietnam also conceives private international law as an independent branch of law and jurisprudence,34 whose object for research is civil relations (in its broad sense) involving foreign elements.35 2. Scope Consequently, Vietnamese authors unanimously regard choice of law rules as the major part of private international law. International procedure in the matter of private law is touched on in all textbooks although its importance is often underestimated. The textbook of Hanoi Law School in particular includes one chapter dealing with the legal status of foreigners.36 Meanwhile, authors in the South, especially young Vietnamese scholars, restrict themselves solely to choice of law and international procedure.37 They no longer examine issues of the status of Wolff 1950, p. 5. Basedow 2012a, pp. 1339, 1340: Prof. Basedow also points out four limitations of this narrow understanding of private international law: “[I]t, a priori, excludes any attempt to deal with cross-border legal conflicts by way of harmonisation or unification of substantive law; there is a questionable neglect of procedural issues; the law of citizenship, the law of the incorporation of companies and the law of the flags to be flown by vessels are not considered as part of private international law; and it excludes substantive rules which directly regulate the rights and legal positions of foreigners”. 31 Basedow 2012a, p. 1340. 32 Morris et al. 2009, p. 2. 33 Basedow 2012a, p. 1340. 34 Lê Thị Nam Giang 2005, p. 8. 35 Hanoi Law School 2006b, p. 8. 36 Hanoi Law School 2006b, pp. 322–336. 37 Lê Thị Nam Giang 2005; Đỗ Văn Đại 2007, p. 49. 29 30

II. Definition, Scope and Position of Private International Law in Vietnam

9

foreigners in their treatises.38 They also place international procedure at the beginning of their treatises in the belief that most of the time, “if the question of jurisdiction is not satisfied, the question of choice of law does not arise.”39 The textbook of Hanoi Law School shares another similarity to those of the former Eastern European socialist countries, which is the inclusion of national substantive law for foreign trade while “the topic is usually regarded as distinct from private international law.”40 This textbook devotes section B of chapter V (on contract) to international sales contracts and the whole of chapter VI to international payments.41 This causes an overlap between private international law and international commercial law in Vietnam, creating an on-going misunderstanding of and between the two subjects. 3. Position Locating private international law in the legal system is a difficult task because its position is not as visible and identifiable as that of other sections of law. Moreover, it has both private and public characteristics.42 Writers in countries in which private international law is developed to a certain degree seldom discuss the matter,43 but most of them give emphasis to justice between individuals,44 and therefore consider that private international law is appropriate for private rather than public law.45 Meanwhile, private international law is still an undiscovered area in Vietnam; consequently, ordinary readers and academic writers have wondered about its position. Legal education treats the two disciplines (private international law and public international law) as separate subjects although the curriculum does make comparisons between them,46 often borrowing from Soviet textbooks.47 Private inSee Đỗ Văn Đại / Mai Hồng Quỳ 2010. Morris et al. 2009, p. 6; Đỗ Văn Đại / Mai Hồng Quỳ 2010. 40 Kegel 1985, para. 1-2. 41 Hanoi Law School 2006b. 42 Weeramantry 2004, p. 169. 43 Kegel 1985, para. 1-4. 44 Kegel 1985, para. 1-6. 45 Morris et al. 2009, p. 5. 46 It is different than the situation of Australia, where comparisons between the two ordinarily fall outside the curriculum. See Svantesson 2005, p. 1. 47 The comparisons are included in a Subject Guide on Private International Law of a lecturer of Hanoi Law School, delivered to Hue law students in 2006. The same comparisons are found in books authored by Boguslavskiĭ 1988 and Kalenský 1971, and they consist of two similarities and five differences. The similarities are that the common purpose of both private international law and public international law is to promote efficient cooperation between nations; and, secondly, fundamental principles of public international law play a vital role in private international law. The differences are many: i) in subject matter, ii) in the governing methodology, iii) in the researched subject of the legal disciplines involved, iv) in the sources, v) in punishments. 38 39

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ternational law textbooks do not include any public international law. A full professorship in public international law does not require expertise in private international law and vice versa.48 Some professors however teach the two subjects at the same time. Yet, this is neither required nor common. In that context, Vietnamese literature gives three opinions: i) private international law is a part of international law together with public international law; ii) private international law is national law; and iii) it is a legal discipline that lies between the two systems of national law and international law. The internationalists produce many arguments. First, they allege that private international law principles derive from those of public international law, in particular the principle of “sovereign equality” between different states.49 The second fulcrum of their opinion is the international function of private international law. Private and public international law are claimed to share the same goal, which is to foster effective cooperation between nations. Every dispute, every conflict between individuals and firms could eventually develop into conflict between states.50 The third argument of the internationalists is that treaties are an important source shared by both public and private international law. They are the main source of public international law and an increasingly significant source of private international law, especially in the age of international cooperation.51 Finally, some Vietnamese textbooks of private international law still cover the status of foreigners,52 issues of international judicial assistance and immunity of foreign sovereigns, diplomats,53 and rules on foreign trade.54 The overlapping with public international law reveals the international state of the discipline. The second view is that it belongs to the national system because national law sources prevail over international rules and principles.55 Moreover, the See de Boer 2010, p. 184. Lê Thị Nam Giang 2005, p. 27. Examples are also given: i) principle of equality in the legal perspective of different possession regimes of different states; ii) principle of not discriminating between Vietnamese nationals and foreigners nor between foreigners in the territory of Vietnam; iii) principle of respecting the immunity rights of states in private international law relationships. 50 Lê Thị Nam Giang 2005, p. 27; Nguyễn Ngọc Lâm 2004, p. 45. 51 Lê Thị Nam Giang 2005, p. 27. 52 Stevenson 1952, p. 562: “All rights accorded foreign nationals are related to public international law, for public international law establishes certain broad standards for the treatment of foreign nationals to which municipal law must conform.” 53 Stevenson 1952, p. 563: Some authors concede that public international law regulates this aspect of judicial jurisdiction. 54 In Vietnam, most private international law textbooks address issues of sale contracts in terms of foreign trade and international payment, in which there is a combination of national substantive rules, rules of international treaties, and common practice of international trade. See Hanoi Law School 2006b; Hanoi Law School 2006a. 55 Hanoi Law School 2006b, p. 16. 48 49

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presumption that there is no common private international law for all states is widely adopted.56 Accordingly, every nation has its own solutions for the problems of private international law, and national courts have the tendency to apply their own laws to cases with an international dimension.57 The third opinion is a kind of compromise, which supposes that private international law is composed of two parts: one lies in national law and the other resides in international law. These two components are inextricably linked and do not exclude each other.58 Other scholars however see this opinion as an isolated precept.59 When I conducted a survey with Vietnamese law students of their views on the matter, interestingly a large majority of them nevertheless agreed with the third approach. It is notable that most Vietnamese textbooks somehow learn blindly from Soviet legal science,60 and the overwhelming tendency is to rely on the Russian approach.61 Hence, one can find the arguments for the three opinions above in the book of Boguslavskiĭ.62 In choosing a stance in the controversy, most Vietnamese authors opt for the national view. Most textbooks and commentaries either conclude or imply that private international law is, more reasonably, a special discipline within the national law system.63 Those authors however cannot explain the increase of treaties and international custom as a source of private international law because, according to their knowledge, this is characteristic of no national legal discipline.64 In fact, the increasing significance of international agreements containing unified conflict rules is the result of the efforts of many international conferences or organisations (e.g., the Hague Conference) in promoting “the harmony of decisions as the ultimate goal of private international law”.65 The placement of the subject in law faculties throughout Vietnam is interesting. Among the eight long-established faculties,66 in seven of them private Lê Thị Nam Giang 2005, p. 28. Lê Thị Nam Giang 2005, p. 28. 58 Đoàn Năng 2001, p. 51. 59 Nguyễn Ngọc Lâm 2004, p. 46. 60 Lê Thị Nam Giang 2006. 61 Nguyễn Ngọc Lâm 2004, p. 45. 62 Boguslavskiĭ 1988, p. 15. 63 Lê Thị Nam Giang 2005, p. 25; Hanoi Law School 2006b; Đỗ Văn Đại / Mai Hồng Quỳ 2010; Nguyễn Ngọc Lâm 2004, p. 49; Nguyễn Trung Tín 1996, p. 24. 64 Lê Thị Nam Giang 2005, p. 30. 65 Basedow 2012a, p. 1342; the linkage between public and private international law has been addressed by many foreign authors; for example, see Mills 2009, p. 211. Meanwhile, it is still not covered in Vietnamese legal scholarship. 66 The eight faculties, in chronological order beginning with the oldest: Hanoi Law School, Faculty of Law (belonging to Hanoi National University), Ho Chi Minh Law 56 57

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international law lies beside public international law to form the “International Law” departments.67 Hue Law Faculty, on the other hand, has recently moved private international law from the international law section to the civil law section, which is a very individual turn to the nationalist approach.

III. Sources III. Sources

While common law private international law textbooks and treaties68 exclude a section dealing with sources of the subject, a German one69 contains a brief description. Boguslavskiĭ’s book on the Soviet approach to private international law,70 on the other hand, devotes a larger number of pages to the issue. Most significantly, the great treaty of Rabel71 and the International Encyclopedia of Comparative Law72 attempt to give a comprehensive overview of the sources, as well as a comparative analysis of different legal traditions and countries in the world. In Vietnam “sources” is an important section in the introductory part of every textbook. While professors of universities in the North73 generally rely on Russian legal jurisprudence, the leading author in the South,74 who holds a French qualification, approaches the issue differently by concentrating more on practical analysis. They nevertheless agree on four basic sources of private international law: domestic legislation, international treaties, custom and case law. 1. International treaties International treaties of which Vietnam is a member, by way of ratification or accession, prevail over national legislation where there are differences between School, Hue Law School, Can Tho Law Faculty, Da Nang Law Faculty, Vinh Law Faculty and Da Lat Law Faculty. 67 This placement does not deviate from the common practice of the developing world. Take the Netherlands as an example: in the 1990s it was decided that public and private international law, together with even European law and the law of international organisations, would merge into one “Department of International Law”. Strikingly, a new course with the combination of various types of international relationships in a conception of “International Law” was indeed launched. The abandonment of the course afterwards due to the need for a new curriculum and the consolidation with Department of Private law has been a concern expressed in de Boer 2010, p. 185, referring to the “bumpy” relationship between public and private international law. 68 Clarkson / Hill 2011, Dicey et al. 2012, Fawcett et al. 2008, Morris et al. 2009, Scoles 2004. 69 Kropholler 2006, pp. 3–6. 70 Boguslavskiĭ 1988, pp. 23–44. 71 Rabel 1958. 72 Drobnig / Makarov 2008. 73 Hanoi Law School 2006b. 74 Đỗ Văn Đại / Mai Hồng Quỳ 2010.

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the two sources. This principle is enshrined in Art. 759(2) Vietnamese Civil Code (VCC) 2005 and Art. 2(3) Vietnamese Civil Procedure Code (VCPC) 2004. Vietnam has signed an increasing number of treaties that contain rules on private international law. From 1980 to 2013 Vietnam signed 19 treaties and agreements on legal assistance in civil and commercial matters. The scope of the application of these treaties changes over time. The treaties in the earlier period which were signed with the former socialist countries were more comprehensive. They cover aspects of legal assistance and procedure, international jurisdiction, choice of law, and the recognition and enforcement of judgments. Their contents are generally similar to each other as they are tailored on the model of bilateral treaties between Russia and other former socialist countries.75 These treaties were concluded with: the German Democratic Republic (15 Feb. 1988, expired); The Union of Soviet Socialist Republics (10 Dec. 1981, succeeded by Russia until 2012); Czechoslovakia (12 Oct. 1982, succeeded by the Czech Republic and Slovakia); Cuba (30 Nov. 1984); Hungary (18 Jan. 1985); Bulgaria (3 Oct. 1986); the Republic of Poland (22 Mar. 1993); Lao People’s Democratic Republic (6 July 1998); the Russian Federation (25 Aug. 1998 in force 2012); Ukraine (16 Apr. 2000); the Mongolian People’s Republic (17 Apr. 2000); Belarus (14 Sept. 2000); and People’s Democratic Republic of Korea (4 May 2002).76 In more recent years, the treaties concluded with China (19 Oct. 1998), France (24 Feb. 1999), Taiwan (12 Apr. 2010), Algeria (28 Feb. 2012, in force 24 June 2013), and Kazakhstan (signed 31 Oct. 2011, not yet in force) have a narrower scope of application. They deal solely with the cooperation of judiBoguslavskiĭ 1988, p. 25: “The purpose of all these treaties is to secure the mutual recognition and observance of property and personal rights of nationals of one state upon the territory of another. The treaties proceed strictly from the principles of equality and respect for sovereignty of each country. There are regulated within them questions of cooperation between the agencies of justice, legal defence, the jurisdiction of the courts and application of the law, the procedural rights of foreigners, the execution of letters rogatory as to legal assistance, the recognition and enforcement of judgments in civil and family matters, questions of recognition and transmission of documents, as well as the extradition of criminals, and other questions of assistance in criminal matters. In this fashion, there operates a system of treaties as to legal assistance in which a whole complex of questions is decided which touch upon cooperation of the agencies of justice and the protection of rights of nationals.” 76 Source: Báo cáo đánh giá tình hình ký kết Hiệp định tương trợ tư pháp trong lĩnh vực dân sự giữa Việt Nam và các nước và sự cần thiết gia nhập Hội nghị La hay về tư pháp quốc tế [Report (2011) of Vietnamese Ministry of Justice evaluating i) the signing of mutual judicial assistance agreements between Vietnam and other countries in civil fields and ii) the need to join the Hague Conference on Private International Law], available online at the website of the Vietnamese Ministry of Justice: , visited 7 July 2015 (hereafter “Report (2011)”. 75

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cial agencies and the recognition and enforcement of judgments without regulating the questions of choice of law and jurisdiction.77 The effort of the Vietnamese Government in recent times is a response to the Vietnamese courts’ increasing need for international legal assistance. According to the Report of the Ministry of Justice78, as recently as 2011, it has handled 3,000 letters rogatory, among which 80% are outgoing requests from Vietnamese courts, mostly to countries with which Vietnam has not signed any treaties on legal assistance in civil and commercial matters, such as the USA, Australia, Canada, Germany, Korea, and Taiwan. The rest are incoming requests, mainly from Poland, the Czech Republic, France and Korea. The process of judicial assistance with countries with which Vietnam has not signed treaties has been slow, and normally no results are received.79 It has been noticed in Vietnam that several countries with whom Vietnam has not signed, and does not want to sign, legal assistance treaties are contracting states of certain conventions of the Hague Conference and that they have not signed bilateral treaties regarding those matters with other countries either.80 Apart from legal assistance treaties, Vietnam has signed a great number of bilateral commercial and maritime treaties, treaties on encouragement and protection of investment, treaties on anti-double taxation, and treaties on exemption of visa entry, etc.81

Source: List of legal assistance treaties between Vietnam and other countries, as of 8/2012. The list is available on the website of the Consular Department – Vietnam Ministry of Foreign Affairs , visited 7 July 2015: Apart from those treaties of legal assistance in civil and commercial matters, there are a number of legal assistance treaties in criminal matters signed between Vietnam and the United Kingdom of Great Britain and Northern Ireland, South Korea, India, Thailand, and Australia. 78 Report (2011). 79 For more details, see Report (2011), p. 8. 80 Report (2011), p. 14. 81 Among them: 90 bilateral commercial and maritime treaties (as of 2010), according to one popular Vietnamese e-newspaper , visited 7 July 2015. 23 treaties on the encouragement and protection of investment (as of 2007), see the list on the website of the Ministry of Planning and Investment – Foreign Investment Department: , visited 7 July 2015. 64 treaties on anti-double taxation (as of 2013), see the list of treaties on the Website of the General Department of Taxation – Vietnamese Ministry of Finance: , visited 7 July 2015. 75 treaties and agreements on exemption of visa entry (as of 2013, 73 in force), see the list of treaties and agreements on the website of the Consular Department – Vietnam Ministry of Foreign Affairs: , visited 7 July 2015. 18 consular treaties (as of 2009), see the list of treaties and agreements on the website of the Consular Department – Vietnam Ministry of Foreign Affairs: , visited 7 July 2015. 77

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Regarding regional cooperation, in recent years, Vietnam has played a dynamic role in ASEAN by actively hosting or taking part in forums and conferences and raising suggestions and initiatives to enhance the effectiveness of cooperation of legal assistance in civil and commercial matters, especially with other ASEAN members. However, besides the treaty of legal assistance in criminal matters between ASEAN members in 2004,82 which is the first treaty of legal assistance in ASEAN, there has yet not been much movement in respect of treaties in civil matters. Consequently, cooperation in legal assistance regarding civil and commercial matters between ASEAN members still takes place under the principle of reciprocity.83 It might seem that the future of ASEAN lies in the model of the European Union (EU). However, it might be a long way for ASEAN to come to that level of development in the field of private international law because the modes of cooperation of ASEAN and the EU are different in many respects. In the EU, there has been a change from the conventional method of international conventions to European legislation.84 While EU legal instruments are binding, most of ASEAN agreements or “Action Plans” are politicallybased,85 and function as “soft-law”, which means they are non-legal and bear “public characteristics”.86 Moreover, EU policies are carried out through supranational authorities,87 a mechanism absent in ASEAN. Although a comparison between EU and ASEAN in this case is somehow not feasible, there is room and prospects for future ASEAN judicial cooperation. With regard to the Hague Conference, Vietnam has just become the 73rd member, effective as of 10 Apr. 2013; the application was filed on 29 Aug. 2012.88 On 16 Aug. 2013, the Vietnamese Prime Minister issued Decision No. 1440/QĐ-TTg regarding the plan to implement Vietnam’s rights and obligations under the Hague Conference on Private International Law.89

82 See the website of the Consular Department – Vietnam Ministry of Foreign Affairs: , visited 7 July 2015: The treaty was signed in 2004 and is in force between member states who have ratified it: Malaysia, Singapore, Vietnam, Brunei, Laos and Indonesia. 83 Report (2011), p. 7. 84 See Basedow 2000a, pp. 687–690, for the inconveniences associated with the conventional unification of private international law. See also Drobnig / Makarov 2008, para. 2-2, for the major deficiencies of the traditional method where conventions are concluded by member states. 85 Which is different from the rule-based EU model. 86 Hardjowahono 2005, p. 154. 87 Hardjowahono 2005, p. 149. 88 Information on the website , visited 7 July 2015. 89 See the website of the Vietnamese Ministry of Justice: , visited 7 July 2015.

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Among the numerous Hague conventions, Vietnam ratified (in 2011) the 1993 Hague Adoption Convention, 18 years after Vietnam first signed it.90 This is the very first Hague convention that Vietnam has both signed and ratified, which might pave the way for the ratification of more conventions in the future. It is also notable that in order to ratify this convention, a significant amendment of the law on inter-country adoption had to be implemented in Vietnam. Starting with a few provisions in the Vietnamese Law on Marriage and Family (VMFL) 200091 and decrees detailing the implementation of these provisions, there is now a separate law on adoption issued in 2010 (Vietnamese Law on Adoption (VLA) 2010).92 Vietnam is also a contracting state of one convention of the United Nations (UN): the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This convention has been transformed (if not copied) into the Ordinance on recognition and enforcement in Vietnam of foreign arbitral judgments93 and afterwards incorporated into a chapter of the VCPC 2004.94 2. Domestic legislation In Vietnam it is well established that national law is the major source of private international law. The major provisions on private international law are contained in three acts. First, the Vietnamese Civil Procedure Code 2004 (VCPC 2004) contains Part VI, regulating the recognition and enforcement in Vietnam of judgments, decisions of foreign courts and decisions of foreign arbitrators. The VCPC 2004 also contains Part IX, which regulates civil procedure as to civil disputes with foreign elements and judicial assistance in civil procedure. Secondly, the Vietnamese Civil Code 2005 (VCC 2005) contains 20 general provisions on the applicable law while the previous Vietnamese Civil Code 1995 (VCC 1995) contains only 13 provisions. The latter lacks many important conflict rules such as rules on succession, civil contracts entered in absentia, determination of person as missing or dead, and the statute of limitations for lawsuits. In the VCC 2005, these rules are added, and a number of other rules are amended and supplemented. This set of rules is however very general and out-dated. In particular, Art. 760 contains rules on the determina90 See the Website of the Vietnamese Embassy in the Netherlands: , visited 7 July 2015. 91 Law No. 22/2000/QH10 of 9 June 2000 on Marriage and Family. 92 Law No. 52/2010/QH12 on Adoption. Apart from that, on 7 Sept. 2012 the Prime Minister signed Decision No. 1233/QĐ-TTg approving the project implementing Hague Convention No. 33 on the protection of children and cooperation in the field of international adoption in the period from 2012–2015. See the website of the Vietnamese Ministry of Justice: , visited 7 July 2015. 93 The Ordinance was issued on 14 Sept. 1995. 94 Chapter XXIX.

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tion of nationality as the connecting factor with regard to stateless persons and foreigners with two or more foreign nationalities. In the matter of capacity and civil status, Arts. 761 and 762 deal with foreigners’ “legal capacity to hold rights and obligations” and “capacity to act”. Further, Arts. 763 and 765 deal with “the determination of persons as having no, having lost or having been restricted in capacity to act” and “legal capacity to act of foreign corporate bodies” respectively. Property ownership rights are covered by Art. 766. For succession, there are two articles (Arts. 767 and 768) that refer respectively to “at-law inheritance involving foreign elements” and “testamentary inheritance”. The largest number of provisions is devoted to contract, with three articles: Art. 769 on civil contracts, Art. 770 on forms of civil contracts and Art. 761 on civil contracts entered in absentia. Art. 772 deals with “unilateral civil transactions”. The issue of “extra-contractual liability” is referred to in Art. 773. This part of the VCC 2005 also contains three provisions on “copyright” (Art. 774), “industrial property rights and the rights to plant varieties” (Art. 775), and “technology transfer” (Art. 776). The final provision of the Part (and the Code) is Art. 777, which is a conflict rule on “statute of limitations for lawsuits”. The third major act which contains rules of private international law is the Vietnamese Law on Marriage and Family 2000 (VMFL 2000). It has a Chapter XI with 7 articles regulating marriage and family relations involving foreign elements. These provisions refer to a range of issues such as marriage (Art. 103), divorce (Art. 104), adoption (Art. 105), and guardianship (Art. 106). Apart from these coherent and unified sets of rules, the rest of the legislation on private international law is spread over many codes and other legal instruments, such as the Vietnamese Commercial Law 2005 (VCL 2005), the Law on Nationality 2010, the Law on Investment 2005, the Maritime Code 2005 (VMC 2005), the Labour Code 1994 (supplemented in 2002, 2006, 2007, 2013), the Civil Aviation Act 2006, the Act on Enforcement of Civil Judgments 2005, the Residence Act 2006, and the Law on Adoption 2010 (VLA 2010). There are several Ordinances95 with lesser legal effects, and a great number of bylaws such as Decrees,96 Decisions97 Resolutions, and Circulars of the Supreme People’s Court interpreting and guiding the application of relevant laws. Despite the fragmentation, there has been no clear agenda for a comprehensive piece of legislation that unifies and modernises those scattered rules. 95 For example, Ordinance on residence and movement of foreigners in Vietnam 1992 (out of force). 96 For example, Decree No. 138/ND-CP dated 15 Nov. 2006 detailing the implementation of the Civil Code’s provisions on civil relations involving foreign elements (in force). 97 For example, Decision No. 122/CP dated 25 Apr. 1977 on policies for foreigners residing, working and living in Vietnam (out of force).

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3. Custom International custom is acknowledged as a source of Vietnamese private international law.98 Resolution No. 04/2005/NQ-HĐTP dated 17 Sept. 2005 of the Council of Judges of the Supreme People’s Court provides the definition of international commercial custom: it is the common practice that has been repeatedly applied in international commerce and recognised by relevant international organisations.99 International custom governs civil relations with foreign elements in two situations. The first case is where the parties choose for it to do so. According to, inter alia, Art. 769(1) VCC 2005, Art. 5(2) VCL 2005, and Art. 4(2) VMC 2005, parties can choose international custom to govern their contracts as long as it is not contrary to the basic principles of Vietnamese law. Secondly, according to Art. 759(4) VCC 2005, international custom can be applied in the absence of choice to fill gaps in Vietnamese laws. In other words, the application of international custom in the absence of the parties’ choice is not unconditional but subject to two criteria. First, the VCC and other legal documents of Vietnam must be clear on the matter. Second, the application, or the consequences of it, must not be contrary to the basic principles of the law of Vietnam.100 In practice, the Vietnamese courts frequently apply international custom in the absence of the parties’ choice and without explaining whether the two criteria, especially the first one, have been satisfied or not. In a typical case, a Vietnamese court applied the Uniform Customs and Practice for Documentary Credit (UCP) 500 to solve a dispute on a letter of credit (LC) involving foreign elements although there was no sign of a choice by parties.101 The Ho Chi Minh People Provincial Court also applied UCP 500 in another case regarding a contract between a Vietnamese and a Korean company.102 Vietnamese academic literature regularly refers to the Incoterms rules, another international custom. Some authors also consider the Unidroit Principles as constituting international custom. Others, on the contrary, hold that the Unidroit Principles, as well as the Principles of European Contract Law (PECL) are not necessarily international custom because they have been drafted by non-governmental organisations and therefore do not gain ground from common practice and have not repeatedly been applied.103 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 41. Art. 2.7(d). 100 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 43. 101 Judgment No. 02/2005/KT-ST dated 22 Aug. 2005, First Instance People’s Court of Khanh Hoa Province. 102 Judgment No. 39/1998/KT-ST dated 10 Sept. 1998, First Instance People’s Court of Ho Chi Minh City. 103 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 51. 98 99

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4. Judicial practice Before 2012 the use of case law was not recognised in Vietnam.104 Case law is in general not a source of law.105 However, there exists “de facto case law”.106 While no direct reference to judgments of national courts of different levels is permitted, the Supreme Court has developed rules of guidance issued in its Resolutions, Circulars and Annual Reports of judicial practice.107 These documents provide guidance for the courts of lower levels when dealing with certain cases. 108 Since Vietnamese statutory codified rules of private international law are incomprehensive,109 the Supreme Court has developed rules of private international law in two ways: concretising the law and supplementing the law.110 The Supreme Court uses the first method when it is asked by lower-level national courts about vague statutory rules. For instance, the Supreme Court has explained the notion “economical disputes in Vietnam” in Art. 87 of the Ordinance on Procedure for Resolving Economical Cases dated 16 Mar. 1994 by issuing two bylaws.111 A prime example of the second method is a rule developed in the Joint Circular No. 04/TTLN dated 7 Jan. 1995 of Supreme People’s Court and Supreme People’s Procuracy Guiding the Implementation a Number of Provisions of the same Ordinance. It grants the Provincial Court 104 Phạm Duy Nghĩa 1999: “Case law in the form of English and American common law does not exist in Vietnam.” 105 Hanoi Law School 2006b, p. 25. This textbook adopts the same approach as the Soviet approach in Boguslavskiĭ 1988, p. 44. However, both countries admitted that, in reality, “in order to interpret norms during the process of their application, the significance of judicial – and in the field of private international law particularly arbitral-practice is beyond doubt”; Nguyễn Đức Mai 1998, p. 47. 106 According to the popular Vietnamese e-newspaper, vnexpress, (19 Apr. 2002), visited 7 July 2015; Đỗ Văn Đại 2002, p. 53. 107 According to Nguyễn Văn Nam 2010, p. 248, this practice of the Vietnamese Supreme Court is a characteristic of the Supreme Court in the court systems of former Socialist countries; Nguyễn Đức Mai 1998, p. 47; Phạm Hồng Thái / Đinh Văn Mậu 1996, p. 61. 108 Case law and similar terms [Án lệ và một số khái niệm tương đồng], Decision No. 74/QĐ-TANDTC dated 31 Oct. 2012 of the Vietnamese Supreme Court approving the project “Developing case law” of the Supreme Court [Quyết định số 74/QĐ-TANDTC của Tòa án Nhân dân tối cao ngày 31 tháng 10 năm 2012 về việc phê duyệt đề án “Phát triển án lệ” của Tòa án Nhân dân tối cao], Annex 1, p. 11. 109 Đỗ Văn Đại / Đỗ Văn Kha 2008, p. 39. 110 Đỗ Văn Đại 2002, pp. 45, 49: This author also points out the same practice of French courts. 111 The guidance is issued in two bylaws: Circular No. 11-KHXX dated 23 Jan. 1996, guiding Ordinance on procedure for resolving economic cases dated 16 Mar. 1994; Joint Circular No. 04/TTLN dated 7 Jan. 1995 of Supreme People’s Court and Supreme People’s Procuracy guiding the implementation a number of provisions of the Ordinance on procedure for resolving economic cases dated 16 Mar. 1994.

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jurisdiction to handle first-instance civil disputes involving foreign elements112 because Art. 13 of the Ordinance lacks an answer. The rules contained in those documents in reality have a strong binding force. If a regional court does not take account of them, the risk that its judgments will be overturned by a higher court is greater. As for parties in a dispute who do not appreciate these rules, they tend to lose the case and vice versa.113 Nevertheless, in recent times there has been a new trend in Vietnam. The use of case law has been upheld by Decision No. 74/QĐ-TANDTC dated 31 Oct. 2012 of the Vietnamese Supreme Court approving the project “Developing case law” of the Supreme Court.114 The acceptance of case law is expected to limit and perhaps render obsolete those kinds of Supreme Court documents.115 However, case law in Vietnam will not follow the model of English and American common law, but rather that of the civil law approach. First, not all cases carry precedential authority; only those Cassation Decisions of the Council of Judges of the Supreme People’s Court and those Cassation Decisions of Specialized Courts of the Supreme People’s Court (The Civil Court, the Economic Court, the Labour Court) approved by the Council of Judges of the Supreme People’s Court are considered to be precedent.116 Second, case law is inferior to statutory rules. While courts are encouraged to cite precedent when deciding cases, the reference is only meant to ensure the consistency of the case at hand with the system. In fact, the basis for deciding cases must remain the statutory rules.117 Therefore, it is emphasised that the reference to case law does not mean Vietnamese courts decide cases on the basis of case law, but that case law will only serve as moulds and auxiliary sources for increasing the persuasiveness and the clarity of the court’s decisions. 118 Finally, case law is not binding but rather “persuasive”.119 To put it more simply, the judge can decide himself whether nor not to follow the authority. He nevertheless has to indicate the reasons in case he chooses not to follow a decision; by doing so, he has developed new case law.120 See Đoàn Năng 1998, p. 39. Đỗ Văn Đại 2002, p. 8; Đỗ Văn Đại / Đỗ Văn Kha 2008, p. 42. 114 Before this important decision many Vietnamese authors had suggested the use of case law: Lưu Tiến Dũng 2003; Trần Đức Sơn 2003; Trần Văn Thư 2003; Đỗ Văn Đại / Đỗ Văn Kha 2008; Đỗ Văn Đại 2002, 2005; Nguyễn Ngọc Duy Mỹ 2006. 115 Annex 1 (see fn. 108 above), p. 11. 116 II.2(a) Decision No. 74/QĐ-TANDTC dated 31 Oct. 2012 of the Vietnamese Supreme Court approving the project “Developing case law” of the Supreme Court. 117 I.3(a) Decision No. 74/QĐ-TANDTC. 118 I.1(b) Decision No. 74/QĐ-TANDTC. 119 Case law and the practice of case law in some countries in the world [Án lệ và thực tiễn án lệ tại một số nước trên thế giới], Decision No. 74/QĐ-TANDTC dated 31 Oct. 2012 of the Vietnamese Supreme Court approving the project “Developing case law” of the Supreme Court, Annex 2, p. 12. 120 II.4(b) Decision No. 74/QĐ-TANDTC. 112 113

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Obviously, the use of case law must be accompanied with the publication of cases. While countries with civil or common law systems have published court decisions along with professional comments,121 this awareness has just recently been developed in Vietnam.122 The project mentioned above will have the Supreme People’s Court publish a “Collection of case law”.123 The next step planned is to sort cases and publish them in specialised collections, accompanied with comments of experts.124 Apart from that, all cassation decisions of the Supreme Court are already published on its website.125 The mentioned project also plans to have all decisions of the Supreme People’s Court and regional courts available online.126 This movement is expected to change the situation127 of rare references to case law by the courts, lawyers and legal scholars.128 The lack of practical knowledge in Vietnamese textbooks129 and journals are to blame for the underdevelopment of Vietnamese private international law and the difficulties students encounter when researching the subject.130

IV. Characterisation IV. Characterisation

The formulation of more bilateral rules amounts to the need for the application of foreign law,131 which in turn gives rise to “characterisation”. This is an unaDrobnig / Makarov 2008, para. 2-28: Germany with IPRax; France: most important court decisions are published and usually commented on in specialised periodicals; Italy and the Netherlands: scholarship and practice is mainly presented; Australia, Canada, England, and the US: court decisions are the primary source. 122 Đỗ Văn Đại 2005: Cassation decisions were published occasionally in the People’s Court Magazine. From 2003 to 2009, the publication became more systematic. The Supreme People’s Court has issued a collection comprising seven volumes of cassation decisions of the Council of Judges of the Supreme People’s Court. 123 I.3(b) Decision No. 74/QĐ-TANDTC. 124 II.2(b) Decision No. 74/QĐ-TANDTC. In waiting for these specialised collections, there have been a number of websites sorting cases by areas of law, such as , . 125 . Leading cases of courts of different levels are also released on this website. 126 II.2(b) Decision No. 74/QĐ-TANDTC. 127 According to the legal e-newspaper “Pháp Luật Thành Phố Hồ Chí Minh” ; also see the website of the Vietnam Bar Federation , visited 7 July 2015. 128 Đỗ Văn Đại 2005, p. 5. 129 For example, Hanoi Law School 2006b. 130 Đỗ Văn Đại 2002, p. 9. 131 Lipstein 1999, para. 5: “Unless a country would be satisfied to entertain only those claims or defences to which its own domestic law applies, a need will present itself to take foreign law into account.” 121

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voidable problem of a system of conflict laws based on categories and connecting factors132 since the first step the courts take in a given case is to “categorise the factual situation of the relevant foreign rule into a precise legal category.”133 Vietnamese legislation lacks a general rule on characterisation,134 and only one book contains a discussion on the issue.135 1. A factual situation or a legal rule is characterised There are two approaches expressed in the debate on the object of the characterisation technique. While some writers advocate that the “legal relationship” is characterised,136 other writers argue for the “factual situation”.137 Recent English writers,138 nevertheless, give this discussion little practical importance because “both these approaches amount to the same thing”139; instead, they mention the characterisation of “issues”.140 Yet, in taking a stance on the debate, they are inclined to a characterisation of “rules of law”.141 The Vietnamese authors, however, omit this theoretical question. 2. Characterisation by lex fori or lex causae It should be noted that, in the discussion below, the court is in the position of applying its own system of conflict rules; in doing so, its substantive law is the lex fori. It should be distinguished from the cases where the court is in the position of applying the conflict rules system of another country as a consequence Dicey et al. 2012, § 2-005, p. 39. Clarkson / Hill 2011, p. 20. 134 Legislation of most countries, even Germany (the land of the debate of the issue according to Rabel 1958, p. 55), does not contain such a general rule. One exception is China. In the recent Chinese Act 2010, there is a provision (Article 8) on characterisation in which a mere lex fori approach is laid down: “Qualification of a civil relationship with foreign contacts is governed by the law of the forum.” See Wang 2009, p. 3. 135 These leading authors are Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 203–210. 136 Many writers follow this approach. Amongst them are Lipstein 1999, para. 5, who reasons that “choice of law does not arise in the abstract but only in respect of a specific claim or defence” while these claims or defences are “framed in light of a particular legal system.” 137 According to Rabel 1958, p. 51, at the stage of characterisation “there is nothing but a factual or social situation. Conflict law must operate as do all other rules, directly on the facts of life, not on a legally predicated, abstract subject matter.” 138 Dicey et al. 2012, § 2-008, p. 40; Clarkson / Hill 2011, p. 21. 139 Dicey et al. 2012, § 2-009, p. 40. 140 Dicey et al. 2012, § 2-009, p. 40. 141 According to Dicey et al. 2012, § 2-009, p. 40, the characterisation of an issue is followed by the characterisation of the relevant rule of law. The court however should not start with the alternative way of seeking first to characterise the rule of law; Clarkson / Hill 2011, p. 27 is more direct in taking the position that the “subject matter of domestic rules is fact; [the] subject matter of choice of rules is rules of domestic law.” 132 133

IV. Characterisation

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of a renvoi reference,142 by which it acts as the forum of the latter country. The lex fori in these cases is the law of the latter country. Advocates of the lex fori approach are many;143 yet, they do not suggest the same solution. In the primary stage, the court relies on its own internal categories of private law to characterise a foreign legal rule.144 This solution, nevertheless, is met with criticism, for the forum may distort foreign law145 since foreign legal ideas may be grouped in different classes and terms.146 Moreover, the characterisation is confused when the legal rule is unknown to the law of the forum.147 Meanwhile, fewer writers opt for the characterisation according to the lex causae. Among them is Wolff, who alleges that “every legal rule takes its classification from the legal system to which it belongs”.148 This approach is nevertheless faced with an illogicality: how can the court characterise a claim based on a law that is still waiting to be ascertained?149 Rabel, on the other hand, developed a comparative approach, in which characterisation is based on more abstract notions developed by a comparative study of different legislation in order to find a valid compromise. 150 He believed that “hidden behind apparent dissimilarity, there is fundamental likeness, suggesting international cooperation […]”. The objection to his approach is that this is a large and ambitious task because of the huge differences between legislation151 and the unavailability of information on foreign law,152 which may have been true in his day but is no longer a significant constraint in the modern age. Rabel’s approach is in fact suitable when a court is to apply the uniform conflict rules contained in international instruments, such as an EU regulation.153 Other writers154 were not ready to leave the lex fori as the starting point although they agreed with Rabel that the courts would produce absurd results if they based their judgments solely on their own notions of private law. They See Kropholler 2006, pp. 121, 122. For an enumeration of these authors, see Lorenzen 1947; Kahn-Freund 1976, p. 237. 144 Lorenzen 1947, p. 117: This approach was conducted by Kahn and Bartin; see Lipstein 2011, para. 5-12; Rabel 1958, p. 53. 145 See Dicey et al. 2012, § 2-011, p. 41. 146 Robertson 1940, p. 165. 147 Dicey et al. 2012, § 2-011, p. 41. 148 Wolff 1950, p. 154. 149 Lipstein 1999, para. 5-12; Lorenzen 1947, p. 117. 150 Rabel 1958, pp. 57, 65. 151 Lorenzen 1947, p. 117. 152 Rabel 1958, p. 64. 153 See Kropholler 2006, p. 125. 154 Among them, Falconbridge 1938, p. 7; Robertson 1940, pp. 165–167. Robertson, in addition, suggested clarifying the characterisation by means of the lex fori into two substages. He also asked for the consideration of conflict-of-law conceptions instead of internal law conceptions. 142 143

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thus advocated for a process of characterisation comprising several stages, in which both the lex fori and the lex causae play roles. In general, the process starts with the lex fori to identify the category to which the situation belongs. In applying the conflict rule corresponding to this category, the court ascertains the lex causae. The second characterisation is done with reference to the lex causae. Robertson, in particular, stressed that the court must interpret the category into which the situation fits in the light of conflict law rather than of internal law.155 Lorenzen agreed with this approach.156 He however rejected the second characterisation based on the lex causae and contended that “the questions of characterisation should be resolved on the basis of the lex fori.”157 In fact, what Lorenzen envisaged in 1947 comes quite near to the “functional approach”158 and the method of characterisation generalised from cases.159 All these approaches require the court to look at the function and the purpose of the legal rule, not merely its formulation (terms, heading, or location in statutes) when deciding which conflict category of the lex fori covers the rule.160 In addition, when there is no available conflict rule, a new conflict rule should be formulated. 161 While the conflict categories of the lex fori remain the fulcrum of these approaches, the “via media approach” adopted in South Africa requires “the abandonment of the lex fori as the point of first and last reference.”162 Hence, characterisation is carried out independently according to the lex fori and the lex causae. This process finishes when the two characterisations produce the same applicable rule. If it is not the case, the third stage – the via media will appear: consideration of policy, international harmony of decisions, justice and convenience.163 It is however noticeable that the via media stage of taking uniformity of decision as a guiding principle in private international law usually leads to the lex causae,164 and it seems limited to cases of prescription. The leading Vietnamese authors nevertheless suggest the primary role of the lex fori. They consider the comparative approach that develops an autonomous notion as being of minimal feasibility because of the national judge’s lack of knowledge of foreign law. Moreover, the criteria for establishing an autonomous notion are not explicit: how many countries’ laws does the court 155 156 157 158 159 160 161 162 163 164

Robertson 1940, p. 166. Lorenzen 1947, p. 135. Lorenzen 1947, p. 135. In Lipstein 1999, para. 5-20. By Dicey et al. 2012, § 2-039, p. 51. Dicey et al. 2012, § 2-039, p. 51. Dicey et al. 2012, § 2-039, p. 51; Clarkson / Hill 2011, p. 27. Forsyth 2006, p. 430. Forsyth 2006, p. 428. Forsyth 2006, pp. 430–431.

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investigate? As a result, each judge may create his own autonomous definition, which harms the uniformity of the application of law. After rejecting the comparative method, these authors proceed to the lex causae approach, which they believe more feasible. Nevertheless, they afterwards reject the latter because of its theoretical circuitousness. The reason given to support the lex fori approach was that the interpretation of Vietnamese legal rules including conflict rules must be based on the intention of Vietnamese legislature. Moreover, when characterising a legal issue, the court need only identify the synonymous domestic law, thus simplifying its work. Whenever dealing with an unknown institution, the court should take account of the relevant foreign law although it is not bound to the result found. In other words, it preserves the right to follow its own style of characterisation.165 This view appears to be too conservative. It is admittedly hard for a national court to adopt a comparative approach, but if the court ties in its own law, it would engage in the mistake of seeking in internal law the concepts needed for conflict law. Rabel long ago spoke of this problem, observing that “naturally if each conflicts law is nothing but an annex to the corresponding internal law and receives its sense and meaning from this nation and local source, international uniformity cannot be achieved.”166 There is no indicator of the characterisation approach taken in court practice because the courts apply Vietnamese laws in most cases even without resorting to conflict rules. Yet, the courts are likely to rely on internal law to characterise a foreign rule.167 The present writer, on the other hand, prefers the lex fori advanced approach; according to that, the categories of forum conflict rules must be interpreted for the purpose of conflict law and independently from internal law. Moreover, the foreign rule must be analysed in light of its function and purpose, and not its physical characteristics. The legal issue drawn from this foreign rule will be placed into the proper conflict category of the forum. In the event there is no appropriate category, a new conflict rule must be created.

Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 203–210. Rabel 1958, p. 61. 167 Hardjowahono 2005, p. 240, proposes reference to the Unidroit Principles when characterisation issues involve contracts: by reference to the convenient label of “objective characterisation” this writer looks forward to the possibility of correlating the necessary process of characterising facts in contract cases with an internationally acknowledged legal classification adopted in the systematic assembly of the Unidroit Principles’ chapters and sub-chapters. 165 166

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3. Codified rules on characterisation and tentative characterisation of certain legal institutions Vietnamese legislation has two clear codified rules on characterisation. First, procedural time limits are a matter of substance168 and governed by the lex causae.169 One exception to the lex fori approach is the classification of property (as movable or immovable), which is determined by the lex situs.170 Apart from those rare well-codified provisions, I give below a knowledgeable-observer’s speculation as to how a Vietnamese court may characterise some unknown legal concepts in accordance with the lex fori approach. The category “formal validity of marriage” may cover “proxy marriage” and “religious ceremonies”.171 In recent years, many Vietnamese women have married Korean men, whose laws allow proxy marriage. Instead of carrying out the marriage registration before the Vietnamese authorities, which require the presence of both parties, the groom chooses to register in Korea (without the presence of the bride) and then submit that proxy marriage for recognition in Vietnam. The fact that most marriages are recognised172 implies that proxy marriage is considered as a valid formal marriage and therefore subject to the law of the country where the ceremony takes place. If it was otherwise held as “substantial capacity to marriage”, the Vietnamese brides would have necessarily infringed Vietnamese laws at the time of the ceremony and thus the marriages would have not been recognised.173 Meanwhile, the category “substantive validity of marriage” may cover “the requirement of parental consent”,174 “the effect of impotence and wilful refusal to consummate a marriage”, and “polygamous marriages”. The latter two institutions might be related to the forbidden circumstances of marriages under Art. 10(2)&(1) VMFL 2000, which are indeed the conditions for marrying according to Art. 9(3) VMFL 2000. The most difficult classification is For more analysis on the issue of substance and procedure, see Panagopoulos 2005; Garnett 2012; Carruthers 2005; Illmer 2009a. 169 Art. 777 VCC 2005. 170 Art. 766(3) VCC 2005. 171 Hanoi Law School 2006b, p. 256: “The formal validity of marriage laid down in the Vietnamese Law on Marriage and Family 2000 (VMFL 2000) for ceremonies carried out in Vietnam prescribes a civil ceremony, not a religious one.” 172 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 351. 173 Art. 20(1) Decree No. 68/2002/NĐ-CP and Art. 7 Decree No. 69/2006/NĐ-CP amending and supplementing a number of articles of Decree No. 68/2002/NĐ-CP: “Marriages between Vietnamese citizens or between Vietnamese citizens and foreigners, which have been registered at competent agencies of foreign countries, in accordance with the legislations of those countries, shall be recognized in Vietnam, if by the time of marriage such Vietnamese citizens have not violated Vietnam’s legal provisions on marriage conditions and cases of marriage prohibition.” 174 Hanoi Law School 2006b, p. 254. 168

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that of a “marriage of convenience”175 because it is unclear whether the issue is more related to the substantive validity of marriage, matrimonial property or the contract. Since the Vietnamese law on marriage is separate from the VCC, and the general perception in Vietnam is that a marriage of convenience cannot be regulated by contract, it is more properly classified as falling under the substantive validity of marriage. The list should be longer, consisting of legal concepts such as “whether a will is revoked by marriage”; “an agreement not supported by consideration”; “contractual defence to a claim in tort”; “whether a bona fide purchase of shares provides a defence to a claim for restitution”; “whether a spouse is liable to another in tort”; “whether a cause of action survives against the estate of a deceased tortfeasor”; and “any requirement of a foreign law that certain types of testator must observe special formalities and that some types of witnesses must possess certain qualifications”. I will nevertheless abstain from giving a tentative and subjective characterisation of these issues: future cases will provide definite answers.

V. The Incidental Question V. The Incidental Question

1. Vietnamese practice “The incidental,176 or preliminary, question is a technical problem of considerable difficulty”,177 discovered by the German author Melchior.178 In order to understand what it is, many writers illustrate it with examples.179 As this thesis is concerned with Vietnam, I will take a Vietnamese case: Tran Thi Bich Ngan (a Vietnamese national) and Kee Choong Kiong (a Malaysian national) married in Malaysia and had the marriage decree issued by the Malaysian authority. Ngan returned afterwards to Vietnam and pleaded for a divorce in the Vietnam-

175 A marriage of convenience is a marriage between two people for practical or financial reasons (e.g., for immigration purposes) and not for love or intimacy. 176 Almost no country in the world, including Germany, has statutory provisions on incidental questions, whether supporting the lex fori or the lex cause approach. China, interestingly, used to propose such a provision in Book Nine of the Chinese Civil Code, adopting a flexible solution to the matter of incidental questions, stating in Art. 8 that “The law applicable to the preliminary question is determined by its nature.” See Zhu 2007, p. 290. The new 2010 Act on Private International Law has abandoned the provision and stayed silent in relation to incidental questions, leaving the problem to the courts. Vietnamese private international law does not have regulations governing incidental questions. 177 Dicey et al. 2012, § 2-048, p. 55. 178 Schuz 1997, p. 1; Schmidt 1992, p. 321. 179 These examples can be found in Gotlieb 1977, p. 736; Schmidt 1992, p. 317; Dicey et al. 2012, § 2-048, p. 55.

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ese courts. The court was to consider the validity of the marriage.180 In this case, the principal question was which law was applicable to the divorce, and the incidental question was which law was applicable to the validity of the marriage. In order to ascertain the latter, should the court apply the conflict/recognition rules of the forum or those of the law applicable to the principal question?181 It should be borne in mind that true incidental questions only arise when the principal question, through the application of the forum conflict rule, is governed by a foreign law.182 Accordingly, a genuine incidental question is unlikely to arise before Vietnamese courts or agencies because they have always applied Vietnamese laws to the main questions, either by virtue of references in Vietnamese conflict rules or by subjective practice. In fact, most of the Vietnamese cases183 where the presence of an incidental question is detected are cases related to marital status which have been settled by a foreign decision. The courts in those cases184 do not seem to be consciously aware of the theoretical basis of the incidental question. Consequently, the incidental questions are dealt with as main and separate issues. In addition, Vietnamese recognition rules have been applied to ascertain the validity of the foreign decisions. In three cases where the main issue was

180

Court.

Judgment No. 1276/2006/HN-ST dated 29 Nov. 2006, Ho Chi Minh City People’s

Gotlieb 1977, p. 737; Schmidt 1992, p. 316. This is one of three conditions for a true incidental question to arise. For these three criteria, see Dicey et al. 2012, § 2-049, p. 56: “Firstly, the main question must, by English conflict rule, be governed by the law of some foreign country. Secondly, there must be a subsidiary question involving foreign elements which is capable of arising in its own right and which has a conflict rule of its own available for its determination. Thirdly, the conflict rule for the determination of the subsidiary question must lead to a different result from the corresponding conflict rule adopted by the country whose law governs the main question.” Schmidt 1992, p. 316: first, the lex causae must be foreign law; agreed to by Gotlieb 1977, p. 738. 183 For example, Judgment No. 102/2006/HNGĐ-ST dated 24 Oct. 2006, Hanoi People’s Court: Ho Thi Thanh Tu and Nguyen Van Thanh (2 Vietnamese) married before a German authority. They subsequently applied for a divorce before the Vietnamese courts; Judgment No. 20/2010/HN-ST dated 15 Nov. 2010, Long An Province People’s Court: Nguyen Mai Hong Thai (Vietnamese) and Kim Nam Tae (Korean) married before the Korean Embassy in Vietnam. Nguyen Mai Hong Thai applied for divorce in Long An Province People’s Court. 184 These cases could be regarded as cases relating to the “primary question” instead of the “incidental question” under the theory of primary question. However, this theory is not widely supported. See the distinction between the two questions in Schmidt 1992, pp. 324– 330. 181 182

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divorce, in order to ascertain the validity of the marriages185 (between two Vietnamese nationals or between a Vietnamese national and a foreigner) issued by foreign authorities (German, Korean, Malaysian), the courts applied Vietnamese recognition rules regarding foreign marriage decisions. These rules require the parties to those foreign marriages to have their marriages annotated in registers according to the Vietnamese law provisions on civil status.186 This procedure is mandatory for a marriage to be upheld as valid. In one187 of those cases, because a party refused to carry out the procedure, the courts ruled the marriage to be invalid and issued a decision in which it did not recognise the parties as being husband and wife.188 It should be noted that this annotation procedure is only required for a marriage between two Vietnamese nationals, or between a Vietnamese national and a foreigner, concluded before foreign authorities. Nevertheless, the recognition rules of Vietnam applied for marriages between foreigners are not clear. According to Circular No. 07/2002/TT-BTP189, “marriages between foreigners require no annotation but only the submission of the copies of the divorce judgments or decisions, which have already taken legal effect.”190 This Circular is, however, out of force and the new Decree191 and Circular192 do not contain any provisions relating to these matters. In addition, there has not been a case where the validity of marriages overseas between foreigners arises as an incidental question before Vietnamese courts. In addition to cases of validity of marriage concluded abroad, the Vietnamese marriage registration authority is likely to deal with the validity of a divorce judgment obtained abroad as an incidental question that affects the principal one, namely a second marriage. If the incidental question is treated separately as a main issue, the judgment has to undergo a separate recognition 185 Judgment No. 102/2006/HNGĐ-ST dated 24 Oct. 2006, Hanoi People’s Court; Judgment No. 20/2010/HN-ST dated 15 Nov. 2010, Long An Province People’s Court; Judgment No. 1276/2006/HN-ST dated 29 Nov. 2006, Ho Chi Minh City People’s Court. 186 Art. 16 Decree No. 24/2013/NĐ-CP dated 28 Mar. 2013 detailing the implementation of a number of articles on marriage and family law regarding marriage and family relations involving foreign elements; Art. 12 Circular No. 22/2013/TT-BTP dated 31 Dec. 2013 detailing the implementation Decree No. 24/2013/NĐ-CP. Previously, this procedure was regulated in Art. 7 Decree No. 69/2006/NĐ-CP amending and supplementing a number of articles of Decree No. 68/2002/NĐ-CP of 10 July 2002. See the analysis in Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 349. 187 Judgment No. 1276/2006/HN-ST dated 29 Nov. 2006, Ho Chi Minh City People’s Court; Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 349. 188 According to Art. 11 VMFL 2000. 189 Circular No. 07/2002/TT-BTP guiding the implementation of a number of articles of the government’s Decree No. 68/2002/ND-CP dated 10 July 2002. 190 Art. 2(1.1.3) Circular No. 07/2002/TT-BTP. 191 Decree No. 24/2013/NĐ-CP. 192 Circular No. 22/2013/TT-BTP dated 31 Dec. 2013.

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procedure, in which the forum recognition rules on foreign divorce judgments193 are applied. The empirical research above shows that Vietnamese courts practise universal preferential treatment, which is given if there is a prior foreign judgment which has been recognised and enforced in Vietnam, although the choice of law rules applied by the foreign judgment may differ from the Vietnamese-relevant rules.194 2. Theoretical basis The Vietnamese courts and agencies will eventually have to apply foreign law to the principal question. Consequently, they will have to choose between the conflict rules of the forum and those of the lex causae to govern the true incidental question. Hence, they must take an appropriate approach in the theoretical debate. Theorists are divided into three groups.195 Advocates of the lex fori approach196 are fundamentally concerned with the inconsistencies among deciThis recognition procedure has differed from time to time. Before 2002, according to Circular No. 04/TTLN dated 24 July 1993, Vietnamese courts only considered foreign civil judgments, including divorce judgments of foreign courts, if the countries of such foreign courts and Vietnam had signed or acceded to international treaties that provided for the recognition and enforcement of civil judgments or decisions. There were cases in which Vietnamese nationals remarried in Vietnam after obtaining a foreign divorce from the first marriage judgment. As the divorce from the first marriage was not recognised in Vietnam, the second one was held illegal. See Chu Tuấn Đức 2000, p. 8. After the issuance of Decree No. 68/2002/NĐ-CP of 10 July 2002, foreign divorce judgments between Vietnamese nationals or between a Vietnamese national and a foreigner would be recognised in Vietnam after the parties had carried out the annotation procedure. For divorce judgments between foreigners, according to Circular No. 07/2002/TT-BTP, the parties simply needed to submit copies of their divorce judgments or decisions. Vietnamese scholars strongly criticised the recognition of a divorce judgment by way of an annotation procedure. As a response to the criticism, Decree No. 69/2006/NĐ-CP amending and supplementing a number of articles of Decree No. 68/2002/NĐ-CP abolished the effect of annotation in the recognition of a divorce judgment. Nevertheless, these two Decrees were replaced in 2013 by Decree No. 24/2013/NĐ-CP, which requires foreign divorce judgments to be recognised by a decision of a competent Vietnamese court in accordance with the VCPC 2004. 194 Wengler 1986, para. 35. 195 The list of authors in these three groups is found in Gotlieb 1977 and Schmidt 1992. Gotlieb and Schmidt adhere to the third and second approach respectively. 196 The lex fori approach is advocated for the private international law of the European Union by Goessl 2012, pp. 75, 76 In the context where the laws of Member States (substantive or conflicts law) have been mostly harmonised, this author analyses the advantages and disadvantages of the two approaches and concludes in favour of the lex fori approach with one rare exception, namely where there is an urgent need for international harmony. Then the lex causae approach applies. 193

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sions in the internal law of the forum,197 this approach requiring a question to be decided in the same way in all the courts of a country, whether it arises as an incidental question or as a main one.198 In another camp, proponents of the lex causae approach vote for the international harmony of decisions,199 which requires that courts of different countries adopt the same solution.200 Moreover, the lex causae approach avoids the “denaturalisation of the foreign law applicable to the main question.”201 It is noticeable that both groups of authors admit exceptions in favour of the opposite approach.202 In that context there emerges a third group,203 who believe that it is not possible to formulate a general rule for incidental questions. When general theory does not work, each case has to be resolved according its individual character.204 Authors of this group, moreover, suggest that one should also consider the practical consequences of the case.205 The two prior approaches are in fact quite theoretical and abstract while the “no-general-rule” suffers from uncertainty and provides less guidance (though it may best describe the situation). Schuz, in his thesis on the issue of incidental questions, has developed a result-selecting approach based on the policy of the forum206 and formulates ranges of reference rules (with full of exceptions) for categories of incidental situations.207 In the meantime, the lex fori principle is more appropriate for the Vietnamese situation because it guarantees the internal harmony of decisions.208 The argument that the court should be able to distinguish between the legal effects of a marriage or a status based on when they are decided as an incidental question and when as a main question is reasonable.209 It is, however, unrealistic to expect that Vietnamese judges, who are not experienced in technical problems of private international law, will not find those technicalities confusing. Moreover, the advantage of the lex causae approach on the Gotlieb 1977, p. 755; see also Neels 2010, p. 335. Schmidt 1992, p. 345; Dicey et al. 2012, § 2-050, p. 56. 199 Gotlieb 1977, p. 757. 200 Schmidt 1992, p. 344; Dicey et al. 2012, § 2-050, p. 56. 201 Schmidt 1992, p. 371. 202 Schmidt 1992, p. 322. 203 This group consists of mostly common law writers; Dicey et al. 2012 is among them. 204 Gotlieb 1977, p. 760. 205 Dicey et al. 2012, § 2-051, p. 56. 206 Schuz 1997. 207 To the extent that Schuz’s rules of references were developed for the English forum, specific rules must be worked on for the legal system of Vietnam. 208 Gotlieb 1977, p. 759: The counter-argument is that in some situations the lex fori approach could not guarantee internal harmony of decisions because the courts seem to be “unconscious of any general or theoretical considerations”. 209 See more analysis in Schmidt 1992, p. 379. This author also mentioned the German theories of “internationale Gestaltungswirkung” and “relative Gestaltungswirkung”. 197 198

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ground that many Vietnamese conflict rules use nationality as the connecting factor210 will not remain if the country adopts habitual residence in the future. Furthermore, the difficulty of applying foreign law211 is a considerable burden for Vietnamese courts. With those considerations in mind, I would suggest starting with the lex fori to decide on the law applicable to the incidental question. Besides, Vietnamese courts should take into account the practical consequences, the individual character of the cases, and considerations of public policy.

VI. Connecting Factor for Personal Status VI. Connecting Factor for Personal Status

“Status” refers to situations subject to personal law.212 Those situations under Vietnamese laws consist of capacity (the capacity to have rights in general, the capacity to engage in legal transactions including the capacity to contract) and family relations (marriage, divorce, adoption, and succession). Two basic connections are traditionally used to subject a person to the personal law of a state: nationality of that state and domicile/residence in that state.213 In line with this tradition, Vietnam utilises the two connecting factors for conflict and jurisdictional rules in the area of personal law. 1. Nationality a) Historical development of nationality as a connecting factor The history of nationality as a connecting factor must be dated to the nineteenth century when it began to gain ground in one country after another.214 By using nationality as connecting factor for conflict rules, countries such as France and Italy are able to determine the legal status of its subjects, which corresponds to the nationalism policy.215 Although in the later period nationality appears to

Schmidt 1992, p. 382: The principle of lex causae prevails where nationality is used as the connecting factor in choice-of-law rules. 211 Schmidt 1992, p. 381: In Schmidt’s opinion, “this is hardly a valid argument. The application of foreign law is necessary as otherwise the whole system of private international law breaks down, and the difficulties in applying foreign law should not be exaggerated.” 212 Rabel 1958, p. 114. 213 Rabel 1958, p. 115. 214 Basedow 2012b, § 482, p. 311; Dicey et al. 2012, § 6-167, p. 198; Schmidt /  Cheshire 1951, p. 50. 215 Rabel 1958, p. 121. 210

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have lost favour,216 there are some remainders of it217 in European Union private international law instruments. Since Vietnam is a former colony of France, the test of “belonging” to a country for conflict of laws purposes is not domicile but nationality. Consequently, the legislature gave preference to the principle of nationality over residence as soon as a limited number of conflict rules were codified for the first time in the VCC 1995 and the VMFL 2000.218 Nationality remains the prevailing connecting factor for personal law.219 The adoption of nationality as the prevailing criterion of personal law in Vietnam may result unconsciously220 in one part from the French influence and in another part from many historical and political factors, e.g., the wave of nationalism which emerged from the severe struggle to win independence, the desire of a poorer country to share in the prosperity221 and the brain power222 of

Basedow 2012b, § 484, p. 312: “In recent times, citizenship as a connecting factor has increasingly been abandoned in European countries due to various reasons […]”; Dicey et al. 2012, § 6-172, p. 199: “There is an increased reliance on habitual residence as the primary connecting factor in contemporary conflict of laws instruments and proposals, particularly within the European Union.” 217 Kruger / Verhellen 2011: In international family law – the Brussels II Regulation – nationality made an appearance. “The last of the alternative bases for jurisdiction in divorce matters referred to the common nationality of the spouses”. When this Regulation was replaced with the Brussels IIbis Regulation, “the criteria of nationality was retained”. “Nationality found its way into the Maintenance Regulation” and the Rome II Regulation; see Basedow 2010a, p. 447. 218 In the VCC 1995 there were two conflict rules using nationality (Art. 831 and 832) and no rule using residence. 219 In the VCC 2005 there are six conflict rules using nationality: Art. 761, 762, 763, 764, 767 and 768. 220 See Rabel 1958, p. 162. 221 Nguyễn Văn Toàn 2011, pp. 17–19: According to statistics of the Vietnam Committee for Overseas, about 80% of the Vietnamese people are making their living in developed countries, and are concentrated especially in the US (1.5 million), France (300,000), Canada (250,000) and Australia (245,000). Eastern Europe (Russia) and Asia (Cambodia, Thailand) each have about 100,000 Vietnamese people making their living. This community has economic potential although they still encounter certain difficulties such as competition pressure from the local population. Among those Vietnamese people residing overseas, some have attained business success. The prestige of Vietnamese people residing in foreign countries has been increasingly enhanced. 222 Nguyễn Văn Toàn 2011, p. 19: Currently, many Vietnamese in foreign countries are university degree holders, postgraduates, and highly-skilled technical experts. With a studious tradition, overseas Vietnamese who belong to the 3rd and 4th generations engage in higher education, increasing the intelligentsia among Vietnamese overseas. 216

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its emigrants, the potential application of the country of origin law, 223 and its two main advantages: being “easy to ascertain”224 and its “stability”225. b) Scope of utilisation of nationality in Vietnamese legislation First, nationality plays the role of connecting factor in choice of law rules regarding the matters below: – legal capacity to hold rights and obligations226 – civil capacity to act227 – civil procedure capacity to hold rights and obligations and procedural capacity to act228 – determination of persons as having no, having lost, or having been restricted in civil act capacity229 – determination of persons as missing or dead230 – at-law inheritance involving foreign elements231 – testamentary inheritance232 – marriage233 – adoption234 One note specifically regarding adoption is that the VLA 2010 has recently replaced nationality with permanent residence as connecting factor in many provisions,235 which indicates a decrease in the importance of the role of nationality in choice of law rules in Vietnam. 223 Basedow 2012b, § 482, p. 311: many advantages are identified: the development of nation-state ideology, the desire to maintain links with émigrés, and the practical convenience of the application of the lex fori in the court of the country of origin. 224 Basedow 2012b, § 483, p. 312; Dicey et al. 2012, § 6-170, p. 198. 225 Basedow 2012b, § 483, p. 312; Schmidt / Cheshire 1951, p. 42; Vischer 1998, para. 4-20; Dicey et al. 2012, § 6-169, p. 198. 226 Art. 761(1) VCC 2005. 227 Art. 762(1) VCC 2005. 228 Art. 407(1)(a) VCPC 2004. 229 Art. 763(1) VCC 2005. 230 Art. 764(1) VCC 2005. 231 Art. 767(1) & (4) VCC 2005. 232 Art. 768(1) VCC 2005. 233 Art. 103(1) VMFL 2000. 234 Art. 105(1) VFML 2000. 235 For example, in Art. 29 VLA 2010, permanent residence is used instead of nationality. Art. 29 VLA 2010 [Conditions on adopting persons] (in inter-country adoption cases): “1. Overseas Vietnamese or foreigners permanently residing abroad who seek to adopt a Vietnamese must meet all conditions required by the law of the country in which they permanently reside and specified in Article 14 of this Law; 2. Vietnamese citizens who seek to adopt a foreigner must meet all conditions specified in Article 14 of this Law and required by the law of the country in which the to-be-adopted person permanently resides.”

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Second, nationality is a basis of jurisdiction in divorce cases.236 Art. 410(2)(g) grants the Vietnamese courts jurisdiction in divorce cases where the plaintiff or the defendant is a Vietnamese citizen. Apart from jurisdiction in divorce cases, Art. 410(1) together with Art. 35(1)(a) VCPC 2004 provide Vietnamese courts with jurisdiction in cases in which the defendants are Vietnamese nationals residing in Vietnam.237 Accordingly, nationality combines with residence to establish jurisdiction for the Vietnamese courts in civil and commercial cases. c) Dual nationality (1) Vietnamese policies regarding dual nationality Few practical cases of dual citizenship occurred in Vietnam during the war and the main objective of the government and the people at that time was to struggle to unify the country. The issue only emerged later in 1975 as a result of the exodus of Vietnamese people going abroad, forming a community of millions of Vietnamese overseas.238 Therefore, the issue of dual nationality is more appropriate for the Vietnamese Government’s policies on overseas Vietnamese239 while it may concern Germany, for example, in respect of foreigners living within Germany. Vietnamese laws have gradually admitted the dual nationality status of Vietnamese nationals living overseas.240 Recently, VLN 2008 and its imple236 See, for instance: Judgment No. 11/HNST dated 7 Jan. 2005, First Instance Court of Ho Chi Minh City; Judgment No. 1211/HN-ST dated 15 June 2005, First Instance Court of Ho Chi Minh City; Judgment No. 01/HNST dated 16 Jan. 2006, First Instance Court of Tra Vinh Province. 237 Cassation Decision No. 25/2003/HĐTP-DS dated 25 Aug. 2003, Supreme People’s Court, published in “Quyết định giám đốc thẩm của Tòa án nhân dân tối cao năm 2003– 2004” [Collection of Cassation Decisions of Supreme People’s Court Year 2003–2004], Vol. 1, p. 144 and following; Decision No. 08/QĐ-HGT dated 11 July 2001, First Instance Court of Thua Thien Hue Province. 238 Hoàng Hữu Đức 2009b, p. 2. 239 Hoàng Hữu Đức 2009b, p. 3. 240 Hoàng Hữu Đức 2009a, p. 2: The main reason for the dual nationality situation of these people is historical. A large number of Vietnamese people had left the country during and after the war. They had been issued refugee status and obtained foreign nationality without giving up their original nationality. Since then there have been more Vietnamese giving birth to children in the territory of foreign countries. One the one hand, the child obtains the nationality of her/his parents; on the other hand, he or she may gain foreign nationality at the same time. Vietnamese people may have dual nationality as a result of naturalisation into foreign countries where such a legal action does not require the loss of Vietnamese citizenship. Among the overseas Vietnamese living in nearly 100 countries, some of those who hold foreign passports have stated their desire to retain their Vietnamese nationality and that the Vietnamese Government recognise their dual nationality status, which would fulfil certain

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menting Decree241 and Circular242 allow overseas Vietnamese who have already acquired foreign nationality but have not officially given up their Vietnamese nationality to register with Vietnamese agencies to keep their nationality.243 Nevertheless, the legislature also acknowledged the trouble posed by dual nationality and therefore introduced measures to lessen this phenomenon by setting a deadline of five years, until 2014, for the procedure of retaining one’s Vietnamese nationality, which is lost if one fail to register.244 (2) Dual nationality in jurisdiction and applicable law There should be a distinction between two situations of dual nationality because in the first case, a party has both Vietnamese (forum) nationality and additional foreign nationalities whereas in the second, a party has two or several foreign nationalities. Vietnamese laws contain no general provision on how the courts should choose between the forum and the foreign nationalities. Nevertheless, Art. 407(1) VCPC 2004, which specifically regulates the “civil procedure capacity to hold rights and obligations and civil procedural capacity to act”, gives priority to the Vietnamese nationality over the foreign nationality. The preference given to the forum nationality is also employed by many other countries245 which is to “correspond to a state’s interest to take due regard of the nationality of their own citizens.”246 In one Vietnamese divorce case,247 the plaintiff who had dual Vietnamese and American nationality brought divorce proceedings against a Vietnamese citizen before a provincial court. According to Art. 34(c) VCPC 2004,248 if the court takes account of the US citizenship of the plaintiff, the competent court is the provincial one. Otherinterests of a Vietnamese national such as rights to: emigrate to, and reside in, Vietnam; invest; conduct business; legally own immovable property; and other privileges. 241 Decree No. 78/2009/NĐ-CP guiding the implemetation of a number of articles of VLN 2008. 242 Circular No. 05/2010/TTLT/BTP-BNG-BCA dated 21 Mar. 2010 guiding the implementation of Decree No. 78/2009/NĐ-CP and Law on Nationality 2008. 243 Art. 13 VLN 2008; Art. 18 Decree No. 78/2009/NĐ-CP. 244 Art. 13(2) VLN 2008: “Overseas Vietnamese who have not yet lost Vietnamese nationality as prescribed by Vietnamese law before the effective date of this Law may retain their Vietnamese nationality and within 5 years after the effective date of this Law, shall make registration with overseas Vietnamese representative missions to retain Vietnamese nationality.” 245 Vischer 1998, para. 4-20. 246 Kruger / Verhellen 2011, p. 607. 247 Judgment No. 17/2009/HNGĐ-PT dated 20 Aug. 2009, Provincial People’s Court of Quang Ninh. This case is referenced in Trần Thị Thu Hiền, p. 1. 248 Interpreted by Art. 4(1) Part I Resolution No. 01/2005/NQ-HDTP dated 31 Mar. 2005 guiding the application of some provisions in Part I – Some general provisions of the Civil Procedure Code 2004.

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wise, if the Vietnamese nationality is given effect, the provincial court has to transfer the case to the competent district court. The provincial court seised chose the plaintiff’s Vietnamese nationality in interpreting such a jurisdictional rule and thus directed the case to the district court. This treatment of the provincial court was criticised by the Supreme Court on the grounds that the provincial court had failed to consider the foreign aspects of the plaintiff.249 In fact, in the context of EU law, specifically in interpreting a jurisdictional rule in the Brussels IIbis Regulation, the treatment of persons with dual nationality as if they were only the nationals of the forum country has been disapproved by the ECJ250. In addition, the approach of taking into account only one “most effective” nationality (the nationality which has closest link) has also been rejected.251 The approach drawn from the Hahadi case is that if the dual nationality of a person has the effect of providing other available fora, both nationalities (the forum and the other) “should be attributed equal weight”.252 A preference of the forum nationality or the most closely connected nationality is unjustified. Nevertheless, the equal treatment of dual nationalities meets with trouble when one of the nationalities of the person gives rise to exclusive jurisdiction rather than a concurrent one. Take a Vietnamese example: suppose that a Vietnamese court hears a divorce case, in which one party (the plaintiff A) is an Australian and the other (the defendant B) is both Australian and Vietnamese. They reside, work, and live in Vietnam. In this case, if the Australian nationality of B is taken, the case falls into the scope of Art. 410(2) (g) VCPC 2004, and Vietnam court would have concurrent jurisdiction based on the in Vietnam status of this party. Whereas, if B’s Vietnamese nationality is taken, the Vietnamese court will even have exclusive jurisdiction according to Art. 411(1)(c), which means it would not recognise any judgments of other jurisdictions (i.e., Australia).253 In this scenario, taking the Vietnamese forum nationality, as the courts might do, could produce an absurd result. Nevertheless, the treatment of two nationalities on equal footing also meets with difficulties. This is because, once effect is given to the Vietnamese nationality, the exclusive jurisdiction of the Vietnamese courts will block the recognition and enforcement of any judgments of the Australian courts regarding the matter, which consequently interferes with the consideration given to the second nationality. The solution for this particular case could be that the ViTrần Thị Thu Hiền, p. 1. According to the Supreme Court, the provincial court should have taken into account the fact that the plaintiff at the same time had US nationality, so as to hold itself competent in the case. 250 Case C-168/08 Hadahi v Mesko [2009] ECR I-6871, [41]. 251 Hadahi, [52]. The reason for the rejection pointed out is that “a whole set of factors would have to be taken into consideration, not always leading to a clear result” [55]. 252 Kruger / Verhellen 2011, p. 617. 253 Art. 356(3) VCPC 2004. 249

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etnamese courts at the stage of recognition and enforcement of any relevant judgments of the courts of the country of second nationality should bear in mind the fact that the person concerned has a dual nationality, so as to disregard the rule which prevents the recognition and enforcement of the foreign judgments. When nationality plays the role of a connecting factor deciding the applicable law,254 one suggestion for dealing with a dual nationality situation, apart from the preference of the forum nationality and the objective closest connection nationality, is to allow the person with dual nationality to choose the relevant nationality.255 This suggestion is not sound for Vietnam: why should the person with dual nationality be permitted to manipulate the applicable law by choosing between their multiple nationalities whilst the parties are not even permitted to choose the law applicable to, for example, their matrimonial relationships?256 As regards persons having two or more foreign nationalities, VCC 2005 has one provision. Art. 760(2) explicitly refers to the laws of the countries of which such persons bear the nationalities and where they reside at the time when the civil relations arise. If such persons do not reside in one of the countries of which they bear the nationalities, the laws of the countries of which such persons bear their respective nationalities and have the closest relations regarding their civil rights and duties shall apply. Although this provision is designed for the purpose of applicable law, its principle might extend to jurisdictional rules. Nevertheless, relevant Vietnamese cases on this point are lacking or unknown.257 It can be seen that Art. 760(2) takes into account one of the nationalities and the fact of residence to determine the applicable law. In case such persons do not reside in one of the countries of which they bear the nationalities, the wording “closest relations” signifies the closest-connection test. However, it is crucial that this test considers the closest connection only with those 254 In the Vietnamese conflict rules, there are only cases where nationality in itself is the only connecting factor. Meanwhile, in EU law, according to Kruger / Verhellen 2011, p. 618, conflict of nationality can happen in three situations: party autonomy as a connecting factor (one of the legal systems the spouses can choose is that of their common nationality), common nationality as a connecting factor, and nationality as a connecting factor, which does not apply in many domains of law (one domain is name). 255 Kruger / Verhellen 2011, pp. 624, 626; Bariatti 2011, p. 8. 256 There has been only one journal article which mentions this issue: Đỗ Văn Đại 2013, pp. 54–55. 257 There are many reasons. First, cases regarding this matter must be rare. Second, cases of Vietnamese courts have not been published (except some typical Cassation decisions). Third, in those cases that are mentioned by Vietnamese authors in their books and journals and those cases I myself have collected, the courts do not mention the fact of dual nationality in their judgments. Therefore, we do not know whether they have dealt with the issue or how they have chosen between the two.

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countries that such persons have nationalities, thus leaving out other potentially or factually connected countries. Besides, the factual elements weighed are more limited than in the standard test found in much literature258 as they are inclined to be public connections such as in which country they undertake the rights to vote and in which country they pay taxes, etc. In sum, I would suggest the objective closest-connection test for people having multiple nationalities, with or without the absence of the forum nationality, and the factors taken into consideration should be broader than only civil rights and duties as regulated in the current Art. 760 VCC 2005.259 d) Stateless person Vietnam is concerned with a number of stateless people.260 When the conflict rules refer to the law of the country of a person’s nationality, which law would apply when they are stateless? The international practice is to apply “the law of their domicile or habitual residence, and in default thereof the law of their temporary residence.”261 Art. 760(1) VCC 2005 and Art. 407(1)(c) VCPC 2004 adopt the similar approach, providing for the application of the laws of the country where such persons reside; if such persons have no place of residence, the law of Vietnam shall apply. In jurisdictional rules, stateless persons are mentioned as an independent party alongside forum nationals and foreigners,262 and their position in those rules is similar to foreigners. 258 Kruger / Verhellen 2011, p. 608: “The closest-connection test is open and flexible: besides habitual residence, it permits the taking into account of various factual elements, such as a long time habitual residence in the past, the nationality of a spouse or other family member, language, professional activities, the registration of a particular nationality in a public register, the course of the person’s life, etc.” 259 Further detailed rules could be developed in the future. For example, in Bariatti 2011, pp. 17–19, there are tentative rules developed for cases of multiple nationality in the application of EU private international law instruments. 260 Vietnam Ministry of Justice, Đặc san tuyên truyền về quốc tịch và luật quốc tịch Việt Nam [Special document propagandizing the issue of nationality and Vietnamese Law on nationality] 2009, pp. 25–30: They constitute four sub-groups: (i) Refugees and immigrants from Cambodia in the period from 1970 to 1983 now living in the south provinces who have no papers to prove their nationality. (ii) Immigrants from Laos living in provinces along the west border of Vietnam who have no papers to ascertain their nationality. (iii) Immigrants from China living in border provinces in the north of Vietnam with no identity papers. (iv) Vietnamese people renouncing their Vietnamese nationality without naturalizing into a foreign country who now return to live in Vietnam (these people return mainly from Germany, Korea, Taiwan, and Czechoslovakia) or are living abroad. 261 Rabel 1958, p. 132; Vischer 1998, para. 4-27. 262 Examples of those rules are: Art. 410(2)(b)&(c); Art. 411(1).

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e) Nationals of countries with a composite system of private law The third disadvantage of nationality is that “it breaks down altogether”263 “when dealing with composite states, such as United Kingdom or the United States, comprising more than one legal system.”264 Unfortunately, Vietnamese laws have no statutory rule governing this problem; as of yet, Vietnamese scholars have not discussed it. The suggested solution265 is that where interregional rules exist, the determination of the applicable state law should respect those rules,266 while where no interregional rules exist and the individual is resident within his national country, the law of the state in which the individual resides should apply. In case the individual is resident outside his national country, the closest-connection test267 should be carried out to find the state most objectively connected to that person. 2. Permanent residence, domicile, and habitual residence The second connecting factor for personal status used in Vietnam is residence. In order to determine whether residence here is close to “domicile” or “habitual residence”, it is necessary to investigate its use in choice of law and jurisdictional rules. One may first search for conflict rules in VCC 2005, but the result found may disappoint advocates of residence because they are all subject to nationality. Meanwhile, VMFL 2000 contains conflict rules using residence as the connecting factor in divorce, adoption, and guardianship cases involving foreign elements. For divorce, Art. 104 VMFL 2000 uses the terminology “thường trú”, which is translated as “permanent residence”. According to paragraph 1 of Art. 104, Vietnamese laws on marriage and family would apply to divorce relations between a Vietnamese citizen and a foreigner or between two foreigners permanently residing in Vietnam. According to paragraph 2, in divorce cases where a party who is a Vietnamese citizen does not reside in Vietnam at the time of requesting the divorce, the divorce shall be Dicey et al. 2012, § 6-171, p. 199. Clarkson / Hill 2011, p. 328. 265 Siehr 2012a, p. 357. 266 This is the German solution; Art. 4(3) German Introductory Act 2011: “If referral is made to the law of a country having several partial legal systems, without indicating the applicable one, then the law of that country will determine which partial legal system shall be applicable. Failing any such rules, the partial legal system to which the connection of the subject matter is closest shall be applied.” 267 In Art. 4(3) sent. 2 German Introductory Act 2011, Germany employs this closest connection test. China does the same in Art. 6 Chinese Act 2010: “Where different systems of law are in force (concerning a civil relationship with foreign contacts) in different territorial units of a foreign country whose law is applicable to the civil relationship, the relationship is governed by the law of the unit with which it is most closely connected.” 263 264

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settled according to the law of the country where the husband and wife permanently co-reside. As regards adoption, the term “permanent residence” is also found in Art. 29(1) VLA 2010, which provides that “Overseas Vietnamese or foreigners permanently residing abroad who seek to adopt a Vietnamese must meet all conditions required by the law of the country in which they permanently reside and specified in Art. 14 of this Law (emphasis added).” Nonetheless, the term used for guardianship in marriage and family relations involving foreign elements is quite different since the connecting factor is the “residence” of the guardian, without clarifying whether permanent or temporary residence is needed.268 Apart from being a connecting factor for conflict rules, residence can vest Vietnamese courts with jurisdiction over two categories of people. If foreign nationals or stateless persons are defendants269 in general cases, or plaintiffs in matters claiming alimonies or parent identification,270 the jurisdiction of the Vietnamese courts is established when he/she “cư trú, làm ăn, sinh sống lâu dài” (officially translated into “permanently resides, works or lives”) in Vietnam. On the other hand, if Vietnamese nationals are defendants, jurisdiction is conferred on the Vietnamese courts if those Vietnamese nationals “cư trú, làm việc” (translated as reside or work) in Vietnam. 271 In addition, residence is a basis for granting exclusive jurisdiction to the Vietnamese courts in divorce cases according to Art. 411(1)(c) VCPC 2004 if both the Vietnamese citizen and the foreign citizen/stateless person “cư trú, làm việc, sinh sống” (translated as “reside, work or live”) in Vietnam. In the meantime, the expression of the residence factor in rules on the recognition and enforcement of foreign judgments is “cư trú, làm việc” (translated as “reside or work”), and the competent court is the court where the persons who are obliged to execute or who request not to recognise foreign courts/arbitral judgments reside or work.272 a) Residence in role of connecting factor It is important to see how Vietnamese courts define “thường trú”/“permanent residence”. In fact, there are differences in the way they consider a Vietnamese returning from abroad and a foreigner living Vietnam as “thường trú” in Vietnam for finding the law applicable to their divorces, since the length of stay needed for Vietnamese nationals relocating to Vietnam is indeed shorter. In one case, although a Vietnamese had just returned to Vietnam from Taiwan for five months before the date on which she applied for a divorce in a Vietnamese 268 269 270 271 272

Art. 106 VMFL 2000. Art. 410(2)(b) VCPC 2004. Art. 410(2)(c) VCPC 2004. Art. 411(1) VCPC 2004. Art. 35(2)(d),(e) & (f) VCPC 2004.

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court, she was considered as “thường trú” in Vietnam. Consequently, the couple no longer had common “thường trú” in Taiwan, and therefore Vietnamese law applied to the divorce.273 In two other cases, the Vietnamese nationals had just returned for some months before they pleaded for divorce with their husbands abroad (with whom they had lived together there for some years and had children). The courts however did not hold that they have common “thường trú” abroad (in which case foreign law would have been applied). By applying Vietnamese law, the courts assume that the Vietnamese nationals have set up their “thường trú” in Vietnam within a short period.274 Nevertheless, different than relocating Vietnamese, the length of stay of a foreigner living in Vietnam in one case was quite long (seven years).275 The practice of the Vietnamese courts reveals that they have made a distinction between “thường trú” for the purpose of choice of law and (with the same terminology) “thường trú” in public law on residency. If they had brought in the criteria of public law into the three cases above, they would have not considered the three Vietnamese returning from abroad as “thường trú” in Vietnam. In addition, if a foreigner considered as “thường trú” in Vietnam for the purpose of choice of law has to satisfy the criteria in public law, there would not be many of them;276 consequently, the chance of Vietnamese law applying would be reduced. Beside the length of the stay, the courts have considered other factors in order to assume the “permanent residence” of a party such as he/she works, lives,277 and settles in Vietnam.278 Judgment No. 01/HNST dated 4 Mar. 2004, First Instance Court of Ba Ria-Vung Tau Province. 274 Judgment No. 08/HNST dated 22 Mar. 2006, First Instance Court of Tra Vinh Province; Judgment No. 09/HNST dated 22 Mar. 2006, First Instance Court of Tra Vinh Province. 275 Judgment No. 88/LHST dated 29 Apr. 1999, First Instance Court of Hanoi City People’s Court. 276 According to Art. 13(1) of Ordinance No. 24/2000/PL-UBTBQH10 on entry, exit, and residence of foreigners in Vietnam, “foreigners temporarily residing in Vietnam under one of the following circumstances shall be considered for permanent residence: a) They are people who have struggled for freedom and national independence, for socialism, for democracy and peace or for the cause of science, but have been subject to suppression; b) They have meritorious contributions to the cause of building and defending the Vietnamese Fatherland; c) They are spouses, offspring, and parents of Vietnamese citizens residing in Vietnam.” 277 Judgment No. 88/LHST dated 29 Apr. 1999, First Instance Court of Hanoi City People’s Court. 278 Judgment No. 01/HNST dated 4 Mar. 2004, First Instance Court of Ba Ria-Vung Tau Province, Judgment No. 08/HNST dated 22 Mar. 2006 First Instance Court of Tra 273

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It is my impression that the term “thường trú”, in the role of a connecting factor (which is officially translated into “permanent residence”), bears the characters of domicile, not in the sense of the English concept but in the continental sense of the general concept of domicile.279 The reason might be that “thường trú” in Vietnam is only used as connecting factor for choice of law rules in family relations (divorce, adoption, etc.) where the connection between a person and the place of residence usually needs to be stronger. One possibility is that “permanent residence” here is indeed domicile and should be correctly translated as domicile. Although the translate versions of those laws are from an official source – the website of the Vietnamese Ministry of Justice280 – it is just for the purpose of reference (as expressly stated on top of those texts). As the concept of domicile has not yet been understood properly in Vietnam, such a misinterpretation is understandable. b) Residence in jurisdictional rules Turing to the area of jurisdiction, the wording changes to “cư trú, làm ăn, sinh sống lâu dài” which is translated into “permanently reside, work or live”. Accordingly, if a foreign defendant “permanently resides, works or lives” in Vietnam, the Vietnamese courts have jurisdiction.281 In practice, cases in which the defendants are foreigners living in Vietnam are rare. In two cases of Khanh Hoa Province Court, the same defendant was a French man who was residing and working in Vietnam from 1997 until 2004.282 Given the lack of number and variety of cases, it is not possible to draw out the practice of the courts regarding how long a length of stay is required and what factors are taken into consideration when deciding that a foreigner can be said to “permanently reside, work or live” in Vietnam. For the length of stay, some Vietnamese scholars have continuously advocated for a fixed provision particularly designed for the purpose of private international law to clarify how long a period is necessary to be considered as Vinh Province; Judgment No. 09/HNST dated 22 Mar. 2006, First Instance Court of Tra Vinh Province. In these cases, the three Vietnamese women returned to Vietnam to settle. 279 Vischer 1998, para. 4-28: Special concept of domicile in England: “distinguishes between domicile of origin and domicile of choice” whereas domicile of origin coupled with the technical doctrine of its revival; elusive factor of intention and “combines to a certain degree elements of nationality and domicile in the continental sense”; see Basedow 2012b, § 479, p. 308 for examples of the variations in the regulation of domicile in the law of various countries; Rabel 1958, p. 151. 280 Vietnamese Ministry of Justice’s Portal: Vietnamese legal normative documents: . 281 According to Art. 410(2)(b) VCPC 2004. 282 Judgment No. 07/2004/DS-ST dated 23 July 2004, First Instance Court of Khanh Hoa Province; Judgment No. 12/2004/DS-ST dated 8 Sep. 2004, First Instance Court of Khanh Hoa Province.

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satisfying the “permanent reside, work or live” criterion. They have also regretted that the lack of such a provision has caused difficulties for the court in deciding whether to hear relevant cases.283 However, such a provision does not exist in every country. In fact, most jurisdictions leave it to the courts as each case turns on its facts, and therefore a strict rule seems inappropriate. Other scholars appear to confuse the concept of “permanently reside, work or live” with the corresponding meaning of “permanent residence” in public laws regarding residence. They hence deduce that if a foreigner just temporarily resides (in public law criteria) in Vietnam, the Vietnamese courts would not have jurisdiction.284 As pointed out earlier, the number of foreigners meeting the requirement of permanent residence in accordance with public law is not large; therefore, such a construction leads to the result that Vietnamese courts would hardly ever have jurisdiction over foreigners. The cases mentioned above reject this understanding when the foreign defendant only temporarily resided and worked in Vietnam. 285 Nevertheless, it is not appropriate if a court hears a case where the length of the residence is too short because, if it does so, it would express the tendency of hearing cases on the basis of mere presence, which is not a practice that the Vietnamese courts have pursued. Beside the length of the stay, the terminology “permanently reside, work or live in Vietnam” expressly asserts the duty of the court to consider the foreigners” course of life, by providing two guiding factors that are the course of working and the course of living of that person. Nevertheless, many Vietnamese scholars suggest that the “permanently reside, work or live in Vietnam” should be held to have been established if just only one of the three factors of residing, working and living is satisfied, which means it is not necessary for that person to reside, work and live in Vietnam at the same time.286 c) In recognition and enforcement issues The criterion expressed in the rules on the recognition and enforcement of foreign judgments is that the person who is obliged to execute or who refuses to recognise the judgment “resides or works” in Vietnam. This applies to both Vietnamese and foreigners. To analyse the required length of the stay (while the question: “Would mere presence be enough for competence?”287 should be Bành Quốc Tuấn 2009, p. 45. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 84. 285 Judgment No. 07/2004/DS-ST dated 23 July 2004, First Instance Court of Khanh Hoa Province; Judgment No. 12/2004/DS-ST dated 8 Sep. 2004, First Instance Court of Khanh Hoa Province. 286 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 85; Thái Công Khanh 2006, p. 20. 287 Oppong 2007, p. 322: Generally, writers have been critical of mere presence as founding international competence. 283 284

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answered in negative288), the stay nevertheless does not need to be permanent in the meaning of public law on residency.289 Moreover, the lack of the word “permanent” implies that the length could be construed as being shorter when compared to the expression “permanently reside, work or live” in the context of jurisdiction. The second aspect of the criterion is that the person works in Vietnam. Vietnamese cases indicate that their competence is satisfied when one aspect of the criterion (either the stay or the working) is fulfilled.290 It is noticeable that, different from the context of jurisdiction where the work and the residence factors need to be cumulative, they can have the alternative effect of granting the Vietnamese courts competence over cases of recognition and enforcement of foreign judgments. d) Some suggestions Vietnam needs to adopt the following policy: that residence in the role of a connecting factor for conflict rules in family relationships should take the form of domicile, which requires a stronger association between a person and a country. The policy should also encompass what the courts are doing unconsciously: that is, making a distinction between a new residence establishment by foreigners in Vietnam and the relocation of Vietnamese back home from abroad, in which case the latter usually entails less exacting criteria. When the residence of foreigners provides a basis for the Vietnamese courts” jurisdiction, habitual residence is the better term, which has gained ground as a primary connecting factor for personal status in all of the more recent Hague conventions.291 It is also commonly recognised as suitable for jurisdictional purposes.292 In order to ascertain habitual residence, the ECJ 288 Decision No. 1100/2007/QĐ-ĐC-HNGĐ-ST dated 29 June 2007, Ho Chi Minh City People’s Court: In this case, the Belgium nationals who had to execute the judgment had only stayed in two hotels in Ho Chi Minh City for a few days. 289 Decision No. 572/2012/QĐST dated 3 May 2012, Ho Chi Minh City People’s Court. In this case, the person who had to execute the judgment was a Hong Kong national and temporarily resided (in the sense of Vietnamese public law on residency) in Ho Chi Minh City. 290 Decision No. 1100/2007/QĐ-ĐC-HNGĐ-ST dated 29 June 2007, Ho Chi Minh City People’s Court. In this case, the reason that the court found itself not competent to hear the case was that the person who had to execute the judgment did not either reside or work in Vietnam. In another case, the two persons, one Vietnamese and one foreigner, who had to execute a German judgment were not residing in Vietnam: See Circular No. 2687/BTPPLQT dated 20 June 2007. 291 See the clear trend towards the habitual residence in Basedow 2012b, §§ 485–494, pp. 313–319. 292 For example, jurisdiction in matrimonial matters in accordance with the Brussels IIbis Regulation, and general jurisdiction in the matters of succession in accordance with the EU Succession Regulation (Reg. 650/2012). See more in Basedow 2012b, §§ 492–493,

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has, in many of its cases,293 asserted that the national court has to consider all the particular circumstances of the case. For the habitual residence of children as the jurisdictional basis in matters of parental responsibility (according to Brussels IIbis Regulation), the ECJ has introduced a factual assessment of many relevant circumstances.294 Taking those interpretations into account, when a Vietnamese court interprets the habitual residence of a person for a jurisdictional purpose, many factual characteristics of an individual’s life should be taken into account, apart from the length of the stay and the intention to settle. Furthermore, if one wishes to give a tentative guideline for the length of stay for the establishment of habitual residence in the context of jurisdiction, that appreciable period of residence should be normally one year.295 This length is however not fixed because it has to be combined with other relevant factors (e.g., working, family. and social connections), so that the habitual residence in one country could be held to have been established with a shorter or longer time. The criteria are even fewer in the matter of the recognition and enforcement of foreign judgments. Although mere residence with an address in a hotel for some days is not enough, the stay need not be as long as one year. Moreover, the person does not need to reside and work in Vietnam contemporaneously since the competence of the courts is satisfied when either of the factors is evident. e) Illegal resident (1) Illegal Vietnamese residents abroad Determining the domicile or habitual residence of illegal residents for the purposes of private international law is very context-sensitive. Vietnam in general is an emigration country, with four million Vietnamese individuals living,

pp. 318–319; Dicey et al. 2012, § 6-172, p. 199: “Apart from being acceptable to lawyers of both the common law and the civil law traditions, the strength of habitual residence lies in its flexibility, a characteristic particularly valued in the regulation of jurisdiction.” 293 Inter alia, Case C-452/93 P Magdalena Fernández v Commission [1994] ECR I4295, para. [22]; Case C-372/02 Adanez-Vega [2004] ECR I-10761, para. [37]; and Case C-66/08 Kozłowski [2008] ECR I-0000), para. [54]. 294 See Case C-523/077 (A) 2 Apr. 2009, paras. [37],[38],[39],[44]. 295 This suggested length of stay needs to be distinguished from the public law on residency in which, according to Art. 15(3) Ordinance No. 24/2000/PL-UBTBQH10 on entry, exit and residence of foreigners in Vietnam, “Foreigners who temporarily reside for 1 year or more shall be granted temporary residence cards” while according to Art. 15(2), “Those temporarily resident for less than 1 year shall be granted temporary residence certificates.” One year is also the appreciable period of time for determining habitual residence, see He 2012/2013, p. 339.

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working, and studying abroad.296 Among them are hundreds of thousands of illegal residents,297 entering receiving countries via different routes.298 In that context, divorce cases could arise between Vietnamese living inside the country and Vietnamese living abroad illegally. The question of whether a Vietnamese court presumes the illegal residence abroad of the Vietnamese citizen as constituting domicile or habitual residence in the sense of private international law is unlikely to arise. Because in these cases the jurisdiction of the Vietnamese courts is established based on the Vietnamese nationality of at least one party, 299 and the applicable law is determined by the fact that the domestic Vietnamese is living in Vietnam.300 The court therefore is not concerned at all with the residence of the party abroad. (2) Illegal foreign residents in Vietnam Illegal residence in Vietnam mainly happens in the border areas.301 Since most Vietnamese conflict rules use nationality as the connecting factor, the determi296 General report on the migration of Vietnamese citizens overseas, at the “Conference on International Migration and Data Management for Policy Development”. Available online at , visited 14 July 2015. Hereafter referred to as “Presentation by the Vietnamese Consular Department 2011”, p. 1. 297 Presentation by the Vietnamese Consular Department 2011, p. 11: “According to incomplete statistics of the receiving country, there are hundreds of thousands of Vietnamese illegally entering or residing in the countries of the former Soviet Union, Eastern Europe, Germany, Britain and France. With the figure of 30,000 people, Vietnam now ranks fifth among countries having illegal immigrants in Britain, many of whom were detected and arrested by British police for participating in illegal activities, such as cannabis production and supply and prostitution. The organised crime bringing people across the borders has branches in Russia, Poland, the Czech Republic, Germany, France, and Vietnam. In July 2010, 31 Vietnamese suspects along with 66 illegal immigrants were arrested in Hungary, Germany, France, and England.” According to one e-newspaper: (dated 11 Nov. 2004, visited 27 Apr. 2012), approximately 1,000 people are illegally residing in Malaysia. Another 14,754 people are illegal residents in Korea, according to another e-newspaper: , visited 7 July 2015. 298 Presentation by the Vietnamese Consular Department 2011; according to the Review of Vietnamese Migration Abroad (2011) - Consular Department – Ministry of Foreign Affairs of Vietnam, these routes are the trafficking of women and children, overstayers, and fleeing cooperation labourers. This Review of Vietnamese Migration Abroad was developed by the Consular Department of the Ministry of Foreign Affairs of Vietnam, in consultation with experts from the Vietnam Institute of Social Sciences, and an advisory panel of staff from relevant ministries and agencies. The Review and its publication were made possible through the financial assistance of the European Union and the International Organization for Migration (IOM), with technical support from IOM Vietnam. Available online at , visited 11 July 2015. 299 Art. 410(2)(g) VCPC 2004. 300 Art. 104(1) VMFL 2000.

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nation of the applicable law does not depend on whether the illegal residence of a foreigner constitutes habitual residence or not. Nevertheless, the problem is critical for the basis of jurisdiction. If an illegally-resident foreigner in Vietnam (and perhaps one working or living there for a considerable time) sues or is sued, would a Vietnamese court consider that person as a foreigner permanently residing, working or living in Vietnam? Although there has not yet been such a reported case, since Vietnamese courts have been able to make a distinction between the fact of residence in public law and in private international law, they may consequently be able to assume that the residence need not be lawful for a purpose. This proposition corresponds to the theory of the functional approach, namely that the courts in certain occasions could presume the residence of a person for the purpose of finding the applicable law or establishing the court’s jurisdiction,302 although the residence itself is not legal according to requirement of public law.303 Meanwhile, it must be borne in mind that although the court is willing to hear a case involving an illegal resident, this does not lead to the public recognition of that fact.304

VII. The Application of Foreign Law305 VII. The Application of Foreign Law

Vietnamese scholars have recognised the necessity of applying foreign law by pointing out three justifications. First, it is a practical and objective demand for the purpose of broadening and strengthening relationships with foreign countries.306 Secondly, when a legal system expressly contains rules of conflict law referring to foreign law, the application of that foreign law is consequently required.307 Finally, the application of foreign law is also necessary to protect the legal rights of parties in a dispute.308 Nevertheless, some important reasons are missing. The first is to ensure the recognition and enforcement of judgments in foreign countries;309 and the second is the harmony of decisions, or uniformity of outcomes, when a court is willing to apply foreign law – thus courts in different countries can apply the same law and reach the same outcome in relation to a particular issue.310 Nguyễn Văn Toàn 2011, p. 29. For example, in one leading English case, Mark v Mark [2005] UKHL 42, the unlawful residence was recognised for the purpose of deciding jurisdiction. 303 Forsyth 2005, p. 342. 304 Forsyth 2005, p. 342. 305 This part is restricted to the application of foreign law by judicial authorities. 306 Hanoi Law School 2006b, p. 55. 307 Hanoi Law School 2006b, p. 55. 308 Hanoi Law School 2006b, p. 62. 309 Zajtay 1970, para. 14-4. 310 Basedow 2012b, § 14, p. 9. 301 302

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1. The duty of ascertaining foreign law in Vietnam Unlike a number of foreign laws,311 Vietnamese law now does not contain an express general statutory provision on the manner of the application of foreign law which clearly states whether foreign law is applied ex officio or only upon the application by the parties. Regarding the question of who (the court or the parties) has the duty of ascertaining the foreign law, the statutory provisions are varied. In a 1974 Circular of the Supreme People’s Court,312 the application of foreign law seems very restrictive because whenever there is demand for reference to foreign law, local courts are bound to report to and get advice from the Supreme Court on the merits of each case. The Supreme Court will ascertain the content of foreign law through relevant central authorities in order to guide local courts in its efficient application.313 In other words, this Circular regards the ascertainment of foreign law as being the work of the courts. Meanwhile, provisions in the recent years show that there are some duties incumbent on the parties. Take one provision concerning arbitration law, for example. Art. 49(3) VOA 2003314 allows parties to choose foreign arbitrators in accordance with the arbitration law of that country. When facing the question of who has to ascertain the foreign law in order to determine whether the foreign arbitrators have jurisdiction, the Supreme Court answers that “parties who plead with the court for the assignment of the foreign arbitrators bear the duty of providing the court with legal documents on arbitration of that country having been translated into Vietnamese and legally notarised.”315 Art. 5 Decree No. 138/NĐ-CP dated 15 Nov. 2006316 gives another illustration when requiring the parties to prove their closest relations to the legal systems re-

311 See Esplugues et al. 2011; Esplugues Mota 2011, p. 278: “Sometimes the legal nature accorded to foreign law directly derives from, more or less, explicit legal provisions. That is the case in Austria, Belgium, etc.” Another example is Art. 10 Chinese Act 2010: “The foreign law applicable to a civil relationship with foreign contacts is to be ascertained by the people’s courts, arbitral institutions or administrative authorities. If the parties choose to apply a foreign law, they should produce the content of that law. If the foreign law cannot be ascertained or if it contains no governing provision, the law of the People’s Republic of China applies.” See more on this Article in Guo 2012/2013, p. 292. 312 Circular No. 11-TAND dated 12 July 1974 guiding some matters as to principles and procedures in solving divorce disputes with foreign elements (no longer in force). 313 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 222. 314 Art. 49(3) VOA 2003: “Arbitrators selected by the involved parties or appointed by courts may be those on or not on the lists of arbitrators of Vietnam’s Arbitration Centers or foreign arbitrators according to their countries’ law provisions on arbitration.” 315 Resolution No. 05/2003/HĐTP dated 31 July 2003 of Council of Judges of Supreme People’s Court; Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 223. 316 Decree No. 138/NĐ-CP dated 15 Nov. 2006 detailing the implementation of the Civil Code’s provisions on civil relations involving foreign elements (currently in force).

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quested for application.317 Yet, these provisions are solely limited to specific issues; therefore, none of them is a general statutory rule applicable to others situations. Furthermore, case law is rare and inconclusive. In one case regarding the recognition and enforcement of a foreign arbitral judgment, involving application of Art. 5 New York Convention on the recognition and enforcement of foreign arbitral judgments,318 the court required a party to provide evidence of Singaporean law.319 When both statute and case law are not clear, one scholar320 and the textbook of Hanoi Law School321 are of the opinion that the courts are under a duty to ascertain the foreign law under the principle of iura novit curia. This opinion puts the “full active role” on the part of the court.322 Nevertheless, this proposition could endanger the efficiency of the task323 because the judge is a person whose knowledge of foreign law is limited.324 Moreover, judges may lack time, thus favouring the direct application of Vietnamese law. Furthermore, the system gives rise to high expenses – a difficulty more pronounced in the case of Vietnam. On the other hand, another Vietnamese scholar325 and textbook326 advocate the ex officio ascertainment of foreign law Art. 5 [Involved parties’ burden of proof for law application requests] Decree No. 138/NĐ-CP dated 15 Nov. 2006: “In case of application of laws to stateless persons or foreigners with two or more foreign nationalities under Article 760 of the Civil Code or application of laws of foreign countries with different legal systems under Clause 3, Article 4 of this Decree, the involved parties are obliged to prove to Vietnamese competent agencies their closest relations regarding citizens’ rights and duties to the legal system requested for application. When the involved parties fail to prove their closest relations regarding citizens’ rights and duties to the legal system requested for application, Vietnamese laws shall be applied.” 318 Vietnam is a party to this Convention. Art. 5(1): “Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made […].” 319 Decision No. 01/QĐ dated 21 Sept. 2001, Hanoi People’s Court. 320 Nguyễn Ngọc Diện 2005, p. 70. 321 Hanoi Law School 2006b, p. 62. 322 Esplugues Mota 2011, p. 281. 323 Bogdan 2012, p. 49: “To obtain reliable information about the contents of relevant rules in a foreign legal system, which one has never studied, is time-consuming, difficult and sometimes even impossible. The language of the foreign legal system may be a problem and there is a substantive risk that the foreign rules will be misunderstood when interpreted by someone lacking insight into their natural context.” 324 See, for more on the difficulties on the part of the court, in Zajtay 1970. 325 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 228. 317

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plus the assistance of the parties. During the proceedings, the parties could provide the court with evidence of foreign law in order to protect their rights, but the ascertainment of foreign law is mainly a duty that belongs to the judicial agencies. In fact, Vietnam is following the French model, where whether the duty to apply foreign law is incumbent on the courts or on the parties depends on the character of the choice of law rules.327 Where the conflict rules refer to foreign law, the courts bear the main duty of ascertaining it. The parties nevertheless are not deprived of the right to provide information on foreign law to support the consideration of the courts. On the contrary, in the event that the rules grant the parties the choice of law, the role of pleading the chosen foreign law is incumbent on the parties; and the courts’ task is to consider the application of the pleaded foreign law. 328 This kind of “mixed approach” requires cooperation between the courts and the parties for the efficient ascertainment of foreign law.329 2. Means used to ascertain the content of foreign law To acquire knowledge of foreign law, the courts of many countries employ a number of techniques,330 such as consulting research institutions331 and faculties of law (Germany); certificates of custom (France); written expert evidence (many countries); and expert witnesses (England and the US).332 In Vietnam, there has been no provision listing available means; thus one textbook has assumed a general reference to all techniques.333 Nevertheless, there is evidence that the court may prefer the method of requesting the assistance of the Ministry of Foreign Affairs and the Ministry of Justice as Art. 22

Hanoi Open University 2004, p. 85. Esplugues Mota 2011, p. 282: “In those cases in which choice-of-law rules are mandatory, the parties become rather passive in relation to pleading foreign law. Whereas in those situations where the choice-of-law rule is deemed facultative, it is necessary for a party to plead the relevant foreign law before it is necessary for the judge to apply it: France and the Scandinavian countries are good examples of that approach.” 328 Esplugues Mota 2011, p. 282; according to Guo 2012/2013, p. 297, “The Chinese Act 2010 follows the mixed model”; “The legislator takes the view that the relevant authorities should have the duty to ascertain the foreign law with one exception: when the parties choose to apply a foreign law, they should produce the content of that law.” 329 Esplugues Mota 2011, p. 294. 330 Remery 2005. 331 Such as the Max Planck Institute for Comparative and International Private Law, Hamburg, see more in Bach / Gruber 2011. 332 Zajtay 1970, paras. 14-16–14-17, see more in Esplugues et al. 2011. 333 Hanoi Law School 2006b, p. 59. 326 327

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Decree No. 138/ND-CP dated 15 Nov. 2006334 sets out the duty of these agencies in assistance with the task of ascertaining foreign law.335 What about the method “frequently employed in continental European countries”336 – expert opinion? Since cases requiring the application on foreign law are rare,337 they cannot furnish an answer as to the required qualifications of experts who are to provide written opinions to the Vietnamese courts. However, if courts, rather than the parties, request an expert opinion, it implies that the expert they choose meets the criteria; consequently, the qualification of an expert then depends on the choice of the court. In a conference at Hanoi in 2005, one Vietnamese judge answered in particular to the issue of “expert opinion of lawyers” that Vietnamese courts can ask for assistance of experts where necessary, but they may not ask for advice from lawyers.338 On the other hand, according to this judge, parties could plead the expert opinion of lawyers to protect their rights.339 Nevertheless, the judge failed to give a clear answer to the possibility of foreign lawyers presenting their testimony (or making written submissions) on foreign law before Viet334 Art. 22 Decree No. 138/NĐ-CP dated 15 Nov. 2006 detailing the implementation of the Civil Code’s provisions on civil relations involving foreign elements: “When requested by courts or state agencies competent to settle affairs or disputes arising from civil relations involving foreign elements, the Ministry of Foreign Affairs and the Ministry of Justice shall assist the requesting agencies in determining applicable laws and provide applicable foreign legal documents.” 335 In many of the judicial assistance treaties Vietnam has concluded with mostly Socialist countries, there exists the reciprocal obligation of the contracting states to furnish each other with the law in force in their respective countries. For example, Art. 28 [Exchange of legal information] Judicial Assistance Treaty between Vietnam and China provides that: “The Contracting Parties, upon request, shall provide each other with information about current legislation and law enforcement practices on its territory.” However, these treaties are only bilateral. Moreover, they do not set out further the authorities of each state and the procedures through which the exchange of information could be carried out. 336 Zajtay 1970, para. 14-17. 337 Phần thảo luận ngày 26/5, Hội nghị Tư pháp Quốc tế, Nhà Pháp luật Việt – Pháp [Discussion part 26/5, Conference on Private International Law, Vietnamese – French Publishing House, Practical issues in personal and property relations in Private International Law), 2005, p. 179 (hereafter “Phần thảo luận ngày 26/5” [Discussion part 26/5]): Vietnamese judges admitted that they have rarely applied foreign law as parties in the disputes did not request the application of foreign law, and there have not been cases in which the judges or the parties consider that foreign law should be applied. The judges did not find it necessary to apply foreign law as they considered either that foreign law is compatible with Vietnamese law or that in applying either law, the dispute would be solved in an identical fashion. Although those grounds that theVietnamese court had been relying on in applying Vietnamese law were rejected in worldwide academic literature, this practice has been dominant in Vietnam. 338 Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005, p. 178. 339 Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005, p. 178.

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namese Court.340 Moreover, there is no recorded case that allows one to form conclusions as to the acceptability of this procedure. 3. Interpretation of foreign law The theory given in Vietnamese textbooks is that foreign law has to be applied adequately and in good faith. When a conflict rule refers to foreign law, it means to refer to the whole legal system of that country, with its sources and structure. Moreover, it must be interpreted and applied as if in the country of origin.341 This is very much in line with the theory that “the court of the forum must, somehow, place itself in the shoes of the court of the foreign country.”342 4. In the event that foreign law cannot be ascertained – the application of the lex fori The required high quality of the ascertainment of foreign law incumbent upon the Vietnamese court is incompatible with the costs, the competence of the courts, and time constraints. What happens if foreign law cannot be obtained? Vietnam follows the most common approach: apply the lex fori.343 This approach is partly embodied in Art. 5 Decree No. 138/ND-CP dated 15 Nov. 2006,344 which provides that “[…] When the involved parties fail to prove their closest relations regarding citizens’ rights and duties to the legal system requested for application, Vietnamese laws shall be applied.” Apart from this specific rule, the application of lex fori results from case law and academic suggestions.345 The criterion for the resort to the lex fori is the failure of the court to ascertain the content of foreign law despite taking the necessary means in a reasonable time.346 However, the required level of sufficiency of foreign law ascertained is unclear; consequently, the determination of the failure of the task depends largely on the will of the court.347 Vietnamese lawyers have 340 Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005, p. 178: “Theo quan điểm của chúng tôi, chúng ra phải giải quyết trên cơ sở pháp luật Việt Nam. Nếu pháp luật Việt nam quy định không công nhận lời chứng của luật sư nước ngoài thì chúng tôi không thể công nhận lời chứng này.” 341 Hanoi Law School 2006b, p. 59. 342 Zajtay 1970, para. 14-24. 343 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 229; Hanoi National University 1997, p. 59; Esplugues Mota 2011, p. 286: “All EU States accept the application of the lex fori.” 344 Decree No. 138/NĐ-CP dated 15 Nov. 2006. 345 For other countries where the application of lex fori is explicitly stated in statutes or results from case law and academic research, and for alternatives to the application of the lex fori (application of probable content of foreign law), see Esplugues Mota 2011, p. 287. 346 Hanoi National University 1997, p. 59. 347 Esplugues Mota 2011, p. 286: “This is purely subjective process determined on a case-by-case basis.”

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criticised the unrestricted discretion of the court in avoiding foreign law and the exceeding homeward trend. They have also voted for more effort on the part of the court and for the resort to lex fori as being reserved for exceptional circumstances only.348 The interesting question of whether the lack of proof of the content of foreign law entails the dismissal of the claim by the Vietnamese courts does not have a statutory answer. Nevertheless, in practice, in a case where the court was obliged to ascertain foreign law but had failed to do so, it did not dismiss the claim but applied Vietnamese law in place of the foreign law.349 On the other hand, in another case where a party bore the burden of proof, its failure resulted in the dismissal of the claim.350 5. Cassation and review of the application of foreign law Vietnamese laws give no direct answer to the question of whether the application of foreign law is subject to review. It is worth bearing in mind that in Vietnam the review of the question of law is done through the cassation procedure351 while reviews regarding questions of fact are done through the reopening procedure.352 Since most Vietnamese judges and scholars consider the application of foreign law as being a question of law rather than of fact,353 the appropriate procedure, if any, is likely to be the cassation procedure. In reference to Art. 283(3) VCPC 2004, a seriously flawed application of law can form the basis of an application to annul the whole judgment, decision, or part of it.354 Although there is no specific ground for review of the misapplication of 348

p. 178.

Opinion of one participant at Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005,

Nguyễn Việt Cường 2006, p. 18: In this case, Vietnamese workers sued a Vietnamese labour export company for damages due to their loss of work in Malaysia. The Malaysia employer ran out of finance and the Vietnamese workers were sent back before the contracted return. The Vietnamese court, lacking knowledge of Malaysian labour law, applied Vietnamese law to force the Vietnamese labour export company to compensate the workers. 350 Decision No. 01/QĐ dated 21 Sept. 2001, Hanoi People’s Court. In this case (regarding recognition and enforcement of a foreign arbitral judgment), the court required a Vietnamese company to prove that a Japanese company’s branch in Singapore lacked capacity to sign a contract according to Singapore law. The Vietnamese party failed to do that and, as a result, the court dismissed the Vietnamese application to the court asking the court to not recognise a decision of Singapore arbitration. 351 Art. 283 VCPC 2004. 352 Art. 305 VCPC 2004. 353 See the subsection “The duty of ascertaining foreign law in Vietnam” above. 354 For measures taken by the Cassation Court, see Art. 297 [Powers of cassation review panels] Law No. 65/2011/QH12 amending and supplementing a number of articles of the Civil Procedure Code: “The cassation review panel has the following powers: 1) To reject the protest and uphold the legally effective court judgment or decision; 2) To annul 349

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foreign law, the application of law in general might include the application of foreign law. Nevertheless, there has not been any such reported case in Vietnam. In fact, if the cassation procedure (based on errors in applying foreign law) is permitted, the lower court’s ignorance of applying foreign law may give rise to many cases of review, because lawyers might be dissatisfied with the insufficient reasoning of the court for choosing to stay away from foreign law.355 6. Some solutions The point is that the Vietnamese courts and judges are in fact not hostile to foreign law. Nonetheless, they lack knowledge of foreign law so as to ascertain its content themselves. They also lack the competence and facilities to evaluate either the information they receive or the evidence put forth by the parties. Consequently, the courts choose to stay away from foreign law, fearing that they might misapply it. For this reason, the focus is on the competence of the courts, which should be enhanced to enable them to engage further in the process of ascertaining foreign law, interpreting it, and making decisions as to its application. Additionally, the courts should develop clear methods and procedures for ascertaining foreign law, which requires international cooperation.356 the legally effective court judgment or decision and uphold the lawful judgment or decision of the subordinate court which has been annulled or modified; 3) To annul part or the whole of the legally effective court judgment or decision for retrial according to firstinstance or appellate procedures; 4) To annul the judgment or decision of the court which has tried the case and terminate the resolution thereof.” 355 Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005. 356 Since Vietnam became a member of the Hague Conference in 2013, the country has taken part in activities of the Conference regarding this issue, such as the “Guiding principles to be considered in developing a future Instrument”. See more in Lalani 2011, p. 300: “The first part of the Guiding Principles focuses on facilitating access to online legal information of foreign law. It sets out minimum reliability and language criteria relating to such information and provides for a monitoring system to facilitate respect for such criteria.” In this article, Lalani proposed a model that contains articles for two additional parts: administrative and/or judicial co-operation and network of institutions and experts. Examples of regional conventions on this issue are: the European Convention on Information on Foreign Law (London Convention), available at , visited 7 July 2015; Inter-American Convention on the Treatment and Proof of Foreign Law, available at , visited 7 July 2015; The Madrid Principles (The “Principles for a Future EU Regulation on the Application of Foreign Law”), elaborated by the team of European academics and institutions in the frame of Project JLS/ CJ/2007-1/03: “Application of Foreign Law by Judicial and Non-Judicial Authorities in Europe” by the European Commission, in 2008. The Madrid Principles (Feb. 2010) are attached as an annex in Esplugues Mota 2011, p. 297. According to Mota, “The Madrid Principles tend to reach a point of equilibrium among several existing national solutions in Europe, with the clear aim of summarising a common minimum standard in this field in the EU.” For comments on the Madrid Principles, see also Lalani 2011, p. 299, fn. 2.

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VIII. Renvoi VIII. Renvoi

The process of applying foreign law in its entirety, including its choice of law rules is known as renvoi.357 The case where foreign conflict rules refer back to the forum is remission.358 On the other hand, if they refer onwards to the law of a third country, it is a case of transmission.359 1. Statutory bases While Art. 759(3) VCC 2005 together with Art. 5 Decree No. 68/2002/NĐCP360 allow renvoi in the form of remission to the internal law of Vietnam, they nevertheless do not speculate about the allowance of transmission. It is noticeable that Art. 5(3) Decree No. 60/NĐ-CP 6 June 1997,361 which is no longer in force, explicitly used to provide for transmission. Unfortunately, this Decree has been replaced by Decree No. 138/NĐ-CP dated 15 Nov. 2006,362 which does not repeat such provision. As a result, an express stipulation of transmission is lacking. Some authors regret the decision to omit transmission from the new Decree363 and advocate for the acceptance of transmission,364 which should be 357 Cited in accord with Lee / Lu 2005, pp. 35, 36: On the continent, the Forgo case of the French Cour de cassation brought renvoi to the fore. The three decisions of the Cour de cassation are, respectively, Cass.civ 5 May 1875, DP 1875 1.343, Clunet 1875, 358 (first instance, applying French law without renvoi ); 24 June 1878, DP 1879 1.56, S 1878 1.429, Clunet (som) 1879, 285 (appeal, applying French law with renvoi from Bavarian law); Cass.req 22 Feb. 1882, DP 1882 1.202, S 1882 1.393, Clunet 1883, 64 (upholding the appeal). In English law, the so-called foreign court theory was inaugurated by the case of Collier v Rivaz (1841) 163 ER 608. 358 Rabel 1958, p. 78. 359 Clarkson / Hill 2011, pp. 34–35. 360 Art. 5 Decree No. 68/2002/NĐ-CP detailing the implementation of a number of articles on marriage and family relations involving foreign elements: “[…] in cases where a foreign law refers back to Vietnamese law, the Vietnamese legislation on marriage and family shall apply” (emphasis added). 361 Art. 5(3) Decree No. 60/NĐ-CP dated 6 June 1997 detailing the implementation of provisions on civil relations involving foreign elements of the Civil Code 1995: “In case of an application of foreign law according to paragraph 1 of this Article […] if that foreign law refers to the law of a third country, the law of that third country shall apply” (emphasis added). 362 Decree No. 138/NĐ-CP dated 15 Nov. 2006 detailing the implementation of provisions on civil relations involving foreign elements of the Civil Code 2005. Just as the VCC 1995 was replaced by the VCC 2005, Decree No. 60/NĐ-CP dated 6 June 1997 detailing the implementation of the Civil Code 1995 was replaced by Decree No. 138/NĐ-CP dated 15 Nov. 2006362 detailing the implementation of the Civil Code 2005. 363 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 235. 364 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 235; Nguyễn Trung Tín 2004, p. 36.

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contained in a separate article in the Civil Code along with remission. 365 On the other hand, another scholar suggests that although there is no legislation, reference to the law of a third country should be allowed as long as that country accepts governance of the legal matter.366 In sum, renvoi in Vietnam is single renvoi367 as Vietnamese courts accept remission to Vietnamese law and apply Vietnamese law without any further consideration of foreign doctrine on renvoi, regarding what the foreign court would do in that case – specifically whether it accepts renvoi back from the forum court or not.368 2. Renvoi in contract Vietnamese scholars suggest a rejection of renvoi in disputes relating to contracts where there is a choice of law agreement. Although there is no express statutory provision, they use Art. 759(3) VCC 2005 to infer that the second sentence of this provision, about contracts, is an exception to the first sentence about renvoi in general matters.369 In absence of a choice of law by parties, scholars nevertheless suggest the acceptance of renvoi, thus they do not follow the pattern of rejecting renvoi laid down in Art. 20 Rome I Regulation.370 The reason is that the Vietnamese conflict rule on contract in the absence of choice371 does not refer to the law of the country with which the contract has closest connection, as the Rome I Regulation does. It rather designates the law of the country of the place of performance, which sometimes leads to the law of a country with which the contract is less-well connected. Consequently, if Vietnam accepts renvoi in this case, the chance that the application of the law of the country most closeNguyễn Trung Tín 2004, p. 36. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 235. 367 Double renvoi is where the forum courts take account of foreign conflict rules in exactly the same manner as, in their opinion, the foreign court would have done (whether the foreign courts would accept renvoi back from the forum). See Sauvephanne 1988, para. 6–40. This may be called the foreign court theory or the English doctrine of renvoi, see Fawcett et al. 2008, p. 61; Dicey et al. 2012, § 4-20, p. 85: “[…] it must be taken that the theory of double or total renvoi is the doctrine of English courts in the situations in which they are willing to refer to the conflict rules of the foreign law. Hence, if the foreign law refers to English law and rejects renvoi doctrine altogether, the result is that English law is applicable; while if the foreign law refers to English law and adopts the doctrine of single renvoi, the result is that the foreign domestic law is applicable.” 368 See Fawcett et al. 2008, p. 61 for objections to the doctrine of double/total renvoi: (a) The total renvoi doctrine does not necessarily ensure uniform decisions; (b) the total renvoi doctrine signifies the virtual capitulation of the English rules for choice of law; (c) the total renvoi doctrine is difficult to apply. 369 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 239. 370 Art. 20 [Exclusion of renvoi] Rome I Regulation. 371 Art. 769 VCC 2005. 365 366

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ly-connected with the contract being applied is increased. This is attained when the Vietnamese conflict rule refers to the law of the country of the place of performance whereas this law in turn refers (back or onwards) to the law of the country with which the contract is most closely connected.372 3. Future of renvoi in Vietnam Renvoi has always been an extremely difficult topic,373 which makes a swift rejection of it attractive.374 There was a suggestion to abolish the doctrine in the 2006 edition of the treatise by Dicey, Morris, and Collins on the Conflict of Laws;375 moreover, another example of the simple exclusion of renvoi is Article 9 Chinese Act 2010.376 Although the most significant disadvantage of renvoi is that it increases uncertainty,377 it is helpful for the achievement of uniformity of decisions in some situations,378 for instance, in the absence of uniform conflict rules.379 Moreover, renvoi is often preferred when it enables the judge to apply his own law.380 Nevertheless, an observation of cases of renvoi in continental European and common law countries (England and the US) reveals that renvoi does not apply to all fields of law. Accordingly, it has been mostly applied where lex domicili and lex patrie conflict,381 mostly in cases of succession, family, and Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 240–241. In Hughes 2010a, p. 214, by tools of mathematical logic the author concludes that the problem of renvoi (even considering the three approaches (exclusion, single or double)) is insoluble. He describes the situation as “whenever one attempts to put one’s finger on the renvoi problem, it somehow slips away”; Hughes 2010b, p. 517 (erratum). 374 Forsyth 2010, p. 646. Siehr 2012b, p. 1450: there are national jurisdictions that decline to accept renvoi at all (e.g., Art. 32 Greek Civil Code). 375 Dicey et al. 2006; see Dicey et al. 2012, § 4-038, p. 95. 376 Art. 9 Chinese Act 2010 “The foreign law to be applied to a civil relationship with foreign contacts does not include the rules on the application of law of that foreign country.” English translation by Chen Weizuo/Kevin M. Moore, in: Yearbook of Private International Law 12 (2010), pp. 669–674. 377 Forsyth 2010, p. 640: “[…] when the approach of the foreign court to the matter at hand is unknown or depends upon unsatisfactory evidence of the foreign law.” 378 For instance, in the English case Blue Sky One Ltd & Ors v Mahan Air & Anor [2010] EWHC 631, the judge did not apply renvoi and held invalid a mortgage that would clearly be upheld by the courts in the place where it was executed. Forsyth 2010, p. 640, sees it as a pity and he supports renvoi in this particular case, on the basis of the uniformity policy. 379 Forsyth 2010, p. 641; Siehr 2012b, p. 1450. 380 Siehr 2012b, p. 1450. 381 The Hague Convention on Renvoi 1950 also only deals with conflicts between national law and the law of the domicile (even though it is not yet in force). This Convention can be downloaded from . An English translation is found in 372 373

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property law.382 In contrast, renvoi has had no place in contract and tort,383 for example in the Rome I and Rome II Regulations.384 The specific reason given for its exclusion in contract matters is that the application of renvoi could frustrate the intention of the parties.385 Regarding tort, the Australian case Neilson v Overseas Projects Corporation & Anor386 may suggest the use of renvoi in this field of law. However, it should be noted that in that case, renvoi was taken to constitute a device for softening the rigidity of the Australian choice of law rule for tort, which is the lex loci delicti without exception.387 As a result, a later full court decision388 rejected this extension of renvoi. These experiences signify that, if Vietnam keeps a general provision of renvoi like in Germany,389 the courts should bear in mind its limited scope of application. In addition, renvoi should retain its form as single renvoi due to

the American Journal of Comparative Law, Vol. 1, 1952, p. 280. Outside, the Japanese Act 2006 contains a provision for renvoi (Art. 41), which designates renvoi in the field of personal law. See Yokoyama 2010, p. 113. 382 For example France, see Sauvephanne 1988, para. 6-25: “The decisions of the Cour de cassation only deal with renvoi from the national law to the law of the domicile, limited to matters of personal status and, earlier on, succession to movables […].” For Germany, see Sauvephanne 1988, para. 6-33: “It is true that in the areas of personal status, family law and succession a reference to foreign law as a whole is a rule, but the situation in other fields is different […]”; Lorenzen 1910, p. 191. Courts in common law countries have applied renvoi largely in cases of succession and property law, and in limited cases of personal and family law. 383 For example in Germany, Sauvephanne 1988, para. 6-33. For common law countries, see Sauvephanne 1988, paras. 6-48, 6-42: Renvoi is not accepted in the law of contract. Writers agree that renvoi has no place in the field of tort. According to Sauvephanne 1988, para. 6-44, “In the areas of contract and tort renvoi is to be rejected as neither practical nor feasible, because of the lack of precision of choice-of-law rules in these fields and because the objective of renvoi can only be attained in those areas where choice-of-law rules are precise, which means that they determine the applicable law by a fixed connecting factor, e.g., the situs of land or chattels or a person’s domicile”; Fawcett et al. 2008, p. 71; Dicey et al. 2012, § 4–022, p. 86. 384 Art. 24 [Exclusion of renvoi ] Rome II Regulation. 385 Lee / Lu 2005, p. 36. 386 Neilson v Overseas Projects Corporation of Victoria & Anor [2002] WASC 231. 387 Mortensen 2006, pp. 2, 3; Lee / Lu 2005, p. 49. 388 Mercantile Mutual Insurance (Australia) Ltd v Neilson (2004) 28 WAR 206. See Lee/Lu 2005, p. 49: the authors agree with the full court decision. 389 Art. 4(1) German Introduction Act to Civil Code, last amended by law of 12 Apr. 2011: “(1) If referral is made to the law of another country, the private international law of that country shall also be applied, insofar as this is not incompatible with the purpose of the referral. If the law of another country refers back to German law, the German substantive provisions shall apply; (2) Where the parties can choose the law of a certain country, that choice may only relate to the substantive provisions.”

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the complexity of the double renvoi doctrine.390 Furthermore, if transmission is accepted (implicitly as in current law or explicitly in a future article), the chain of renvoi onwards has to be broken at some point. There have been four methods of breaking the vicious circle: when the reference goes back to forum law;391 when a legal system accepts renvoi as a reference to its substantive law; when renvoi constitutes a reference back to a legal system that applied before;392 and breaking the chain at the second reference.393 Vietnamese literature tends to support the fourth technique. Accordingly, the reference to the second jurisdiction means the reference to its internal law.

IX. Public Policy IX. Public Policy

Public policy is “a fundamentally important element of modern private international law.”394 It plays the role of a safeguard against the damaging impact of foreign norms and decisions on the domestic legal order.395 1. Codification of public policy in Vietnam Arts. 759(3) and (4) VCC 2005 assert the importance of public policy when applying foreign law and international custom (emphasis added): “3. In cases where the application of foreign laws is referred to by this Code and other legal documents of the Socialist Republic of Vietnam or by the treaties to which the Socialist Republic of Vietnam is a contracting party, such foreign laws shall apply, provided that such application or the consequence thereof is not contrary to the basic principles of the law of the Socialist Republic of Vietnam; […] 4. In cases where the civil relations involving foreign elements are not governed by this Code and other legal documents of the Socialist Republic of Vietnam, the treaties to which the Socialist Republic of Vietnam is a contracting party or civil contracts between the parties, the international practices shall apply, provided that such application or the consequence thereof is not contrary to the basic principles of the law of the Socialist Republic of Vietnam.”

In addition, some provisions of specified laws, inter alia, Art. 5(2) VCL 2005396 and Art. 7(2) VOA 2003397 affirm the effect of public policy on the 390 For difficulties in the application of the doctrine of double renvoi, see Dicey et al. 2012, §§ 4-033–4-037, pp. 91–94. On the other hand, Siehr calls the single renvoi a sort of “selfish” renvoi and approves the double or total renvoi approach. 391 Adopted in China before the Act of 2011. See Sauvephanne 1988, para. 6-47. 392 The second and third approaches are adopted in Austrian law. See Sauvephanne 1988, para. 6-36. 393 Portuguese law in the Portuguese Civil Code 1966. See Sauvephanne 1988, para. 637. 394 Mills 2008, p. 201. 395 Kramberger Škerl 2011, p. 461; Martiny 2012, p. 1395.

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application of foreign law and the international commercial practices chosen by the parties. It is noticeable that these provisions use the terminology “basic principles of the law of the Socialist Republic of Vietnam” instead of the notion “public policy”. Nevertheless, they express the same meaning. Vietnamese legislators might want to clarify that they effectively mean “public policy” when they use the phrase “basic principles of the law”.398 Other countries do not use the same expression of public policy. While Japan codifies directly the notion of “public policy”,399 China employs the notion “social and public interests of China” for their provision on public policy.400 Germany on the other hand lays down “fundamental principles”,401 which is the nearest pattern to Vietnam’s. 2. Form of public policy in Vietnam and the distinction between public policy and mandatory rules The application of public policy in Vietnamese legislation takes the orthodox form of being “an exception to the operation of the choice of law rules”.402 In other words, “it manifests itself by ousting the normal applicable law.”403 Vietnamese scholars have recently differentiated the two models of rejecting foreign law. Accordingly, public policy has to proceed from examining the rules of normally applicable law and then to see if that law complies with 396 Art. 5(2) VCL 2005: “Parties to commercial transactions involving foreign elements may agree to apply foreign laws or international commercial practices if such foreign laws or international commercial practices are not contrary to the fundamental principles of the Vietnamese law” (emphasis added). 397 Art. 7(2) VOA 2003: “For disputes involving foreign elements, the Arbitration Councils shall apply the laws selected by the involved parties. The selection and application of foreign laws must not contravene the fundamental principles of Vietnamese law.” This Ordinance is out of force, and is replaced by the Law on Commercial Arbitration 2010. 398 Bùi Thị Thu 2010, p. 7. 399 Art. 42 Japanese Act 2006: “Where a case should be governed by a foreign law but application of those provisions would contravene public policy (ordre public), those provisions shall not apply.” 400 Art. 5 Chinese Act 2010: “If the application of a foreign law would prejudice the social and public interests of the People’s Republic of China, the law of the People’s Republic of China applies instead.” 401 Art. 6 German Introductory Act 2011: “A provision of the law of another country shall not be applied where its application would lead to a result which is manifestly incompatible with the fundamental principles of Germany.” 402 The two other approaches are the “better law approach” and the Mancini approach which treats public policy as an autonomous connecting factor: See Lagarde 1991, para. 11-12. 403 Lagarde 1991, para. 11-12.

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basic principles of Vietnam. The slightly modified model, starting with Vietnamese rules characterised as of a public policy nature, regardless of the substance of the foreign applicable law, is the overriding application of domestic mandatory rules (and not of public policy).404 Vietnamese scholars have also acknowledged that although mandatory rules are domestic legislation with the natural role of regulating domestic relationships, they are mandatorily applied to certain aspects of civil relations with foreign elements, and in doing so they disable conflict rules which would otherwise apply.405 According to these authors, in comparison with public policy in its exception model, the use of mandatory rules is a more simplified procedure because there is no need to apply conflict rules and foreign law, as well as to determine the result of the application of foreign law.406 Examples of mandatory rules are certain provisions on consumer protection, such as Art. 4407 and Art. 6408 Ordinance on protection of consumer interests 1999 (VOPC 1999). These provisions reveal that Vietnam prefers the common law method of using protective provisions409 rather than the German and French practice of relying on public policy to disregard a lex contractus which gives the buyer too little protection.410 Apart from consumer protection, some provisions on foreign exchange management411 are also attributed a mandatory character.412

See Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 185. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 183; Bùi Thị Thu 2010, p. 16. 406 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 186. 407 Art. 4 VOPC 1999: “Organizations and individuals that produce and/or deal in goods and/or services in service of domestic consumption; and organizations and/or individuals trading in import goods shall have to strictly comply with the provisions of this Ordinance, the legislation on commerce, standards, measurement, the quality of goods, food, advertisement, environmental protection as well as the relevant provisions of law, and have to pay compensation for any damage as prescribed by law.” 408 Art. 6 VOPC 1999: “Foreign organizations and individuals operating on the Vietnamese territory shall have to abide by the provisions of Vietnamese legislation on the protection of consumers interests, except otherwise provided for by international agreements which the Socialist Republic of Vietnam has signed or acceded to.” 409 Lagarde 1991, para. 11-17: “The courts tend to hold that the protective legislation of the lex fori covers the contract in issue, whatever is the proper law of the contract.” 410 Lagarde 1991, para. 11-17. 411 These provisions can be found in Decree No. 63/1998/ND-CP dated 17 Aug. 1998 on foreign exchange management, replaced by Ordinance No. 28/2005/PL-UBTVQH11 on foreign exchange management; Decree No. 160/2006/NĐ-CP dated 28 Dec. 2006 detailing the implementation of the Ordinance on foreign exchange. 412 The Vietnamese courts applied Vietnamese provisions on foreign exchange as mandatory rules in a dispute regarding a contract with foreign elements: Judgment No. 228/DSST dated 29 Dec. 2003, Ho Chi Minh City People’s Court. 404 405

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3. Relative character of public policy a) The need to consider the actual circumstances of the case It is well-established nowadays that public policy does not aim to exclude foreign law but the application of foreign law in concrete individual circumstances. Foreign law in the abstract that is contrary to the public policy of the forum may produce a compatible outcome in certain circumstances and vice versa.413 The courts therefore should be alert to considering the legal solution (and not just the content on the surface of foreign law). Fortunately, Art. 759(3) VCC 2005 has set out clearly the circumstances for applying the doctrine of public policy: when either the application of foreign law or the consequences thereof are contrary to basic principles of the law of Vietnam. b) Connection between the dispute and forum jurisdiction The second character of the application of public policy is the existence of some connection between the case and domestic jurisdiction, which German and Swiss scholars refer to as Inlandsbeziehung or Binnenbeziehung.414 English literature on the other hand employs the concept of “proximity”, which is “an examination of the connecting factors operating between the dispute and the forum state;”415 so, where the degree of proximity is strong, the application of public policy is more likely to be justified.416 Vietnamese literature, however, has not sufficiently developed to cover this analysis. In fact, the courts will ascertain whether the connection between the dispute and the forum is close enough for the forum’s legal principles to protect against the application of foreign law.417 The two commonly recognised bases of the Inlandsbeziehung are the habitual residence and the nationality of one of the parties.418 4. Standard of public policy When the doctrine of public policy was codified for the first time, the term used was not “contrary to the basic principles of the law of the Socialist Republic of Vietnam” but “contrary to the law of Vietnam”. The Commercial Law 1997 (VCL 1997)419 and the Maritime Code 1990 (VMC 1990)420 reflect this wording. 413 Lagarde 1991, para. 11-24; for examples of English cases, see Dicey et al. 2012, § 5-006, p. 101. 414 Blom 2003, p. 382; Lagarde 1991, para. 11-25. 415 Mills 2008, p. 212. 416 Mills 2008, p. 212. 417 Basedow 2012b, § 218, p. 133. 418 Martiny 2012, p. 1397. 419 Art. 4(2) VCL 1997 (no longer in force): “Contracting parties shall be entitled to agree on the application of foreign laws if such laws are not contrary to Vietnamese laws or where international treaties which Vietnam has signed or acceded to stipulate the appli-

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Accordingly, public policy could oust foreign law not only when it contravened basic principles of the law of Vietnam but also when it was simply contrary to Vietnamese law. The scope of public policy was therefore much wider as foreign provisions and legal provisions of Vietnam are likely to be contrary.421 Consequently, the court could easily resort to familiar Vietnamese law. Vietnamese scholars nevertheless were unanimously opposed to the wording, arguing that it went against international practice,422 and that the courts could not oust foreign law just because it differs from the lex fori.423 As a result, since 2005 the wording has given way to “the basic principles of the law of Vietnam”. Since the standard “basic principles of the law of Vietnam” became common, Vietnamese scholars have continuously debated the definition and the scope of the notion.424 Some even call for a list of provisions and rules of basic principles of the law of Vietnam425 although such an attempt hardly succeeds in any country.426 Moreover, they claim a hierarchy of a constitutional nature among the provisions of Vietnamese laws representing that legal order. They also believe that the Constitution is the primary source of these provisions.427 Other scholars, on the other hand, see an articulation between the basic principles of the law and the fundamental rights derived from the Constitution.428 It should be noted that Germany incorporates the respect for fundamental rights into the exception of public policy, but they have their fundamental rights shown in and guaranteed by the Fundamental Law.429 At the same time, fundamental rights in Vietnam can only be drawn subjectively from the Constitution; such an articulation therefore does not really help. Given the absence of a concrete list of basic principles, the use of the doctrine of public policy is ultimately at the discretion of the courts.

cation of foreign laws”. Art. 4(3): “Contracting parties shall be entitled to agree on the application of international commercial practices if such practices are not contrary to Vietnamese laws” (emphases added). 420 Art. 7 VMC 1990 (no longer in force): “In cases regulated by this Code or where agreed by parties in contract, foreign law can be applied in Vietnam as to maritime contractual relations, provided that that law is not contrary to the law of Vietnam” (emphasis added). 421 Nguyễn Bá Chiến 2004, p. 62. 422 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 247; Bùi Thị Thu 2010, p. 9. 423 Bùi Thị Thu 2010, p. 9. This is a universal observation, see Lagarde 1991, para. 1152. 424 Đặng Hoàng Oanh 2008. 425 Bùi Thị Thu 2010, p. 16; Đặng Hoàng Oanh 2008. 426 Dicey et al. 2012, § 5-009, p. 102. 427 Bùi Thị Thu 2010, p. 17. 428 Hanoi Law School 2006b, p. 67. 429 Lagarde 1991, para. 11-55.

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It can be seen that Vietnam has chosen the lex fori as a yardstick to measure against foreign law instead of relying on international values or comparative tests.430 Although there is no guarantee of a standardised lex fori, the Vietnamese legislature employs this approach because the comparative approach would be beyond the courts’ capabilities. Nevertheless, recent Vietnamese writers have increasingly criticised the national public policy (based on domestic legal order) and supported a broader understanding of public policy, which is international public policy based on a shared standard.431 The argument takes the position that since Vietnamese laws are generally behind the international innovations, reliance on national standards in evoking public policy may be unreasonable and might harm the integration process. The courts should thus align themselves to the international conception of the doctrine of public policy.432 Because this proposition has just emerged in Vietnam, there has been little material written about the perception of international public policy. In fact, public policy can be expressed in a bilateral sense, a regional sense, and a universal sense.433 Examples of public policy in a bilateral sense are Art. 3 Treaty of Legal Assistance in Civil Matters with France 1999, Art. 7 Treaty of Legal Assistance in Civil Matters with Russian Union 1998, or Art. 12 Treaty of Legal Assistance in Civil Matters with Poland 1993.434 Although those provisions set forward the respect for public policy of contracting states, they do not mention the common standard of two countries. In the regional sense, one might relate public policy to the ASEAN Human Rights Declaration,435 which provides a source of fundamental regional norms just as the European Convention on Human Rights (ECHR) does.436 Yet, apart from the human rights boundary, it is hard to determine ASEAN international public policy in respect of private international law without a directly relevant ASEAN convention. In universal sense, public policy derives mainly from the norms of international human rights.

For these two approaches, see Lagarde 1991, para. 11-52. Đỗ Hải Hà 2008, p. 54. 432 Đỗ Hải Hà 2008, p. 53. 433 Mills 2008, pp. 213, 214. 434 For a list of these treaties, see section III.1 in this thesis. 435 Drafted in 2011 and adopted unanimously by ASEAN members at its November 2012 meeting in Phnom Penh. This declaration can be downloaded from , visited 19 July 2015. It is not legally binding, but it indicates the effort, as well as the consensus, of ASEAN members towards the prevention of violations of ASEAN citizens’ human rights. 436 Martiny 2012, p. 1396. For European public policy and its relationship to national public policy and relevant case law, see Kramberger Škerl 2011. 430 431

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5. Effect of public policy Some Vietnamese scholars adopt the findings of French sources to acknowledge that the operation of public policy could lead either to the dismissal of the claim or to the substitution of foreign law with another law.437 The former effect of public policy is negative and usually happens when claims for the recognition and enforcement of foreign judgments are decided based on an offensive foreign law,438 whereas the latter effect involves the question of which law the court will take to substitute in the place of foreign law. Some Vietnamese provisions used to answer the latter question by regulating the resort to Vietnamese law: Art. 5(2) Decree No. 60/NĐ-CP dated 6 June 1997 guiding the implementing of the Civil Code on civil relations with foreign elements,439 and Art. 5 Ordinance No. 28 dated 15 Dec. 1993 on marriage and family relations between Vietnamese nationals and foreigners.440 However, they are no longer in force, and recently enacted legislation441 does not make use of such a device. Vietnamese scholars consider this phenomenon as a legal shortcoming of Vietnamese private international law 442 and vote for the approach443 of resorting to the lex fori.444 They believe that this is appropriate for Vietnam because it is simpler and more practical for the judges with little knowledge of foreign law to fill the gap caused by the exclusion of foreign law with the corresponding rule of the lex fori, rather than seeking the compatible provision in the foreign law or in the legal system most closely connected with the issue.445 The question of how far the exclusion of foreign law extends is another aspect of the effect of public policy. Vietnamese scholars support the prominent view446 that not foreign law in toto, but only its offensive provisions must give way to the forum law.447 They emphasise that the employment of public Bùi Thị Thu 2010, p. 12. Bùi Thị Thu 2010, p. 12. 439 “In case the application of foreign law or the result thereof is contrary to provisions from Art. 2 to Art. 11 VCC 1995 and other basic principles of the law of Vietnam, Vietnamese law shall apply.” 440 “If the application of foreign law is contrary to basic principles of the law of Vietnam or is harmful to the sovereignty and security of Vietnam, Vietnamese law shall apply.” 441 For example, Decree No. 138/2006 detailing the implementation of the Civil Code’s provisions involving foreign elements. 442 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 249. 443 See Lagarde 1991, paras. 11-59–11-63 for three approaches to the substitution of foreign law: first, using the lex fori; second, filling the gap with another provision of that foreign law; and third, apply the law indicated with a subsidiary connecting factor. 444 Bùi Thị Thu 2010, p. 12; Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 248. 445 Lagarde 1991, para. 11-55. 446 Mills 2008, p. 212; Lagarde 1991, para. 11-54. 447 Bùi Thị Thu 2010, p. 20. 437 438

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policy does not mean the denial of the validity of other nations’ legal systems; it solely aims to exclude the application of some unsuitable individual provisions.448 6. In recognition and enforcement of foreign judgments There are some Vietnamese cases relating to the doctrine of public policy in the matter of recognition and enforcement of awards of international arbitrators.449 One leading and paper-consuming case is Tyco services (Singapore) v Leighton Contractors (Vietnam). This case involved litigation arising out of a jointventure agreement concluded in 1995 to construct the Indochina Beach Hotel in Da Nang-Vietnam. An Australian (Queensland) arbitrator decided the dispute in accordance with the arbitral agreement between the two parties and found in favour of the Singaporean company in two arbitral judgments. The Singaporean party then sought the recognition and enforcement of those judgments before the Vietnamese courts. Accordingly, Ho Chi Minh City Court issued a decision in favour of recognising the two arbitral judgments.450 However, the Supreme Court, on hearing the appeal,451 held the recognition of these judgments to be contrary to basic principles of the laws of Vietnam. The Supreme Court explained that Tyco – a Singapore legal person – did not acquire permission of Vietnamese agencies (in accord with Vietnamese law) to carry out activities in Vietnam. Moreover, the joint venture had not been sanctioned by the competent Vietnamese authorities, and the venture did not have the required construction bidding license. Those facts constituted the contravention of Vietnamese public policy. Furthermore, in accordance with Art. 1 Ordinance 1995 on Recognition and Enforcement of Foreign Arbitral Decisions,452 an arbitral judgment submitted for recognition must result from a dispute arising out of commercial activi-

Hanoi Law School 2006b, p. 68. Beside Tyco Services (Singapore) v Leighton Contractors (Vietnam), there are three other important cases. First, Energo-novus, Moscow v Vinatex [1998] with two judgments: Judgment No. 02/ST dated 18 Nov. 1997 of the First Instance Court of Hanoi City and Judgment No. 59/KTPT dated 4 June 1998 of the Appellate Court located in Hanoi City. The second case is Kyunggi Silk Co Ltd v Viseri: Judgment No. 01/YCCN dated 23 July 2001 of the First Instance Court of Lam Dong Province, and the third, case Kurihana Kogyo Ltd v Cong ty lien doanh TNHH Hanoi: Judgment No. 01/QĐ dated 21 Sep. 2001 of the First Instance Court of Hanoi City. 450 Judgment No. 82/QĐ-XDTT dated 23 May 2002 of the First Instance Court of Ho Chi Minh City. 451 Decision No. 02/PTDS dated 21 Jan. 2003 of the Appellate Court located in Ho Chi Minh City. 452 Chapter XXVI of VCPC 2005 substitutes this Ordinance. 448 449

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ties. However, at the time of the litigation and court proceedings,453 construction activities were not codified as commercial but as civil activities.454 As a result, the recognition of foreign arbitral judgments regarding litigation on construction activities was deemed contrary to the public policy of Vietnam.455 The decision of the Supreme Court was met with enormous objections. One scholar believes it unjustified to consider the evasion of business license provisions and tax obligations of foreign contractors as a violation of public policy, “unless there are other consequences, such as seriously damaging the national security or society.”456 Moreover, the court should have not restricted itself to national law in interpreting the legal term “commercial”, which in 2003 consisted of only the sale of goods and services (not including construction). They would have done better to refer to international standards of commercial activities, which include all activities generating profits. 457 Some Vietnamese authors on the other hand support the public policy expedient of the Supreme Court because the disputes between Tyco and Leighton involved a construction project in Vietnam, which should have been subject to the special jurisdiction of Vietnamese courts.458 Vietnamese laws recently have changed to meet the international standard; for example, the scope of commercial activities is broader and the VCPC 2004 has introduced special international jurisdiction to the Vietnamese courts. Nevertheless, the case has always posed a question for an international outlook on public policy. 7. Some reflections on Vietnamese public policy Readers may wonder why Vietnamese cases on public policy are rare, especially in respect of the application of foreign law. One reason is that the courts have mostly applied Vietnamese domestic law, especially in family cases, which renders the need for recourse to public policy redundant. This practice of the court partly results from the fact that most Vietnamese conflict rules are unilateral ones which point to the application of Vietnamese laws, and a few others are alternative. There are not many neutral conflict rules, while “it is precisely the neutral and blind character of conflicts rules which justifies the 453 See more in Blom 2003, pp. 382–384: As public policy changes over time, the court should take the public policy as it stands at the time the court comes to its decision. A large number of countries accept this point of view. 454 Construction activities were not codified as commercial until 2005 when the Commercial Law 2005 provided a broader definition of commercial activities. 455 This case has been intensively discussed in Bùi Thị Thu 2010, pp. 13–16; Đặng Hoàng Oanh 2008; Đỗ Hải Hà 2008. 456 Dư Ngọc Bích 2008, p. 491; see more in Dư Ngọc Bích 2006. 457 Đỗ Hải Hà 2008. 458 In 2003, there existed no clear statutory provisions on the special international jurisdiction of Vietnamese courts in Ordinance 1989 on procedures for settlement of civil cases.

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corrective operation of public policy.”459 The second reason is that many domestic provisions are given a mandatory character and are thus immediately applicable; consequently, the public policy safeguard is rarely required. One may suppose that a court has many tools to defend against offensive foreign law so that foreign law could hardly penetrate through this multilayer safety net. This view is particularly true for Vietnam, where the protective layer is even thicker than usual. It consists of, in a chronological order, the process of choosing the applicable law, expansive mandatory rules, unilateral conflict rules, a subjective homeward trend, and, lastly, the doctrine of public policy.

X. Concluding Remarks X. Concluding Remarks

Some random Vietnamese provisions on private international law were found in some codes dating back to 1812, 1883, and 1936. There were some influences from French private international law in the French colonial period, which remained in place during the period that South Vietnam was under the control of the US. The private international law of North Vietnam, meanwhile, did not develop; there were some random unilateral conflict rules. From 1986 on, with the “Open Policy”, Vietnamese private international law has grown considerably in terms of the number of rules and the government’s effort to integrate Vietnam into the international community. Nevertheless, there should be a common understanding of the definition, scope, position, and sources of private international law. While the country should integrate more sufficiently into international and regional cooperation regimes, the reform of domestic rules regarding private international law should be fostered. The process of publishing and commenting on court decisions, and their use, should be accelerated. With regard to technical issues, such as “characterisation”, Vietnamese authors envisage that the courts should characterise a legal issue based on the internal categorisation, as this approach is feasible for national judges rather than the lex causae approach or the comparative method. The present author nevertheless suggests the lex fori advanced approach, according to which a foreign rule will be characterised based on its function and purpose, not its physical characters, before being fitted into a category of a forum conflict rule, which is also interpreted for the purpose of conflict law and independent from internal law. In the event that there is no appropriate conflict category found, a new conflict rule must be developed. Another technical problem of considerable difficulty relates to incidental questions. Similar to “characterisation”, the discussion on incidental ques459

Lagarde 1991, para. 11-16.

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tions is totally missing in Vietnam. The empirical research shows that most cases where an incidental question arises are related to marital status, which have been settled by a foreign decision. The courts in those cases seem to be unaware of the theoretical basis of incidental questions, and courts practice the preferential treatment, which is given if a prior foreign judgment recognised and enforced in Vietnam exists, although the choice of law rules applied by the foreign judgment may differ from Vietnamese-relevant rules. It is important for Vietnam to develop a theoretical approach for the issue of incidental questions. Among the lex fori, lex causae, and “no-general rule” approaches, the first is the most appropriate for the situation of Vietnam as it will not create difficulties for national judges who are inexperienced in private international law, and it will relieve them from the burden of applying foreign law. Therefore, Vietnamese courts should start with the conflict/recognition rules of the forum to decide the law applicable to the incidental question. Nevertheless, the courts should also take into account the practical consequences, the individual character of the cases, and considerations of public policy. Nationality and residence are the two basic connecting factors for conflict and jurisdictional rules in the area of personal law. Nationality, however, prevails over residence as the connecting factor for the choice of law rules in the Civil Code 2005 and the Marriage and Family Law 2000. The rise of Vietnamese nationals going abroad after 1975 raises the issue of dual nationality in respect of jurisdiction and the applicable law. As regards a party having both Vietnamese (forum) nationality and additional foreign nationalities, the Vietnamese courts have given preference to forum nationality. Nevertheless, it is understood from the ECJ case Hahadi that either a preference for forum nationality or the most closely connected nationality is unjustified. Both nationalities should be treated equally if they have the effect of providing other available fora. However, if this approach is taken, caution should be given to the situation where one of the nationalities gives the Vietnamese courts exclusive jurisdiction. The solution is that the Vietnamese courts, at the stage of recognition and enforcement of any relevant judgments of the courts of the country of second nationality, should bear in mind the fact that the concerned person has dual nationalities, so as to disregard the rule blocking the recognition and enforcement of foreign judgments. Meanwhile, when nationality plays the role of a connecting factor deciding the applicable law, the approach of taking the nationality of objectively closest connection is more reasonable compared to the preference of the forum nationality or the suggestion of allowing the person with dual nationality to choose the relevant nationality. With regard to persons having two or more foreign nationalities, the solution should be to employ the nationality to which the person has the closest objective connections, a test which will take into account various factors from the course of that person’s life.

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Residence is a connecting factor for choice of law rules in family relationships such as divorce, adoption, and guardianship, and the expression used in those rules is “permanent residence”. Apart from that, residence is also a basis for the Vietnamese courts’ jurisdiction in three circumstances. Furthermore, in the matter of recognition and enforcement of foreign judgments, residence is the factor that locates the competent court, which is the court where the persons who are obliged to execute or who request not to recognise foreign courts/arbitral judgments “reside or work”. In order to develop a theory on the issue, the present writer proposes that, in the role of a connecting factor for conflict rules in family relationships, residence should take the form of domicile. When residence of foreigners is a jurisdictional basis for the Vietnamese courts, it should rather be habitual residence. When interpreting the habitual residence of a person for jurisdictional purposes, many factors in the course of the life of that person should be taken into account. A tentative guideline for the length of stay should be one year, but it is not fixed as it will combine with other factors to establish the habitual residence in one country. For residence in matters of recognition and enforcement of foreign judgments, the stay can be shorter than one year; although a mere presence is not enough. Furthermore, the factors of “reside” and “work” do not need to take effect cumulatively; instead either factor can set up the competence of a court. The illegal residence of Vietnamese nationals abroad does not concern Vietnamese courts in divorce cases involving such individuals and Vietnamese nationals remaining inland as the jurisdiction of Vietnamese courts over these cases is established based on the Vietnamese nationality of at least one party, and the applicable law is determined by the fact that the domestic Vietnamese is living in Vietnam. Meanwhile, the illegal residence of foreigners in Vietnam may be a concern in interpreting jurisdictional bases when they are defendants or plaintiffs before Vietnamese courts. Since the Vietnamese courts have been able to make a distinction between the fact of residence in public law and private international law, the courts will likely assume that the residence need not be lawful for a purpose, and this is also the suggested approach. Although Vietnamese law does not contain an express general statutory provision on the manner of the application of foreign law, Vietnam, in fact, follows the French model; according to that approach whether the duty to apply foreign law is incumbent on the courts or on the parties depends on the character of the choice of law rules. This “mixed approach” requires cooperation between the courts and the parties for the efficient ascertainment of foreign law. There is no provision listing the available means used to ascertain the content of foreign law, but there is evidence that the courts may prefer the method of requesting the assistance of the Ministry of Foreign Affairs and the Ministry of Justice. In case foreign law cannot be ascertained, Vietnam fol-

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lows the most common approach: apply the lex fori. The application of foreign law may be subject to the cassation procedure carried out by the Supreme People’s Court. Overall, the crucial point is that the competence of the courts should be improved, and clear methods and procedure of ascertaining foreign law should be developed to assist the courts in interpreting and making decisions as to the application of foreign law. Renvoi is an extremely difficult topic to deal with, but a mere rejection of it is not reasonable. Vietnamese law allows renvoi in the form of remission to the internal law of Vietnam. The courts, however, should bear in mind the limited scope of its application (mostly in cases of succession, family, and property law, but not in contract and tort). Besides, if transmission is accepted, the vicious circle should be broken at the second reference, meaning that the reference to the second jurisdiction is a reference to its internal law. Public policy in Vietnamese legislation takes the orthodox form of an exception to the operation of the choice of law rules, which is to be distinguished from the operation of mandatory rules. It aims to exclude the application of foreign law in the concrete individual circumstances of the given case, not the application foreign law in general. Vietnam has chosen the lex fori as a yardstick to measure against foreign law instead of relying on international values or a comparative test, although scholars have increasingly voiced in favour of a broader and international understanding of public policy. In the practice of the courts, Vietnamese cases on public policy are rare as the courts mostly apply Vietnamese law, either because most of the conflict rules are unilateral or because many domestic provisions are attributed a mandatory character which renders their immediate application and which eliminates opportunities for the use of the public policy safeguard.

Part 2

Part 2 – Contracts Part 2 – Contracts

I. Overview

I. Overview

The first Vietnamese provision for conflict of laws in contract matters was Art. 8341 VCC 1995. This article consisted of two paragraphs: the first is designated for the form of contract, and the second relates to the rights and obligations of the parties to a civil contract. After ten years, VCC 2005 replaced VCC 1995. In respect of the choice of law rules for contracts, VCC 2005 increased the number of relevant provisions to three articles (Art. 769 –Art. 771). Nevertheless, the content of Art. 769 and Art. 770 VCC 2005 (mirroring Art. 834 VCC 1995) was unchanged. The new provision was Art. 771 VCC 2005, which regulates a “civil contract entered in absentia”. The article provides for the determination of the place where the contract is entered into and the time for entry into a contract in absentia. The place where the contract is entered into in turn helps to identify the law applicable to the form of contracts entered in absentia, in accordance with Art. 770. It is noteworthy that the increase in the number of provisions in VCC 2005 (compared to VCC 1995) did not fulfil the need for more detailed regulations that can be seen in the many codifications worldwide (e.g., Rome Conven-

Art. 834 VCC 1995 [Civil contract]: “1. The form of a contract must comply with the law of the country where the contract is entered into. Where a contract is entered into in a foreign country, which violates the regulations on contractual form under the law of that country but is not contrary to the contractual form provided for by the law of the Socialist Republic of Vietnam, the form of the contract entered into in the foreign country shall still be recognized in Vietnam. 2. The rights and obligations of the parties to a civil contract shall be determined in accordance with the law of the country where the contract is performed, unless otherwise agreed upon. A civil contract entered into and performed entirely in Vietnam must comply with the law of the Socialist Republic of Vietnam. In cases where a civil contract does not specify the place of performance, the determination of the place of performance of the contract must comply with the law of the Socialist Republic of Vietnam. Civil contracts relating to immovables in Vietnam must comply with the law of the Socialist Republic of Vietnam.” 1

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tion, Rome I Regulation,2 Japanese Act 2007).3 In those codifications, besides detailed rules on freedom of choice and the law applicable in the absence of choice, there are specific conflict rules for certain contracts such as consumer, employment, and insurance contracts.

II. Scope of the Law Governing the Contract II. Scope of the Law Governing the Contract

While the Rome I Regulation has Art. 12 stipulating a range of aspects that are governed by the applicable law, and the Draft Hague Principles on choice of law in International Commercial Contracts4 has Art. 9 describing the scope of the chosen law as covering all aspects of a contract, there is no rule defining the scope of the governing law in Vietnamese law. As can be seen, Art. 769 VCC 2005 provides the applicable law for the rights and obligations of the parties to a contract, designating the law of the place of performance. Nevertheless, Art. 15(1) Decree 138/2006/NĐ-CP dated 15 Nov. 2006 detailing the implementation of the Civil Code’s provisions on civil relations involving foreign elements has clarified Art. 769(1) VCC 2005 such that “the content of the contract (instead of only the rights and obligations of the parties to a contract) is governed by the law of the place of performance of the contract” (where there is no choice of law). Consequently, the following observations can be made. First, the governing law of the contract designated by Vietnamese law is the law chosen by the parties; in the absence of such a choice, it is the law of the place of performance of the contract. Second, that governing law is applicable to the rights and obligations of the parties to a contract, in accordance with the wording of Art. 769(1) VCC 2005. Additionally, it also applies to the limitation period of lawsuits, in accordance with Art. 777 VCC 2005. This law also applies to other issues belonging to the content of the contract, as given in Art. 15(1) Decree 138/2006/ND-CP. However, VCC 2005 is vague as to which issues are covered by the term “the content of a contract”. It is apparent that the Vietnamese legislature would like to distinguish “the content” from “the form” of the contract, by subjecting the former to the applicable law, in accordance with Art. 769 VCC 2005, and the latter to another regime set out in Art. 770 VCC 2005. Nevertheless, the scope of the issues covered by the term “content” should have been better clarified. If we refer to the rule on the scope of the applicable law 2 The Rome I Regulation is regarded as a great step in the communitarisation of conflict of laws in contract. See more about the communitarisation of conflict of laws in Basedow 2000a. 3 See Basedow 2008a, p. 12 for the “trend towards a more detailed regulation”. 4 The Draft Hague Principles on Choice of Law in International Commercial Contracts. Preliminary Document No. 6 of Mar. 2014. Available on the website of the Hague Conference on Private International Law: .

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of the Rome I Regulation (Art. 12), there is a list of issues (although not exhaustive) that are governed by the applicable law, which consists of (a) interpretation; (b) performance; (c) (within the limits of the powers conferred on the court by its procedural law) the consequences of breach, including the assessment of damages in so far as it is governed by rules of law; (d) the various ways of extinguishing obligations, and prescription and limitations of actions; and (e) the consequences of nullity of the contract. Furthermore, Art. 12 also contains a special rule in paragraph 2 which provides that, “in relation to the manner of performance and the steps to be taken in the event of defective performance, regard shall be had to the law of the country in which performance takes place”. Although Art. 12(1) does not expressly mention the effects of the contract, which includes the rights and obligations of the parties under the contract (which Art. 769 VCC 2005 does), they are also governed by the applicable law.5 Prescription and the limitation of actions are expressly included. In addition, many important matters are enumerated in order to clarify the matters within the scope of the applicable law and to delimitate them from the other matters which might be dealt with by another regime or governed by another law. It is such a provision that Vietnam should develop in the future. Another example of a rule that provides for a non-exhaustive list of matters that are governed by the chosen law is Art. 9 of the Draft Hague Principles on Choice of Law in International Commercial Contracts. Paragraph 1 of this article states that “the law chosen by the parties shall govern all aspects of the contract between the parties, including but not limited to (a) interpretation; (b) rights and obligations arising from the contract; (c) performance and consequences of non-performance, including the assessment of damages; (d) the various ways of extinguishing obligations, and prescription and limitation periods; (e) validity and the consequences of invalidity of the contract; (f) burden of proof and legal presumptions; (g) pre-contractual obligations.”

It can be seen that Art. 9(1) above mentions expressly the rights and obligations arising from the contract and asserts that they are important aspects of any contract.6 The list also includes the validity and the consequences of invalidity of the contract (although this validity aims more at the material validity of the contract as paragraph 2 of Art. 9 adds that “paragraph 1(e) does not preclude the application of any other governing law supporting the formal validity of the contract”). Meanwhile, the issues of validity of the contract are dealt with separately by the Rome I Regulation in two specific articles. Art. 10 Rome I regulates the consent and material validity of the contract, and Art. 11 regulates the formal validity of the contract. Although the two articles also adhere to the law Schulze 2011a, § 14, p. 250; Dicey et al. 2012, § 32-142, p. 1853. The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 9.4. 5 6

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governing the contract, they provide many special rules or alternative applicable laws. In Vietnamese law there is no rule that expressly designates the applicable law of the material validity of the contract as Rome I does, nor is there a rule on scope of the applicable law that includes the material validity of the contract, as in the case of the Draft Hague Principles on Choice of Law in International Commercial Contracts. Moreover, material validity may not be included in the term “content of the contract” (so that it can be subject to the governing law according to Art. 15(1) Decree 138) because the former is apt to refer to, among others, the formation of the contract, the illegality and effects of illegality, and the avoidance of the contract.7 However, the justified approach for Vietnam is to also subject the material validity of the contract to the governing law. Furthermore, if a separate rule on consent and material validity of the contract in the model of Art. 10 Rome I Regulation is preferred, its paragraph 2 relating to consent should be observed. It provides that a party, in order to establish that he did not consent, may rely upon the law of the country in which he has his habitual residence if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law governing the contract. As for formal validity, it is not subject to the governing law of the contract. Under Art. 770(1) VCC 2005, the form of a contract must comply with the law of the country where the contract is concluded. Art. 770(1) continues that “where a contract is entered into in a foreign country, which violates the regulations on contractual form under the law of that country but is not contrary to the contractual form provided for by the law of the Socialist Republic of Vietnam, the form of the contract entered into in the foreign country shall still be recognized in Vietnam.”8

Therefore, a contract is formally valid if it conforms to either the formal requirements of the law of the country where it is concluded or the law of Vietnam.9 As can be seen, Vietnam is quite restricted in providing only two laws that can validate the form of a contract. Meanwhile, Art. 11 Rome I Regulation, for example, provides for a number of alternative laws according to which the form of a contract can be valid. In doing so, the principle of favor negotii is highlighted.10 Those laws include: the law governing the substance of the contract; the law of the country where the contract is concluded (if the parties are See Schulze 2011b, §§ 9–20, pp. 212–215; The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 9.9. 8 Additionally, Art. 770(2) VCC 2005 provides a special rule whereby “the forms of contracts related to the construction of works or transfer of ownership rights to works, houses and other immovables in the Vietnamese territory must comply with the law of the Socialist Republic of Vietnam.” 9 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 571. 10 Loacker 2011, § 1, p. 222. 7

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in the same country at the time of conclusion of the contract);11 the law governing the substance of the contract; the law of either of the countries where either parties or their agent is present at the time of its conclusion; and the law of the country where either of the parties had his habitual residence at that time12 (if the parties or their agents are in different country at the time of conclusion of the contract).13 Moreover, the way in which Art. 11 Rome I is constructed helps to avoid the classic difficulty of locating the country when the contract is, for example, concluded via the internet.14 As regards the status and legal capacity of contractual individuals or legal persons, the Rome I Regulation excludes those issues from its scope of application (Art. 1(2)(a) and (f)). The only relevant provision is Art. 13, which provides a rule to prevent an individual from envisaging his incapacity under another law to the surprise of his contractual partner.15 Under Vietnamese conflicts law, the capacity to enter into a contract as an individual or legal person is not governed by the governing law of the contract, which means the law chosen by the party or, in the absence thereof, the law of the place of performance. Instead, the capacity of an individual to contract is governed by the law of the country of that person’s nationality. 16 The legal capacity of a legal person is governed by the law of the country where such legal person has been established.17 There are exceptions to those rules, which provide that if an individual or legal person establishes and/or performs civil transactions in Vietnam, their capacity to do so shall be determined in accordance with the law of Vietnam.18 Another matter that Rome I excludes from its scope of application is “the question whether an agent is able to bind a principal, or an organ to bind a company or other body corporate or unincorporated, in relation to a third party”.19 It has to be noticed that the subject of the exclusion is only the relationship between the principal and the third party. That means the contractual Art. 11(1) Rome I Regulation. The inclusion of the habitual residence is considered an innovation of the Rome I Regulation, in comparison to the Rome Convention. See Loacker 2011, § 23, 24, p. 228. 13 Art. 11(2) Rome I Regulation. 14 Art. 11(2) does not provide for the application of the law of the country where the contract is concluded but instead provides the law of either of the countries where the parties or their agents are present at the time of conclusion (besides other alternative laws). But “notwithstanding the open wording of the provision, not the place where the parties happen to be at the time of the technical conclusion of the contract, but rather where they were when they made their statements effecting the conclusion of the contract should be of importance”. See Loacker 2011, § 59, § 44, p. 239, 236. 15 Art. 13 Rome I Regulation. 16 Art. 761(1) and Art. 762(1) VCC 2005. 17 Art. 765(1) VCC 2005. 18 Art. 761(2), Art. 762(2), Art. 765(2) VCC 2005. 19 Art. 1(2)(g) Rome I Regulation. 11 12

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relationship between the principal and the agent or that between the agent and the third party is still controlled by the rules designating the law applicable to contractual obligations.20 As for Vietnam, there have been no rules whatsoever providing for the governing law of any aspects of agency relations. Regarding the functional representation relationship (representation at law) between a legal person (e.g., a company) and its representative, Vietnamese authors suggest referring to the law of the place of headquarters of the company at the time its representative acts on behalf of the company.21 When the representation is a contractual relation, it goes without saying that the relationship between the principal and the agent as well as that between the agent and the third party are subject to choice of law rules regarding contractual obligations. The aspect that needs a rule designating the applicable law, which is also a matter excluded by the Rome I Regulation, is the binding nature of a transaction between the principal, who has acted through his agent, and a third party. Neither does Vietnamese law contain a conflict rule in this regard. However, Vietnamese authors have pointed out that it is unjustified to subject the relationship between the principal and the third party to the law governing the relationship between the principal and the agent, which can be the law chosen by the principal and the agent, in which case the solution is unfair for the third party. 22 Therefore, they advocate that the law of the place where the act of the agent occurs23 govern the scope of MüKoBGB/Martiny VO (EG) 593/2008 Art. 1 para. 69; Plender / Wilderspin 2009, § 5-049, p. 120. 21 Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 679, 680. In practice, Vietnamese courts have followed this principle in some cases. See Decision No. 51/KTPT dated 26 Oct. 2001 of Supreme Court at Ho Chi Minh City of second instance. In that case there was a sales contract between a Vietnamese company (Sunimex) and a French company (Recofi). The dispute concerned the arbitration clause (ICC). The Vice Director of Sunimex (Mr. Minh) signed the arbitration clause. The court decided to apply Vietnamese law to ascertain whether Mr. Minh was a legal representative of Sunimex. Similarly, in another case (Decision No. 211/QĐ-KCNQDTT-ST dated 1 Aug. 2005 of Ho Chi Minh City Court of first instance), the court referred to Vietnamese law to decide whether a vice-director of a Vietnamese company (Thien Phu company) was the legal representative of Thien Phu, in a contract between Thien Phu and a foreign company named Metal. Nevertheless, there was a case where the court referred to both laws of the two companies (Vietnamese law and Russian law) to ascertain the legal position of the representative of the Vietnamese company. See Decision No. 59/KTPT dated 4 June 1998 of Supreme Court at Hanoi of second instance, in which a dispute arose out of the representation relationship of the Vietnamese company (Vinatex) in a sale of steel contract signed on 20 Apr. 1993 between this company and a Russian company (Novus). In coming to the suggestion, the Vietnamese authors have excluded the lex fori as well as the approach of applying the laws of the countries of both contracting companies. 22 Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 685, 686. Similarly, the solution to refer to the law governing the contract between the agent and the third party is unfair to the principal, see Plender / Wilderspin 2009, §§ 5-050, 5-051, pp. 120, 121. 20

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his authority as well as the consequences of a lack of authority or of an act outside the authority given.24

III. Party Autonomy III. Party Autonomy

Party autonomy in respect of international contracts was imported to Vietnam in the 1990s, which is quite late in comparison to the developed world,25 but similar to Latin American countries where the acceptance of party autonomy has been slow.26 The first cornerstone for the acknowledgement of party autonomy in Vietnam is attributed to Art. 834 of the VCC 1995, which stipulated that “the rights and obligations of parties to a contract are governed by the law of the place of performance, unless otherwise agreed upon”. Party autonomy in Vietnam is connoted in that short and vague expression: “unless otherwise agreed upon”. Scholars have accordingly construed that if the parties agree on a law other than the law of the place of performance to govern their rights and obligations, that law may apply and that the court must respect the agreement of the parties. Part autonomy has been thus established, albeit without a clear declaration. In 2003, the Ordinance No. 08/2003/PL-UBTVQH on Commercial Arbitration (VOA 2003) promotes clearer party autonomy for commercial contracts in respect of arbitration proceedings. Art. 49(5) stipulates that “The involved parties may agree on selecting laws under the provisions of Art. 7(2) of this Ordinance and/or international commercial practices for settling their 23 This is also the German case law solution, and it appears to be the appropriate compromise between the interests of the principals and the third party. See Kropholler 2006, p. 304. Art. 16 Chinese Act 2010 also provides for the law of the place where the act of the agent occurred. Plender / Wilderspin 2009, § 5-051, p. 121 prefers the law of the country with which the situation has its closest connection. 24 Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 686, 687. 25 See Basedow 2012b, § 185, pp. 116–117 for the “Worldwide recognition of party autonomy”. The historical development of party autonomy is detailed in Lando 1976, paras. 24-10, 24-3, 24-13. In the context of Europe, from 1865 and onwards, party autonomy was established as the guiding principle by the courts of England, Germany, and France. According to Rühl 2012a, p. 191, the final victory came in 1980 when the principle of party autonomy was incorporated in Art. 3(1) of Rome Convention. In the US, Restatement 1934, which mainly followed Beale’s ideas, did not mention the intention of the parties at all. However, after lengthy discussions, choice of law was recognised as a general principle of the private international law of contracts in both Europe and the United States. In Scandinavian countries, according to Hertz 1977, pp. 24–55, it seems that the freedom of the parties to choose the applicable law is assumed and recognised in modern Scandinavian law. 26 See Basedow 2012b, §§ 187–189, pp. 117–118 for the “exclusion of party autonomy in Latin America”. See more in Albornoz 2010, pp. 23, 29. See also Juenger 1994, p. 387.

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disputes”. In the meantime, Art. 7(2) confirms the respect of arbitrators for that agreement: “For disputes involving foreign elements, the Arbitration Councils shall apply the laws selected by the involved parties”. This Ordinance has been substituted by Law No. 54/2010/QH12 on Commercial Arbitration (VCA 2010), in which Art. 14(2) VCA 2010 repeats Art. 7(2) VOA 2003 and thus confirms the principle of party autonomy in arbitration. As regards the Civil Code, when VCC 2005 replaced VCC 1995, Art. 769 VCC 2005 unfortunately did not develop the wording “unless otherwise agreed upon” any further. However, a more straightforward recognition of party autonomy can be found in some specialised legal documents. Take the Maritime Code 2005 (VMC 2005) for instance. Art. 4(2) of this Code provides that “parties to contracts relating to maritime shipping at least one of which is a foreign organization or individual may agree to apply foreign laws or international maritime customs to their contractual relations and choose an arbitration or a court in either of their countries or in a third country for settlement of their disputes”.

Commercial Law 2005 (VCL 2005) provides another example. Art. 5(2) of this Law states that “parties to commercial transactions involving foreign elements may agree to apply foreign laws or international commercial practices if such foreign laws or international commercial practices are not contrary to the fundamental principles of Vietnamese law”.

Additionally, in the Law on Technology Transfer 2006, Art. 4(3) expressly stipulates that “when technology transfer activities involve foreign elements, the involved parties may agree in their contract on the application of a foreign law and international trade practice provided that such foreign law and international practice do not contravene the basic principles of Vietnamese law.”

A similar example can be found in Civil Aviation Law 1991 (VAL 1991).27 In general, it can be concluded that Vietnamese laws permit the parties to choose the law applicable to their contracts. There have been cases where the courts apply the law chosen by the parties, which is the Vietnamese lex fori.28 27 Art. 4(2), (3) Civil Aviation Law 1991 was supplemented by the Law Amending and Supplementing a number of articles of the Vietnam Civil Aviation Law 1991, in which the just-mentioned Art. 4 is retained. In 2006, the Civil Aviation Law 2006 repealed both of these laws. However, the right of parties to choose the applicable law can no longer be found. This must result from the specialised characteristic of the civil aviation activities that party autonomy ceases to be granted; therefore, it should not be invoked as a setback of party autonomy in the general context of contracts in Vietnamese private international law. 28 See Judgment No. 113/KTST dated 20 April 2004 of Ho Chi Minh City People’s Court. The dispute was between a Vietnamese company plaintiff (Khang Hung) and a

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However, it is important to see whether Vietnamese tribunals respect the rights of parties when the chosen law is a foreign law. In a case in 2003 between a Vietnamese company and a Singapore company,29 although the parties had chosen Singaporean law to govern the contract, the court of first instance still applied Vietnamese law. It is regrettable that the court did not explain the ground on which they disregarded the choice of foreign law, whether it was simply that they did not allow this right of the parties or whether they did recognise the right but the choice was nevertheless invalid or contravened the public policy of Vietnam. In that situation, it can solely be concluded that the first instance court had a negative attitude to the parties’ choice of foreign law. Interestingly, however, when the case was appealed to the Supreme Court, the reasoning was reversed; the Supreme Court respected the choice of law clause of the contract and, in doing so, allowed the parties to choose the foreign law governing the contract. It can be seen that the principle of party autonomy has been gradually adopted in Vietnam. Although the theory of this principle is currently not sufficiently acknowledged in Vietnam because of the shortage of academic research in the Vietnamese language on the issue,30 it should be emphasised that the principle has in fact now been accepted by most countries since it promotes certainty as to the applicable law for international contracts.31 Nevertheless, one of the objections to party autonomy32 that may concern Vietnam is the fear that foreign parties with stronger bargaining and economic power would impose high prices and unfavourable contract terms to the detriment of Vietnamese parties.33 However, it has been pointed out by Professor Basedow that such a fear, which is based on macroeconomic policy considerations, cannot support a prohibition of party autonomy for three reasons. First, competition between strong suppliers creates opportunities for smaller customers to bargain on the choice of law provisions. Second, the standardisation of choice of law clauses by the suppliers in fact helps promote business efficiency and costs savings since strong suppliers often conclude Singapore defendant (Pargan). The parties chose Vietnamese law to govern the contract and the court applied Vietnamese law. 29 See Judgment No. 174/DSPT dated 4 Dec. 2003 of the Supreme People’s Court in Hanoi. This case was commented on in Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 575. No further facts about the place of contracting or the place of performance of the contract were given. 30 For some contributions of Vietnamese scholars on party autonomy, see Đỗ Văn Đại /  Mai Hồng Quỳ 2010 and Đỗ Văn Đại 2013; the latter paper touches on new domains of party autonomy. 31 Rühl 2012b, p. 393. 32 See Basedow 2012b, §§ 204–261, pp. 127–151 for various theoretical objections to party autonomy and for theoretical bases for freedom of choice. 33 Basedow 2012b, § 227, p. 137; this argument against party autonomy is put forward by the Uruguayan author Fresnedo de Aguirre.

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contracts with customers from many different countries. Third, some companies from countries with inferior commercial power may become important dealers in the near future, which renders such countries’ prohibition of choice of law clauses detrimental to their own nationals.34 It is also pointed out that the resistance to party autonomy in fact harms local parties more than the foreign ones, just as the experience of the developing Latin American countries has shown. This is because when freedom of contract is restricted in one sphere of the globe it discourages contracts from being concluded with merchants located there. Or worse, a risk premium would be added to the contracts entered into with merchants within the area,35 which decreases the competitiveness of these parties. 1. Modality and form of choice Does Vietnamese law accept only express choice or will it also consider an implied intention? Party autonomy granted through Art. 769 VCC 2005 and other relevant provisions mentioned earlier do not speak about the modality in which a law can be chosen. At the same time, very few papers discuss the issue; therefore, it is very much unacknowledged in Vietnam. Art. 3(1) of the Rome I Regulation, on the other hand, provides that: “The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case.” Although the wording of this provision is slightly different from that of Art. 3(1) Rome Convention 1980,36 “the substantive meaning is unchanged.”37 The literal change is to unify the various interpretations in different contracting states of the Rome Convention.38 This provision is interpreted in combination with the Giuliano & Lagarde Report of the Rome Convention 1980 to recognise two modes of choice: express choice and implied choice.39 The latter only comes into being when it “appears with sufficient clarity from the contract as a whole or the circumstances of the case.”40 Similar provisions on mode of choice can be found in Art. 4 of the Draft Hague Principles on Choice of Law in International Commercial Contracts, which provides that: “A choice of law, or any modification of a choice of Basedow 2012b, §§ 228–232, pp. 137–138. Albornoz 2010, p. 51. 36 Art. 3(1) Rome Convention: “[…] The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case […]”. 37 Plender / Wilderspin 2009, § 6-024, p. 144. 38 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 46: “Angesichts der Auslegungsdivergenzen in den einzelnen Vertragsstaaten verlangt die VO nunmehr, dass sich die Vereinbarung eindeutig ergibt (‘clearly demonstrated’; ‘résulte de façon certaine’)”. 39 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 45. 40 Plender / Wilderspin 2009, § 6-022, p. 143. 34 35

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law, must be made expressly or appear clearly from the provisions of the contract or the circumstances”. Likewise, the Inter-American Convention, Art. 7, paragraph1, sentence 2 establishes that “The parties” agreement on this selection must be express or, in the event that there is no express agreement, must be evident from the parties’ behaviour and from the clauses of the contract, considered as a whole.”41 a) Dispute-resolution clause While there are overwhelming cases where the Vietnamese courts chosen by the parties apply Vietnamese law, it is regrettable that the courts do not explain the reason why. Therefore, there is no evidence about whether the courts hold the choice of court agreement as a tacit choice of law or not. The same happens for the arbitral awards of the Vietnamese International Arbitration Centre (VIAC).42 There are many cases where the arbitration panel applied Vietnamese law without any explanation.43 It is perhaps more important to propose a suitable position for Vietnam as regards the indication of the jurisdictional clause for a tacit choice of law. The present writer does not support the equalisation of a choice of jurisdiction and a choice of law, although the practice is prominent in English law.44 The inference is so strong that it can only really be challenged where, based on the circumstances of the case, there are strong indications to the contrary.45 Otherwise, it works to authorise an implied choice of law. In particular, in relation to an arbitral clause in which the parties have specified the seat of

41 Rodriguez / Albornoz 2011, p. 509. Inter-American Convention on the law applicable to international contracts, agreed in Mexico on 17 March 1994, available on the website of the Organisation of American States. The Convention has taken effect in Mexico and Venezuela. 42 The Vietnam International Arbitration Centre is a non-governmental arbitration organisation established by the Vietnam Chamber of Commerce and Industry. Visit the website at , visited 4 July 2014. 43 For example, see a case in Hoàng Ngọc Thiết 2002, pp. 141, 142, and another case in Hoàng Ngọc Thiết 2002, pp. 125, 127. 44 Clarkson / Hill 2011, pp. 211, 212; Plender / Wilderspin 2009, § 6-028, p. 145. It comports with common sense that when the parties chose a forum, they were likely to have in mind that that court of arbitration will apply its own law, and that it is not very likely that the parties intended to apply foreign law in the chosen forum. MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 51: “Diese Regel wird insbesondere von der englischen Rechtsprechung befolgt.” 45 See Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572. Lord Diplock, p. 609E: “An arbitration clause was generally intended by the parties to operate as a choice of the proper law of the contract unless there were compelling indications to the contrary in the other contractual terms or the surrounding circumstances of the transaction.” See also The Komninos S [1991] 1 Lloyd’s Rep. 370, at 376.

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arbitration and the arbitrator of one country, it renders more persuasive the argument that a choice as to that law has been implied.46 The reasons for the distinction of jurisdictional and choice of law clauses are twofold. First, if such a parallel is provided for, it would promote a lazy and blind application of Vietnamese law by Vietnamese tribunals, a habit that is to be changed at the expense of time and negative publicity. Second, it has been explained in the Giuliano & Lagarde Report that “the choice of a particular forum may show in no uncertain manner that the parties intend the contract to be governed by the law of that forum, but this must always be subject to the other terms of the contract and all the circumstances of the case.”47

Later on, in the Commission’s Proposal for the Rome I Regulation, the following addition to Art. 3(1) was proposed: “If the parties have agreed to confer jurisdiction on one or more courts or tribunals of a Member State to hear and determine disputes that have arisen or may arise out of a contract, they shall also be presumed to have chosen the law of that Member State.”48

However, this sentence was deleted. Instead, a recital with a different meaning was introduced in the Rome I Regulation, stating that “an agreement of the parties to confer exclusive jurisdiction on one or more courts or tribunals of a Member State to determine disputes under the contract is a factor to be taken into account in determining whether a choice of law clause was clearly demonstrated”.49

That means a jurisdiction clause does not equate to a tacit choice of law. It has to be considered along with other facts of the case to see if there is a clear intention of a choice of law, normally a choice of forum law. In addition, a similar position is taken by the Draft Hague Principles on Choice of Law in International Commercial Contracts in its Art. 4, which specifies that: “An agreement between the parties to confer jurisdiction on a court or an arbitral tribunal to determine disputes under the contract is not itself equivalent to a choice of law.” Furthermore, it is noteworthy that, although an arbitration clause specifying the seat and arbitrators of one country is very weighty, 50 it should not be

Dicey et al. 2012, § 32-064, p. 1813; Plender / Wilderspin 2009, § 6-028, p. 145. Giuliano & Lagarde Report, p. 17. 48 Lando/Nielsen 2007, p. 35: The justification for the proposal is that the parallelism between choice of court and choice of law creates cost savings, is efficient, and is preferred by business. 49 Recital 12 Rome I Regulation. 50 Giuliano & Lagarde Report, p. 18: “Other matters that may impel the court to the conclusion that a real choice of law has been made might include […], or the choice of a place where disputes are to be settled by arbitration in circumstances indicating that the arbitrator should apply the law of that place.” 46 47

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taken as conclusive without considering the other relevant circumstances of the case.51 Accordingly, it seems to be more reasonable to say that “the arbitration agreement must indicate the application of the substantive law of the seat of arbitration in order to be ascertained as a tacit choice of law of that seat. An agreement on an arbitration panel of the Court of Arbitration ICC in Paris, for example, could not be understood as a reference to the choice of law.“52

Furthermore, the arbitration panel chosen by the parties may apply any law that they deem appropriate, for reasons of convenience or accessibility in international trade, and not solely by the presumption that the parties choice of seat means a corresponding choice of law.53 In conclusion, a mere jurisdiction clause does not automatically constitute a tacit choice of law. It should be corroborated by other factors of the case or, to put it in another way, examined together with the circumstances of the case.

51 What Lord Wilberforce said in Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572, at 596, is compelling (although the case represents the common law position before the entry into force of the Rome Convention): “How strong, then, is the inference to be drawn from a (London) arbitration clause? That the selection of a certain place for arbitration and, by inference, of nationals or residents of that place as arbitrators, is an indication that the parties intended the law of that place to govern is a sound general rule. But it should not be treated as giving rise to a conclusive or irresistible inference, as recent pronouncements appear to suggest. One of the reasons commonly given for attributing overwhelming force to the clause is that arbitrators in London are only to be supposed to be conversant with English law […] but I venture to think that in commercial matters, at the present time, this may give insufficient recognition to the international character of the City of London as a commercial centre—the reason, rather than any preference for English rules, for which arbitration in London is selected. In this case the arbitrators had no difficulty in finding for French law and I do not suppose they would find ascertainment of the French law as to damages any more difficult than the English law of anticipatory breach. So, unless otherwise constrained, I would regard the clause as a weighty indication, but one which may yield to others.” 52 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 52 with further references:

“Sie [die Art der Schiedsgerichtsbarkeit] muss auf die Anwendung des Sachrechts des Sitzortes hindeuten. Keinen Hinweis auf das anzuwendende Recht gibt dagegen die Vereinbarung eines Schiedsgerichts des Schiedsgerichtshofs der IntHK in Paris. Damit stehen personelle Zusammensetzung und Verfahrensort noch

nicht fest. […] Auch der Vereinbarung eines Schiedsgerichts einer deutsch-ausländischen Handelskammer wird man häufig keine Rechtswahl entnehmen können.” 53 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 52: “Überhaupt ist zu beachten, dass ein Schiedsgerichtsort im internationalen Handel aus Gründen der Erreichbarkeit oder der Bequemlichkeit gewählt worden sein kann und nicht, weil die Parteien eine Präferenz für das Recht des Forums hegten.”

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b) Other indicators of a tacit choice of law Although the determination of whether there is an effective tacit choice of law should be made on a case-by-case basis,54 there are certain signals which indicate that a tacit choice of law has appeared clearly from the provisions of the contract or the circumstances of the case,55 such as the use of a standard form by the parties, a previous course of dealing between the parties under contracts containing an express choice of law, or reference to a specific article of a law of a country.56 Meanwhile, other criteria such as the use of particular language or the existence of a deed before a notary in a particular country are not strong indicators of a tacit choice of law. These factors are only meaningful in conjunction with others.57 In addition, one factor that is now denied any evidentiary effect of an intention as to the choice of law is the common place of performance as agreed by both parties.58 The Vietnamese tribunals have upheld other indicators of implied choices.59 The most significant is the subsequent conduct of the parties. First, when one party does not explicitly object to the law (Vietnamese law) unilaterally designated by the other party in the hearing of first instance, the tribunals apply Vietnamese law based on the presumption that there was an implicit choice of Vietnamese law by the parties.60 Second, a choice of law might be inferred by the courts where both parties rely upon the same body of law (Vietnamese law) to support their respective arguments.61 Third, when both parties do not mention the applicable law and, further, do not ask for the

Plender / Wilderspin 2009, § 6-036, p. 150; see also Lando 1976, para. 34-98. The Giuliano & Lagarde Report was trying to summarise the most frequent cases of a tacit choice of law, see p 18, Those examples are mostly inspired by English common law, see Dicey et al. 2012, § 32-060, p. 1809; Plender / Wilderspin 2009, § 6-022, p. 142. 56 See BGH NJW-RR 2000, 1002 = IPRax 2002, 37. See MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 59. 57 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 paras. 63–64. 58 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 65. 59 This practice of the Vietnamese courts is very similar to that of the Chinese courts. See more in Xiao/Long 2009, p. 198. 60 Case mentioned in Vũ Trần Khánh Linh 2005, p. 22: In a contract dispute between a Vietnamese and a Malaysian company, the plaintiff (Vietnamese party) argued for the application of Vietnamese law. The defendant did not register any objection. The arbitration tribunal thus decided to apply Vietnamese law to determine the dispute. 61 Case mentioned in Hoàng Ngọc Thiết 2002, p. 34: In a contract dispute between a Vietnamese and a Singapore company, the contract did not stipulate the applicable law. However, the plaintiff relied on Vietnamese law in bringing its claims. Similarly, the defendant also used Vietnamese law in its defence. The arbitration panel considered that both parties had impliedly agreed to apply Vietnamese law to determine the dispute. 54 55

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application of a foreign law, the Vietnamese courts infer that the parties impliedly agree on the application of Vietnamese law. 62 It should be noted that the requirement that the subsequent conduct of the parties may be taken into account to indicate an implied choice of law, in that it illuminates the intentions of the parties at the time of conclusion of the contract,63 is not necessarily accurate in respect of the Rome I Regulation because Art. 3(2) Rome I Regulation allows the parties to make a choice of law (express or implied) for the first time after the conclusion of the contract (in the proceedings for example) or to change the law previously agreed.64 Nevertheless, there are other requirements for the subsequent conduct of the parties to be regarded as a tacit choice whether as a first choice or as a change of choice of law. The indications have to be reliable,65 clear,66 and strong.67 Consequently, the tribunals cannot impute an implied choice of law to the parties if they remain silent on the applicable law. Moreover, if the parties unconsciously refer to the law of the forum, for example, it must be consistent in the process of behaviour.68 Regrettably, there is little sign that the Vietnamese tribunals have paid intention to those requirements when upholding the subsequent conduct of the parties as an indicator of choice of law. The implied choices of law upheld have been always in favour of Vietnamese law. The present writer has not seen any case where such indicators of implied choice in favour of foreign law were upheld by Vietnamese tribunals. It creates an impression that the intention was only found to fasten onto the lex fori; essentially an expedient to apply Vietnamese law. 69

Examples of this inference are many. In Phần thảo luận ngày 26/5 [Discussion part 26/5], 2005, p. 178, a Vietnamese judge admitted that they rarely apply foreign law as parties in disputes do not request, in sufficiently strong terms, the application of foreign law. 63 The question of whether the subsequent conduct of the parties could be taken into account so as to ascertain the governing law is answered in the negative by English common law. However, as regards other jurisdictions, the subsequent conduct of the parties “may be taken into account in determining the intention of the parties at the time of conclusion of the contract.” See Dicey et al. 2012, § 32-037, p. 1796; Plender / Wilderspin 2009, § 6-040, p. 152. 64 See more in Plender / Wilderspin 2009, § 6-042, p. 153. 65 Plender / Wilderspin 2009, § 6-041, p. 152. 66 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 55. 67 See the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 4.8 and 4.1. 68 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 55: “Da sich die Parteien häufig nicht einig sind, sondern sich nur aus Unkenntnis auf eine Rechtsordnung berufen, ist bedeutsam, welche Anforderungen an ein übereinstimmendes Prozessverhalten zu stellen sind.” 69 Lando 1976, para. 24: this preference for the lex fori or the homeward trend became very noticeable in the French, German, and English conflict of laws of contracts. 62

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The misuse of the indicators for a tacit choice of law by Vietnamese tribunals together with the difficulties in laying down the precise guidelines may suggest an approach of doing away entirely with the implied intention of the parties. It is argued that certain tentative indicators of the intentions of parties as to the applicable law, such as a dispute-resolution clause, the form and language of the contract, etc., will eventually be considered in ascertaining the most closely connected law in the absence of choice and that a court will be released from the risk of upholding weak evidence of a tacit choice of law. 70 However, this approach is inappropriate. First, the treatment of those factors – such as the dispute-resolution clause, the language, and the incorporation of provisions of a law – at the level of tacit choice of law is different than at the level of the escape and the default rules utilising the principle of closest connection.71 At the level of the tacit choice of law, they show the intentions of the parties and need to be considered at the first stage under Art. 3(1). When a tacit choice is absent, the consideration of those factors in the context of finding the country most closely connected with the contract is not the same. Those factors no longer stand as strong, but only support an objective connection to one country, which is decided based on other objective and geographical connections such as, inter alia, the place of performance or the habitual residence of the parties.72 Therefore, when this distinction is lost, practitioners may omit the examination of those factors at the first stage of the parties’ choice when construing the applicable law. Bělohlávek has detected, through the collection of case law, a psychological error in that people tend to look at those factors as the absence of choice rather than as evidence of tacit choice in the first place; and, as a result, party autonomy is somewhat marginalised.73 As a result, these factors need to be considered initially at the stage of the parties’ intentions. Just in doing so, the principle of party autonomy is fully respected. This is of greater need for Vietnam, where the principle of party autonomy has just been imported. To do away entirely with tacit choice may hinder the establishment and the development of the principle in Vietnam. Furthermore, while EU law has the closest connection principle in the escape and default rules which allow those factors to be considered in the later stage, in Vietnam the law applicable in the absence of choice is at present the

Clarkson / Hill 2011, p. 217. MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 46: “Objektive Anknüpfung und stillschweigender Parteiwille schließen einander aus; sie betreffen unterschiedliche Stufen der Anknüpfung. Auf der Ebene der stillschweigenden Rechtswahl geht es daher (noch) nicht um die Anknüpfungen des Art. 4 und auch nicht um die Ausweichklausel des Abs. 3.” 72 Fawcett et al. 2008, p. 709. 73 Bělohlávek 2010, § 04-127. 70 71

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law of the place of performance (according to Art. 769 VCC 2005).74 Therefore, if Vietnam does away entirely with tacit choice, it will turn immediately to the law of the place of performance. Consequently, those factors will not be considered at all.75 In conclusion, the present writer is of the opinion that Vietnam should follow the model of EU law and provide that a choice may be implied as long as it can be clearly demonstrated by the terms of the contract or the circumstances of the case. The court should then decide to uphold the tacit choice on a case-by-case basis. 2. Multiple choice of law for a single contract Under Art. 3(1) Rome I Regulation, the parties can choose the law applicable to the whole contract or to only a part of it. Although this provision does not expressly allow the parties to choose more than one law to govern their contract, it is presumed that multiple choices of law76 for a contract is “simply a manifestation of the principle of party autonomy”77 and therefore “would be difficult to prohibit.”78 This conclusion is confirmed by the Draft Hague Principles on the Choice of Law in International Contracts. Art. 2(2) explicitly permits the two possibilities of severability: that “the parties may choose (a) the law applicable to the whole contract or to only part of it, and (b) different laws for different parts of the contract”. The possibility of splitting the contract and subjecting different parts or issues of it to different laws has been exercised in Vietnam. For example, in one standard contract of a joint-venture company named Germartrans, American law was chosen to apply to certain issues. At the same time, Vietnamese It is doubtful whether the Vietnam legislature will replace it with the closest connection principle in the future. 75 China used to stipulate the consideration of only an express choice. See Xiao/Long 2009, p. 198. The 1987 Interpretation of the Chinese Supreme People’s Court “mandated express choice of law as the only permissible means of choosing an applicable national law.” The Interpretation was then abolished in 1999, and now in the current China PIL Act 2010 such a mandate is no longer formulated. Instead, Art. 41 of this Act is generally worded about the choice of the parties. An interpretation of Art. 41 leads one to conclude that the choice might, in various circumstances, be implied. 76 One may be confused with the three terminologies: multiple choice of law for a single contract, splitting of the contract, and dépeçage. According to Plender / Wilderspin 2009, § 6-044, p. 154, it has to be acknowledged that the principle of dépeçage is to appoint, appropriately, different systems of law to different particular issues, with the consequence of many laws applicable in a single case. “Splitting of the contract” is the term used in the US and seems to denote a similar meaning by allocating different parts/issues of contract to different systems of law. Multiple choice of law for a single contract is a “more limited function” performed by dépeçage. 77 Plender / Wilderspin 2009, § 6-044, p. 154. 78 Giuliano & Lagarde Report, p. 18. 74

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law was chosen to apply to those issues not covered by the bill of lading.79 There is another case which may be seen as a case of the parties choosing multiple applicable laws. A Korean company signed a contract on 12 January 1995 to buy sliced tapioca from a Vietnamese company. The parties referred their contract to the UCP 500. The court of first instance held that the parties had chosen the UCP 500 and Vietnamese law to govern the contract.80 This case, however, is not a case of dépeçage because in dépeçage different national laws are selected for different parts or issues of a contract; the parties in this case, according to the court, in fact, impliedly chose Vietnamese law to govern the contract. UCP 500 was chosen at the level of the chosen national law, not at the level of private international law. Current Vietnamese legislation, however, does not contain any stipulation. Nevertheless, scholars have acknowledged the issue and suggested that Vietnam in the future should codify the right of the parties to choose two or even many systems of law to govern their contract.81 However, Vietnamese scholars, regrettably, have not acted further on the issue. In case the parties choose one national law for a specific part of the contract, the rest of the contract should not automatically be subject to the law applicable in the absence of choice.82 Rather, this splitting should be done in exceptional cases only. If possible, for the unified management and assessment of the contract, the law chosen for a part of the contract could be held as a tacit choice for the rest (of course only on the basis of sufficient evidence).83 Moreover, there are two criteria that need to be imposed on the multiple choice of law. First, the multiple choice of the parties can be express or tacit.84 If tacit, it has to be demonstrated by the terms of the contract or the circumstances of the case.85 Second, parts of contract that refer to different laws must be separable. This requires a certain independence of the legal issues.86 In addition, the multiple choices must not create contradictions between the This example is referred to in Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 583. This case is discussed in Lê Thị Nam Giang 2005, p. 161. 81 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 583. 82 This is the position of the Giuliano & Lagarde Report, p. 19: “The Group did not adopt the idea that the judge can use a partial choice of law as the basis for a presumption in favour of one law invoked to govern the contract in its entirety. Such an idea might be conducive to error in situations in which the parties had reached agreement on the choice of law solely on a specific point. Recourse must be had to Art. 4 in the case of partial choice.” See also Rodriguez / Albornoz 2011, p. 512. In addition, the same position is taken by the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 2.7. 83 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 73. 84 Giuliano & Lagarde Report, p. 19. 85 Plender / Wilderspin 2009, §§ 6-44, pp. 154, 155. 86 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 70. 79 80

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different laws.87 However, the severability should fail only when it leads to absolute incompatibility and insurmountable difficulties that could not be cleared by principles of interpretation in the substantive chosen laws. 88 Examples of elements that can be governed by different laws without giving rise to contractions and those that cannot are given by the Giuliano & Lagarde Report89 and the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts;90 more examples are given in the Münchener Kommentar.91 The Giuliano & Lagarde Report has also anticipated the situation when the chosen laws cannot logically be reconciled, in which case recourse must be had to the provision on the law applicable in the absence of choice.92 3. Variation of the chosen law With the introduction of Art. 3(2) Rome Convention and Art. 3(2) Rome I Regulation, the parties may choose the applicable law for the first time after the conclusion of the contract. In addition, if they have already agreed on one law, they may change to another.93 Similarly, the Draft Hague Principles on Choice Giuliano & Lagarde Report, p. 18. MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 71: “Man wird daher die Rechtswahl nur bei absoluter Unvereinbarkeit und unüberwindlichen Schwierigkeiten scheitern lassen. Bei Widersprüchen ist zunächst zu prüfen, ob sie sich nicht durch eine Auslegung der jeweiligen Rechtswahl und sodann durch die Auslegung der vereinbarten materiellen Rechte ausräumen lassen.” 89 Giuliano & Lagarde Report, pp. 18–19: “an ‘index-linking clause’ may be made subject to a different law; on the other hand it is unlikely that repudiation of the contract for non-performance would be subjected to two different laws, one for the vendor and the other for the purchaser.” 90 2.9: “In practice, such partial or multiple choice may concern, for example, the contract’s currency denomination, special clauses relating to performance of certain obligations, such as obtaining governmental authorizations, and indemnity/liability clauses.” 91 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 75: “Teilverweisungen kommen vor allem für individuell ausgehandelte Verträge in Betracht; sie können verschiedene Fragen betreffen, zB Klauseln über Preis, Währung oder Haftungsfolgen. Insbes. kann für Zustandekommen und Erfüllung bzw. die einzelnen Wirkungen unterschiedliches Recht vereinbart werden. ZB können eine Erfüllungsortvereinbarung sowie die Art. und Weise der Erfüllung einem anderen Recht unterstellt werden als der übrige Vertrag. Auch die Kündigung eines Arbeitsverhältnisses kann einem anderen Recht unterworfen werden. Für vertragliche Schadensersatzansprüche kann nachträglich noch ein anderes Recht vereinbart werden als dasjenige, welches für die Wirksamkeit des Vertrages gilt. Auch eine ‘Indexklausel’ bezüglich des Preises kann einer anderen Rechtsordnung unterstellt werden als der übrige Vertragsinhalt […]”. 92 Giuliano & Lagarde Report, p. 19. 93 This is the prevailing practice in most of the EU countries, see Giuliano & Lagarde Report, p. 19; Plender / Wilderspin 2009, § 6-047, p. 156; MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 79. The principle that the parties may vary the choice of law is 87 88

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of Laws for International Contracts directly allows for the variation of choice of law under Art. 2(3), which provides that “choice of law may be made or modified at any time”. The variation of the chosen law is inspired by the notion of “freedom of contract”. The power of the parties is extended from choosing the applicable law at the time of conclusion to choosing it after that time and to change that choice at a later date.94 Meanwhile, Vietnamese legislation to date is still silent on both possibilities of variation.95 As for the permissibility of a choice after the conclusion of the contract, Vietnamese scholars infer that since Vietnamese legislation does not regulate that the parties have to choose the applicable law at the time of conclusion of the contract, it can, therefore, be proposed that the parties can make it at any time, i.e., at the time of conclusion of the contract or later on during the hearing of the case.96 As for a change in the choice of law, although Vietnamese scholars have not mentioned the issue, the same reasoning of allowing the parties to vary their choice at any time, even during hearings at second instance, is likely to apply. In practice, there have been cases where the parties have chosen the applicable law (Vietnamese law) during the proceedings of the case and the tribunals have accepted the choice.97 Meanwhile, there has been no case reported where the Vietnamese tribunals express their view regarding the parties’ subsequent change of their previously chosen law. There definitely should be further literature guiding the practice of Vietnamese tribunals. The first issue is whether the variation of the applicable law may have retrospective effect.98 Although the answer is not clear from the wording of either Art. 3(2) or the Giuliano & Lagarde Report, in general, the parties should decide whether their choice will have retrospective effect or not because, if they fail to do so, the two laws will be applied consecutively,

“widely accepted” in Germany and France. The same position holds for England, see Plender / Wilderspin 2009, § 6-048, p. 156; Dicey et al. 2012, § 32-053, p. 1805. 94 Giuliano & Lagarde Report, p. 20. 95 In this regard, China’s legislation has fluctuated. In the 1987 Interpretation, it was stipulated that the designation of the governing law should be made before the commencement of hearings. With the 2007 Interpretation, it changed so that the parties were entitled to choose the applicable law until such time as the conclusion of the oral hearings at first instance. The current Chinese Act 2010 has left the time limit undefined. See more in Xiao/Long 2009, pp. 199, 200. 96 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 576. 97 Case in Hoàng Ngọc Thiết 2002, p. 171: In a contract between a Singapore company and a Vietnamese company, there was no choice of law clause. However, when the dispute occurred, the plaintiff in its claim suggested applying Vietnamese law to the contract. In the explanatory response, the defendant agreed to Vietnamese law as the applicable law for the contract. 98 Plender / Wilderspin 2009, § 6-046, p. 155.

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which will not generally be in their interests.99 Normally, without any declaration by the parties, the variation will have retrospective effect.100 The second matter that should be addressed is the problem of conflict of laws in respect of time. The validity of a contract may change due to the change of the applicable law. In case a contract is void prior to the variation and becomes valid according to the new applicable law, as far as the variation expresses the parties’ wish, the solution should be to allow such an altering of the validity of the contract.101 In the situation that a valid contract according to the original applicable law is void according to the law subsequently chosen, Art. 3(2) Rome I Regulation and Art. 2(3) of the Draft Hague Principles on Choice of Laws for International Contracts stipulate that the change of the applicable law shall not prejudice the formal validity of the contract. Although the provisions above specify the protection of the formal validity of the contract, its spirit should be extended to the validity of the contract in general. In addition to safeguarding the formal validity, the provisions above also provide for the protection of rights of third parties against the adverse consequences of a variation of the applicable law. The next point concerns floating choice of law clauses. In some cases, the parties agree on an alternative choice of court accompanied with an alternative choice of law, or they insert a clause that enables one party or some subsequent event to decide the applicable law later on.102 While the position of the common law on the matter is unclear and seems to answer in the negative,103 it is believed that the Rome I Regulation permits the possibility on the 99 Kropholler 2006, p. 465: “Im allgemeinen wird es dem Willen der Parteien entsprechen, dass ihre Rechtswahl auf der Zeitpunkt des Vertragsschlusses zurückwirkt; denn die Parteien werden in der Regel kein Interesse daran haben, dass auf den Vertrag nacheinander zwei verschiedene Rechte zur Anwendung kommen.” 100 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 80. 101 Plender / Wilderspin 2009, § 6-051, p. 157; MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 81. 102 For example, in a contract between a Vietnamese and Singapore enterprises, the parties agreed that “in case the International Commercial Arbitration Paris [sic] does not have jurisdiction, the contract would be subject to English Law and the English Courts”. See a sample contract in Nguyễn Trọng Đàn 1997. 103 Dicey et al. 2012, § 32-054, p. 1806: In Armar Shipping Co Ltd v Caisse Algérienne d’Asurrance [1981] 1 WLR. 207 (CA), an arbitration clause in a contract provided that English law would govern if the reference were made by German purchasers, but that German law would govern if the reference were made by English vendors. The permissibility of this clause was not decided but seems to have been viewed unfavourably. In The Mariannia [1983] 1 Lloyd’s Rep. 12, 15 (CA), a contract was governed by English law, but contained a provision that some other law would govern if a London arbitration clause were valid. The arbitration clause was valid and no question arose as to the question of application of alternative law, but there were signs that such a provision would likely have been accepted. In The Iran Vojdan [1984] 2 Lloyd’s Rep. 380, a bill of lading gave the carrier the option of determining whether the dispute should be determined in the courts of

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ground that Art. 3 promotes maximum scope to party autonomy, and that it does not forbid the insertion of floating choice of law clauses.104 In addition, the worry that “contracts are incapable of existing in a legal vacuum” is responded to by advocating that the contract will be governed by the law first chosen by the parties or the law applicable in the absence of choice until the option is exercised.105 The present writer agrees that there is no good reason to exclude such a right of the parties as long as it conveys their will. 4. Validity of the choice of law Vietnamese legislation, judicial practice, and academic writing unfortunately have not touched upon this matter. Meanwhile, according to Art. 3(5) Rome I Regulation, “the existence and the validity of the consent as to the choice of the applicable law shall be determined in accordance with the provisions of Articles 10, 11 and 13”. Consequently, the existence and validity of a choice of law clause, by referring to Art. 10(1), is governed by the putative chosen law.106 Thus, the chosen law will decide, for example, whether a choice of law clause contained in standard terms or general conditions has been effectively incorporated as a contractual term.107 Art. 6(1)(a) of the Draft Hague Principles on Choice of Law for International Contracts, provides a similar rule: “whether the parties have agreed to a choice of law is determined by the law that was purportedly agreed to”. Vietnam undoubtedly should adopt this well-established private international law rule,108 and should use the term “agreement on the choice of law” of Art. 6 Draft Hague, which refers to all issues as to whether

Teheran under Iranian law, in Hamburg under German law, or in London under English law; the answer to this alternative choice of law was negative; Plender / Wilderspin 2009, § 6-017, p. 139. 104 Plender / Wilderspin 2009, §§ 6-018, 6-019, pp. 140–141. 105 Dicey et al. 2012, § 32-054, p. 1806; Clarkson / Hill 2011, p. 218. 106 For an illustration, see the German case BGH 15 Dec. 1986 – II ZR 34/86, IPRax 1988, 26 m; The rationale for subjecting the existence and validity of the contract as well as the choice of law clause to the law selected by the parties, rather than considering objective factors, is to give deference to the intent of the parties as regards a specific governing legal order. See Basedow 2012b, § 225, p. 136. The solution of subjecting the existence and validity of a choice of law clause to the lex fori has been widely rejected because the lex fori usually is not known at the time of conclusion of the contract. Therefore, legal certainty is not ensured. See MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 106. Moreover, applying the lex fori may lead to the situation that different countries’ courts reach different decisions on the material validity of the same choice of law clause, which may promote forum shopping. 107 Calliess 2011, § 29, p. 71; see LG Duisburg 17.4.1996 – 45 (19) 0 80/94, RIW 1996, 774. 108 The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 6.2.

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the parties have reached an agreement on the applicable law109 (instead of the phrase in Art. 3(5) and Art. 10(1), “the existence and material validity” of the choice of law clause). When employing such a rule, two points should be noted. First, the application of the chosen law to decide whether the parties have effectively made a choice of law requires at least an appearance of a choice of that law.110 Second, when the parties choose a law that renders the contract invalid that choice does not lead to the invalidity of the choice of law itself, because of the independence of the choice of law term from the main contract.111 In particular, the Draft Hague Principles on Choice of Law in International Commercial Contracts introduces clearly the principle of severability of the validity of the parties’ choice of law clause from that of the main contract, which should be developed for Vietnam as well. Its Art. 7 provides that “a choice of law cannot be contested solely on the ground that the contract to which it applies is not valid.” Moreover, Art. 10(2) Rome I Regulation as well as Art. 6(2) of the Draft Hague Principles on Choice of Law in International Commercial Contracts provide a widely-accepted exception that a party may rely on the law of the country in which he has his habitual residence to establish that he did not consent to the choice of law, if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law chosen. One characteristic of this exception is that it applies to a limited extent and results in a negative effect as to the validity of the choice only. Furthermore, one of the envisaged domains112 for this exception is for a party to claim that his silence does not imply consent to a choice of law113 if the law of his country of habitual residence so regulates while the purportedly chosen law regulates otherwise.114 One issue that Art. 10(1) Rome I Regulation has not addressed, while Art. 6(1)(b) of the Draft Hague Principles on Choice of Law in International Commercial Contracts provides a novel conflict rule, is the scenario where the parties include standard terms designating different applicable laws, 109 The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 6.6. 110 Calliess 2011, § 25, pp. 69–70. 111 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 paras. 104, 108; Calliess 2011, § 24, p. 69. 112 Other grounds for a party to invoke a defect of consent include duress, misrepresentation and mistake. See the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 6.7. 113 Under Vietnamese law, silence cannot be taken to imply acceptance, unless the parties so agree. See Art. 396 VCC 2005 and Art. 404(2) VCC 2005. 114 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 107; Plender / Wilderspin 2009, § 14-063, p. 422.

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which is known as “the battle of forms”. The solution in Art. 6(1)(b) of the Draft Hague Principles on Choice of Law in International Commercial Contracts is that “if the parties have used standard terms designating two different laws and under both of these laws the same standard terms prevail, the law designated in the prevailing terms applies; if under these laws different standard terms prevail, of if under one or both of these laws no standard terms prevail, there is no choice of law.”115 Vietnamese substantive law appears to refer to the “last-shot rule”;116 however, it is no way clear. The more likely interpretation is that Vietnamese law has not taken a position on the issue of conflicting standard terms. Therefore, when a conflict rule like Art. 6(1)(b) of the Draft Hague Principles on Choice of Law in International Commercial Contracts is employed, it may result in the situation that it is impossible to establish whether the same standard terms prevail or different standard terms prevail; consequently, no standard terms prevail and the conclusion reached is that there is no choice of law.117 With regard to the formal validity of the choice of law agreement, Art. 3(5) Rome I Regulation refers to Art. 11, which provides for an alternative application of the lex causae, the lex loci actus, and the habitual residence of either party, based on whichever validates the main contract in general or the choice in particular. Art. 3(1), on the other hand, prescribes no formal requirements specifically for a choice of law agreement.118 By stating that “the choice shall be made expressly or clearly demonstrated by terms of the contract or the circumstances of the case”, a choice can be made in the absence of formalities. That means it does not need to comply with the formal requirements prescribed by the law of the above countries to be formally valid. To that extent, Art. 5 of the Draft Hague Principles on Choice of Law in International Commercial Contracts provides a substantive rule whereby “a choice of law is not subject to any requirement as to form unless otherwise agreed by the parties”. The Vietnamese conflict rule on the formal validity of contracts is Art. 770 VCC 2005, which as mentioned earlier requires the contract to comply with either the law of the place in which the contract is signed or Vietnamese law. The application of this rule as to the validity of the choice is contrary to the policy of favouring the validity of the choice of law. The better solution is to 115 Cf. Dicey et al. 2012, § 32-067, p. 1816, who presumes that the law applicable in the absence of an express choice could provide an answer. 116 See Art. 395 VCC 2005 and Art. 396 VCC 2005. 117 The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 6.22. See more about the consideration of the relevance of Art. 6(1)(b) of the Hague Draft Principles to the CISG in the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 6.23– 6.27. 118 Callliess 2011, § 30, p. 72.

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have an autonomous rule in the manner of Art. 5 of the Draft Hague Principles on Choice of Law in International Commercial Contracts. However, it should be noted that such a rule is designated primarily for international commercial contracts.119 Therefore, it should be added to Art. 770 VCC 2005, with a conflict rule designating the formal validity of consumer contracts or contracts relating to immovables; in accordance with, for example, Art. 11(4) & (5), the form is governed by the law of the country where the consumer has his habitual residence or the law of the country where the property is situated. With respect to the capacity of the parties in concluding a choice of law agreement, Art. 3(5) refers to Art. 13, which grants a party a limited possibility to invoke his incapacity under the law of another country. For Vietnam, Vietnamese conflict rules on the capacity of parties to enter into a contract also apply to capacity to enter into a choice of law agreement which designates the law of nationality of an individual/the law of the country where a legal person has been established, or the law of Vietnam if the parties establish and perform the civil transactions in Vietnam. In that context, an exception like Art. 13, whose main purpose is to restrict a party from invoking his incapacity under the law of his country of habitual residence, if the law of the place of contracting provides for a full capacity, is deprived of much importance. 5. Choice of non-state law As a conceptual basis, it should be made clear from the beginning that there are two tiers to the possible choice of “non-state law”. One is at the level of choice of law, i.e., non-state law as an equivalent to any national law. Another is at the level of the applicable law and within the limits of the applicable national law. If the first possibility is rejected, it is still possible to agree on non-state law at the second level if the applicable national law ensures freedom of contract. a)

Concept of non-state law

Non-state law literally covers norms and rules that are not part of the domestic law of a particular sovereign country. Meanwhile, lex mercatoria, or merchant law, refers to private regulations that emerge from international commerce and can be distinguished from state law.120 Accordingly, the sources of lex mercatoria should be narrower than those of non-state law. Therefore, the broad coverage of lex mercatoria given by Ole Lando in 1985, which contains eight elements (public international law, uniform law, the general principles of law, the rules of international organisation, uncodified custom and usage, codifications The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, at 5.4. 120 Basedow 2006, pp. 63, 64. 119

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of custom and awards),121 seems outdated. Later on, in 2008, lex mercatoria was described as “a body consisting of international commercial usages and of principles and rules common to most states”.122 The ambit of lex mercatoria has also been pointed out by Phillip Hellwege as including (although he does not agree with some elements) customary law, trade usages, uniform law, arbitral awards, and general principles of law.123 Among them, the inclusion of customary law and trade usages are uncontroversial, while the rest – including uniform law, PECL and PICC (the new lex mercatoria), arbitral awards, and general principles of law – are debatable. Recently, for the purpose of choice of law, the expression “non-state law” has been more commonly used than the expression of “choice of lex mercatoria”, perhaps because of the ambiguous ambit of the latter. b) Vietnamese legislation on non-state law as the applicable law Although the issue of whether parties can choose non-state law at the level of private international law to govern their contractual relationship has been debated all over the world, it has not been deeply discussed in Vietnam in doctrinal writings as well as court reasoning. To begin with, the first question that needs to be answered is whether under Vietnamese law the reference to the parties’ choice of “law” to govern a contract is a reference to a national law, or whether Vietnamese law allows a conflictual choice of non-state law. Art. 769 VCC 2005 is silent on the issue. Its wording “unless otherwise agreed upon” gives no guidance as to whether parties have to choose a national law or whether they can conflictually choose a non-state law. Meanwhile, Art. 5(2) VCL 2005 gives a clearer allowance to specifically international commercial practices, but not to non-state law as a whole. It provides that: “Parties to commercial transactions involving foreign elements may agree to apply foreign laws or international commercial practices if such foreign laws or international commercial practices are not contrary to the fundamental principles of the Vietnamese law.”

To interpret the provision literally, the VCL 2005 permits a choice of international commercial practices at the level of private international law. On the part of arbitration, the relevant provisions of Vietnamese law are contained in the VOA 2003 and the VCA 2010. Art. 49(5) VOA 2003 stipulates that “The involved parties may agree on selecting laws under the provisions of Clause 2, Art. 7 of this Ordinance and/or international commercial practices for settling their disputes”. Clause 2, Art. 7 provides that “for disputes involving foreign elements, the Arbitration Councils shall apply the laws selected by the involved parties”. It is noted that this article uses the 121 122 123

See Lando 1985; cited by Maniruzzaman 1999, p. 672; Tang 2012, p. 23. Lando/Nielsen 2008, pp. 1694–1695. See also Lando 2000, p. 368. Hellwege 2012, p. 1087.

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word “the laws” to indicate the reference of choice. No state or national law is expressly provided for, just “the laws”. However, also in that Clause 2, it is stated that “the selection and application of foreign laws must not contravene the fundamental principles of Vietnamese law”. Therefore, it could be inferred from the reference to “foreign laws” that the laws selected by parties mentioned here must be state law. In conclusion, the VOA 2003 takes the same stance as the Commercial Law as to the choice of non-state law: that is, to allow the selection of only international commercial practices at the level of private international law, and not all sorts of non-state law. The VOA 2003 has now been replaced by the VCA 2010. In this law, Art. 14(2) stipulates simply that “Regarding disputes involving foreign elements, the arbitration councils apply the rules of law selected by parties […]”. There is no further guidance as to whether “the rules of law” here includes non-state law or not. However, since the VCA 2010 is an implementation of the Uncitral Model Law on International Arbitration, and Art. 14(2) VCA 2010 adopts the wording of Art. 28 Uncitral Model Law on International Arbitration, it can be inferred that the VCA 2010 allows a conflictual choice of non-state law, which is more liberal than the Ordinance. The use of the term “rules of law” in Art. 14(2) VAC 2010 and in Art. 28(1) Uncitral Model Arbitration law instead of the term “law” implies that the parties “may agree on rules of law that have been elaborated by an international forum but have not yet been incorporated into any national legal system.”124 Accordingly, it can be assumed that the Vietnamese legislation may be more flexible as to choice of non-state law in relation to arbitral proceedings than in relation to judicial proceedings. From 2010 on, the choice of non-state law is believed to be allowed in arbitration, whilst in the court context, the choice of law is still restricted to mainly state law and arguably international commercial practices. c) International treaties in Vietnamese choice of law rules The treatment of international conventions to which Vietnam is a contracting party and those to which Vietnam is not a party differs. International conventions to which Vietnam is a party and have taken effect are applied as though they are a part of the Vietnamese legal system.125 See the Uncitral Model Law on International Commercial Arbitration 1985 with Amendments as Adopted in 2006, Vienna 2008, p. 33 no. 39. See also Basedow 2012b, § 195, pp. 122–123; Lando/Nielsen 2008, p. 1695. 125 These two provisions of Vietnamese law suggest so. First, see Art. 759(2) VCC 2005. Second, Art. 5 VCL 2005, although adopting a somewhat different phrasing, takes a similar stance: “Where a treaty to which Vietnam is a contracting party stipulates the application of foreign laws or international commercial practices, or contain provisions different from those of this Law, the provisions of such treaty shall apply.” 124

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As regards the international conventions that have not taken effect for Vietnam, they constitute “non-state law”. The question is whether it is possible for parties to select these conventions as the applicable law for their contracts. Vietnamese authors hold different views on the issue. One author reasons that according to the above-mentioned provision of the VCL 2005 (Art. 5(2)),126 the parties are not allowed to choose relevant international conventions to govern their contract.127 Take the CISG, for instance: the parties are not allowed to directly choose it. Other scholars, by contrast, claim that Vietnamese provisions do not expressly prohibit such a choice. The mentioned Art. 5(2) lists the sorts of law that the parties can choose but does not provide that the parties can choose only from those sources. Nevertheless, there have been no provisions that explicitly allow such choice. With the present law of Vietnam unclear about the issue, the discretion is in the hands of the practitioners. Consequently, scholars of this latter camp propose that the choice of international conventions should be granted as international conventions are more tailored to the realities and issues of international trade than national law.128 The present writer holds the former view: that Vietnamese law does not allow the parties to choose international conventions to govern their contract. It can hardly be said that since Art. 5(2) VCL 2005 does not prohibit the practice, it allows it. In fact, Art. 5(2) explicitly allows the choice of international commercial practices. If the legislator intended that the same idea apply to international conventions, there is no good reason for them not to have explicitly stated so. Although there has been no reported case before the Vietnamese courts where the parties chose an international treaty as the applicable law, it could be contended that, if such a case were to take place, the Vietnamese courts would view the parties’ choice negatively.129 It is possible to consider that the attitude of the Vietnamese courts towards the choice of international conventions is in line with that of the Rome I Regulation and of the American Restatement Second on the Conflict of Laws. In 126 As analysed earlier, this provision allows express choice as to only state law and international commercial practices. 127 Nguyễn Bá Chiến 2006, p. 72. 128 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 582. The scholars hold the same view as the Max Planck Institute for Comparative and International Private Law, see Max Planck Comment on Green Paper, p. 31; in which it is supported by further arguments such as the creation of such conventions under the auspices of international organisations with the participation of many states, resulting in a balancing of interests, an increase of legal certainty in international trade, and the parties being provided with further options. 129 Before Vietnamese courts, up to now, CISG has been applied once, but not by virtue of the parties’ choice. The court applied the CISG by itself. See the Judgment No. 28/ KTPT dated 5 Apr. 1996 of The People’s Supreme Court, Appeal Division in Ho Chi Minh City: Ng Nam Bee (Singapore) Pte Ltd. v Tay Ninh Trade (SOE) Co. Available online at , visited 20 July 2015.

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fact, it is not. It is true that Rome I and the Restatement Second on the Conflict of Laws do not permit the contractual choice of international conventions (as well as other non-state norms).130 However, unlike Vietnam, they all have the useful tool of contractual “incorporation” of non-state norms, and, specifically, Recital 13 Rome I envisages the permissibility of incorporating international conventions.131 Those laws benefit from this tool in two ways. First, since some non-state norms including international conventions are better tailored to international commercial contracts than national law, allowing the parties to incorporate them into their contract will satisfy the parties’ interests. Moreover, the courts can make use of the proper provisions of those conventions and better justice is done through the application of better law. Second, incorporating means not allowing a direct choice. In doing so, the court can get rid of those inappropriate provisions of those international conventions (or other non-state laws) by subjecting them to the mandatory rules of the actual applicable law.132 Seeingthe matter from a Vietnamese perspective, in the absence of the incorporation technique, it appears, on the one hand, unwise to totally prohibit the choice of international conventions. However, on the other hand, to give the parties a genuine choice of law and an escape from the limitations of the lex causae would be much too liberal, as least in the judicial context. Moreover, it is believed that “the choice of an international convention refers to the instruments as a whole. In other words, the parties also choose all of its conflict of law provisions, which are specifically tailored to the subject matter and any remaining gaps”.133

Meanwhile, allowing the parties to choose conflict rules as well may violate the sovereignty of the forum country. On the other hand, it is inappropriate to limit the choice of an international convention to only its substantive rules.134 If the convention is purely substantive, then no problem arises. However, some may contain conflict rules as well. Therefore, allowing such a split choice could lead to much controversy. It is safer to apply them under the auspices of incorporation, where use is made of substantive rules but not the conflict rules of internaRühl 2012a, p. 192; Tang 2012, p. 25. Basedow 2012b, § 193, p. 121. 132 Kropholler 2006, p. 465: “Wenn die Vertragsparteien sich außerstaatlichen Regelwerken unterstellen, bleiben sie daher nach bislang geltendem Recht den zwingenden Vorschriften des objektiven (staatlichen) Vertragsstatuts unterworfen […]”; see also Magnus / Mankowski 2004, p. 154. 133 Max Planck Comment on Green Paper, p. 32. 134 Nevertheless, the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts proposes that the parties can choose certain sets of rules of law (Art. 3): “the parties may designate the substantive rules of the CISG as a free-standing set of contract rules”, see section 3.5. 130 131

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tional conventions. In conclusion, the present writer considers that the technique of incorporation would be an appropriate compromise for Vietnam. d) International commercial practices as the chosen law As has been mentioned, Vietnamese law allows a choice – at the level of private international law – of international commercial practices by parties both in court proceedings and in arbitration. After reading the relevant provisions of Vietnam law, one could reasonably conclude that Vietnamese law allows a genuine choice of international commercial practices. However, due to the fact that in Vietnam the distinction between a direct choice and the incorporation of particular provisions as contractual terms is unacknowledged, the present writer suggests that, in fact, Vietnamese law is silent as to the method of reference to international commercial practices by virtue of the parties’ choice. The two frequently chosen sets of international customs are Incoterms and the UCP. Nevertheless, the situation of Vietnam shows that the number of cases where the parties indicate directly that they choose those international customs as the applicable law is considerably lower than the number of cases where the provisions of those customs are envisaged as terms of the contracts.135 In the lack of reported cases, it is hard to conclude whether Vietnamese courts allow a direct choice or just incorporation. In one case136 where the parties chose UCP 500 to govern their contract, the court seised applied UCP 500, accompanied by an overall applicable law(Vietnamese law). One could argue that the court in fact applied international customs as a conflictual choice. The reason why Vietnamese law was applied along with those norms is that custom normally does not have a comprehensive coverage. Vietnamese law was applied alongside international custom (complementing custom where it may lack provisions, but not capable of overriding them). It is similar to the issue of multiple laws applying to a contract. Moreover, there has not been any case where the Vietnamese courts cite mandatory rules of Vietnam as the actual applicable law overlapping compatible rules of international custom. The present writer considers that the absence of such a case is attributable to two reasons. First, the Vietnamese courts, until even now, have not fully conceived of the notion of mandatory rules. They are more familiar with the barrier of public policy. Second, those international customs they are faced with are normally popular and well-drafted. They rarely go against crucial Vietnamese rules (not to the level of being counter to basic principles of Vietnamese law such that public policy is envisaged) so as push Vietnamese courts to defeat. Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 578–579; see examples of contract in Nguyễn Trọng Đàn 2007, pp. 129–334. 136 In a contract between a Korean company and a Vietnamese company, the parties chose UCP 500 to govern their contract and the provincial court of Ho Chi Minh City applied it. This case is referred to in Lê Thị Nam Giang 2005, p. 161. 135

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Imagining a case in which a Vietnamese court is asked to apply more esoteric norms of international custom, the present writer believes that that court would not hesitate to quote the mandatory rules of Vietnamese law as the (covering) applicable law in order to limit the operation of those norms. In conclusion, although the Vietnamese courts did not consciously make a distinction between a direct choice and an incorporation of international custom, the application of international custom before the Vietnamese courts is, in the present writer’s view, in fact an incorporation of these norms. e) Choice of other sorts of non-state law Some Vietnamese scholars have increasingly considered the Unidroit Principles of International Contracts (PICC) and the Principles of European Contract Law (PECL)137 as international custom and have attributed to them the status of international custom. Meanwhile, others are more skeptical. It is argued that it is too early to confirm that PICC and PECL are international custom because they do not fulfil the attributes of custom, such as spontaneous practice repeated for a long time. They are in fact norms drafted by non-governmental institutions taking into consideration different legal traditions.138 To back up this argument, reference is given to the definition of international custom provided by the Supreme People’s Court in Resolution No. 04/2005/NQ-HĐTP dated 19 May 2005, which indicates that international custom is practice that has been repeated regularly in international trade and recognised by relevant international organisations.139 The answer to the question is not easy. Nevertheless, there is a consensus that PICC and PECL are products of comparative work140 rather than having been drawn from trade custom, which prevent those academic principles from taking full title as international custom.141 Besides international commercial custom, Vietnamese law currently does not give allowance to the parties to conflictually choose other kinds of nonstate laws. It is interesting that most Vietnamese scholars are enthusiastic about the choice of principles of law such as PICC or PECL. They thus propose that Vietnamese law should allow the choice of those principles. They put forward three justifications. First, such an allowance is a logical application of the principle of party autonomy. Second, those principles, such as PICC and PECL, are better tailored to govern international transactions than See Principles of European Contract Law – Parts I & II, ed. by Ole Lando/Hugh Beale, The Hague 2000; Principles of European Contract Law – Part III, ed. by Ole Lando/ Eric Clive/André Prüm/Reinhard Zimmermann, The Hague 2003. 138 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 51. 139 Art. 2.7 Session II Resolution No. 04/2005/NQ-HDTP Guiding the implementation of a number of provisions of the Civil Procedure Code on “proofs and evidence”. 140 See Basedow 2000b, p. 130. 141 Hellwege 2012, p. 1087. 137

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national law. Third, in practice, the foreign party normally does not want to choose Vietnamese law and the Vietnamese party is not satisfied when it is forced to choose foreign law, because neither of them have a good understanding of the law of the other. In that situation, those principles are a suitable compromise as both parties may know about them better and they are easily accessible through the internet.142 However, as the scholars’ proposal mainly aims at those well-known principles, it does not make further suggestions as to other less well-drafted sets of norms. In fact, besides those well-drafted, clear, and impartial principles, there are also lesser-known norms, the contents of which are not clear or easily ascertained. In practice, however, there has still not been any case where PICC or PECL has been applied in any Vietnamese tribunal,143 whether as a direct choice or by incorporation. As for other private codifications, in a case of a contract between a Vietnamese company and a Swedish company, the court applied the Institute Cargo Clauses (Air) (Excluding Sendings by Post) 1.1.82 CL. 259;144 however, the Institute Cargo Clauses appeared to be applied within the framework of the applicable Vietnamese law. f)

Proposing a position on choice of non-state law for Vietnam

It is perhaps more important to look beyond the position of the existing Vietnamese law and explore what it should be. Should Vietnamese laws grant a direct choice of non-state law or is the technique of incorporation more favourable? Moreover, is the approach of distinguishing different types of non-state laws and only permitting the choice of certain types (like the approach of the Commission’s Proposal for the Rome I Regulation) more suitable? The present writer does not suggest the direct choice of non-state law. Referring to the Inter-American Convention, it is debatable whether the InterAmerican Convention indeed authorises a choice of non-state laws, and the more accurate interpretation is likely to be that the reference of the parties to non-state laws has the effect of incorporation.145 In addition, it should be noted that Vietnam has not developed rules assuring, for example, that the choice by the parties will not deprive the weaker parties of 142 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 580. See more about the advantages of the Unidroit Principles as general principles of law in Basedow 2000, p. 137. 143 According to Unilex Unidroit Principles, available online at , visited 2 June 2014, there has not been any reported case of the Vietnamese courts or arbitral tribunals in which the Unidroit Principles have been applied. The number of cases choosing non-state law is also low in the world context. See Magnus / Mankowski 2004, p. 151: The most recent statistic on ICC cases reveals that only in 0.8% of all reviewed contracts did parties opt to choose a non-national law. 144 Judgment No. 22/KTST dated 8 June 2000 of Hanoi City People’s Court. 145 See Rodriguez / Albornoz 2011, p. 505.

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the protection given by the otherwise applicable law.146 Therefore, if a direct contractual choice of non-state norms is allowed, the mandatory protective rules of the otherwise applicable law will be bypassed; consequently, the protections of state law (for the weaker parties) are removed.147 Nevertheless, this challenge is only temporary because Vietnam may adopt these protective conflict rules in the future. In fact, the strongest objection to this approach is the fact that not all sets of non-state law are disinterested bodies of rules.148 Bearing this in mind, another approach suggests a classification of rules of non-state law. The Commission’s Proposal for the Rome I Regulation proposed to allow the parties “to choose as applicable law the principles and rules of the substantive law of contract recognized internationally or in the Community”, such as the Unidroit Principles, PECL, or a CESL, and at the same time exclude the lex mercatoria (deemed to be insufficiently precise) or “private codifications not adequately recognized by the international community”.149 Similarly, one author suggests distinguishing different types of nonstate law,150 and only permitting the choice of those codified by “reputable

In the manner of Art. 6 Rome I Regulation, for example. See more about the caution regarding the UCC’s position in Symeonides 2009, p. 21. 148 PICC and PECL, for example, “were not drafted by businessmen in order to further their own interests”, see Max Planck Comment on Green Paper, p. 32. 149 Commission of the European Communities, Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), COM(2005) 650 final - 2005/1261 (COD), Brussels, 15.12.2005, p. 14: Art. 3(2). In addition, examples are given in the Explanatory Memorandum of Art. 3 “freedom of choice”. See also Lando/Nielsen 2008, p. 1697, in which the authors support this approach; Editorial Comments 2006, p. 915. 150 Tang 2012, pp. 23, 24: She classifies such law into codified customary rules and uncodified ones. Codified customary rules are the codification of usage and principles that could overcome the problem of ambiguity. Some codification work has been carried out by reputable, professional and highly-respected organisations. For example, Unidroit and PECL. Although these codifications have no force in law in any state, they are claimed to be clear, full-fledged, updated, and comprehensive. There are also rules established by special industrial associations, such as the professional standards and criteria established in the British Bankers’ Association (BBA), the Wine and Spirit Trade Association (WSTA), the Consumer Credit Trade Association (CCTA), or by individual institutes or professionals. This type of codification may be questioned as to its quality and impartiality. Meanwhile, uncodified customary rules are custom, usage, and general principles of law in international trade that are the primary elements of non-state law. The problem with these uncodified norms is that their existence, content, and influence are always in doubt. Religious law is also uncodified customary rules. The ambiguity and uncertainty as to the existence and interpretation of uncodified customary rules create difficulties for their application in private international law. 146 147

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international organizations” while excluding others.151 At the same time, further criteria for the classification are given by the Draft Hague Principles on Choice of Law in International Commercial Contracts. Art. 3 of these Draft Principles provides that “the law chosen by the parties may be rules of law that are generally accepted on an international, supranational or regional level as a neutral and balanced set of rules […]”. As for the first criteria that the rules of law are generally accepted on an international, supranational or regional level, the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts envisages the CISG, the Unidroit Principles, and the PECL as examples. 152 Moreover, as regards the criteria that the rules of law must be sets of rules, neutral, and balanced, the Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts also gives an explanation to guide the classification.153 However, the criteria above cannot escape the risk of uncertainty that is inherent in the process of evaluation. Moreover, with the passage of time, some norms will be recognised or deemed reputable and some will lose their positions. Such an evaluation is especially difficult for Vietnam. The second objection is that even with PICC and PECL, the need to lift the incorporation of them to the level of a direct choice is not strong.154 Moreover, parties have rarely chosen them for their contracts even before arbitration.155 As pointed out earlier, the same is true for cases before Vietnamese tribunals. Therefore, the incorporation approach currently contained in the Rome I Regulation might be most appropriate for Vietnam.156 6. Limitations on the power to choose the applicable law Although the choice of law agreement results from the exercise of natural freedom (and therefore cannot be rejected), there are certain limitations imposed by

151 Tang 2012, p. 34: Codified customary law can be further codified by reputable international organisations and by others, including trade unions, private researchers, or organisations not recognised at international level. 152 See sections 3.4–3.8. 153 See sections 3.9–3.12. 154 Magnus / Mankowski 2004, p. 151. Because “the practical difference between a conflictual choice and a materiellrechtliche Verweisung tends to be marginal”. 155 Magnus / Mankowski 2004, p. 151. 156 It, however, might not be consistent with the approach suggested by an Indonesian scholar in which he advocates the genuine choice of the Unidroit Principles of International Commercial Contracts in the content of a proposed ASEAN Private International Law Convention. See Hardjowahono 2005, p. 205, who, nevertheless, calls on ASEAN countries to assume the status and function of the Unidroit Principles of International Commercial Contracts as an autonomous and independent legal system. See Hardjowahono 2005, p. 248.

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legislatures to prevent the detrimental effects that such freedom of choice may cause to the public interest, the weaker parties in the market,157 or third parties.158 a) Connection to the law chosen It is clear that most jurisdictions agree on the choice of unconnected law, though there are some variations depending on each country.159 For Vietnam, it is common that the parties choose the law of a country that has some connection with the contract, mostly the law of one of the countries of which the parties are nationals.160 Nevertheless, there have been cases where the parties chose the law of a country with which the contract has no connection. For example, in a contract between a Vietnamese enterprise and a Singaporean one, the parties agreed that “in case the International Commercial Arbitration Paris does not have jurisdiction, the contract would be subject to English Law and English Court”.161 Similarly, in a contract between a Vietnamese company and a Danish company, the parties agreed that “in case the contract does not clearly indicate, the substantive law of France will govern”.162

157 In the Rome I Regulation, contractual relations “such as employment contracts, consumer contracts, insurance contracts and to a lesser extent… contracts of carriage.” See Basedow 2012b, § 197, p. 124. 158 See more about the cooperation between private rule-making and state legislation in Basedow 2012b, §§ 259, 247, pp. 150, 145. 159 European countries such as, France, The Netherlands, and Switzerland (already before the Rome I Regulation 2008) do not require any connection between the contract and the law chosen by the parties, see Lando 1976, paras. 24-35, 24-41, 24-44. Other Asian countries such as Hong Kong (see Wolff 2010, p. 469), China (see Xiao/Long 2009, p. 197), Soviet Russia (see Lando 1976, para. 24-68) also allow the choice of unconnected law. In West Germany after 1945, in writers’ opinions and practice, it was held that “a local connection to the chosen law is not necessary”, see Lando 1976, paras. 24-42–24-43. For Japan, see Basedow 2008a, p. 15. The position of England is quite different. On the one hand the English courts tend to encourage parties in international commerce to adopt English law even if their contracts have no connection with England (see Dicey et al. 2012, § 32-044, p. 1799) by envisaging “underlying connections” with England such as instances where “the insurance for financing is effected in London or in which the bill of lading [is] to be dealt with in London […]” (See Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277, 290–291, 294–295). It is not clear, on the other hand, whether the English courts will grant the same liberty for parties to choose a foreign law, see Lando 1976, para. 24-42. Meanwhile, the US provides a counter-example when requiring a “substantial/reasonable relationship” to the country of the law selected, although the practical importance of such limitation has become less relevant. See more details in Basedow 2012b, § 196, p. 123; Basedow 2008a, p. 15; Rühl 2012a, pp. 192–193. 160 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 577. 161 A sample contract in Nguyễn Trọng Đàn 1997, p. 259. 162 A sample contract in Nguyễn Trọng Đàn 1997, p. 398.

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The question is whether Vietnamese laws allow such a choice. Unfortunately, Vietnamese law is silent on the point. Nevertheless, Vietnamese scholars have voted for an allowance. They propose that, in practice, sometimes it is precisely because that law does not have any relation to the contract that the parties decide to choose it to govern the contract.163 However, before making a suggestion for Vietnam, the risk of allowing such a choice should be addressed. First, there is a fear of the evasion of law. There is a concern that an unconnected law could be chosen with the intention of circumventing the application of the otherwise applicable law.164 Second, even when the choice is made without evasive intent, the mandatory provisions of the otherwise applicable law will be bypassed. Third, a choice of unconnected law may be made by powerful enterprises to the detriment of the weaker parties to non-commercial contracts.165 On the other hand, proponents of the choice of unconnected law respond that the prevention of evasion of law is fruitless in practice because it is easy for parties to create a contract with the chosen law.166 Regarding the concern for the fundamental policy of the law closely connected with the contract and the need to protect the weaker bargaining parties, they are not the reasons for prohibiting the choice of unconnected law because there are other mechanisms for limiting the effect of the choice. For example, the application of the mandatory rules, or public policy, of the country which is closely connected to the contract may be alleged, or special conflict rules can be put in place for unequal bargaining contracts. The Rome I Regulation provides a good example of a sufficient, though complex, mechanism of limitation. It restricts the application of the law of an unconnected country by certain provisions requiring the application of the mandatory rules of other countries.167 According to Art. 9(3), the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed may be given effect in so far as those overriding mandatory provisions render the performance of the contract unlawful.168 Additionally, there are restrictions espoused by the over-

Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 578. Plender / Wilderspin 2009, § 6-008, p. 135. 165 Lando 1976, para. 24-72. 166 Lando 1976, para. 24-68. 167 Plender / Wilderspin 2009, § 6-055, p. 159; Dicey et al. 2012, § 32-046, p. 1801. 168 Art. 9(3) Rome I Regulation: “Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and to the consequences of their application or non-application.” 163 164

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riding mandatory provisions of the law of the forum169 and the public policy of the forum.170 As regards the protection of weaker parties, limits can be set either by allowing the parties to choose within the laws of certain related countries171 or by mandating the application of provisions of the law applicable in absence of choice that cannot be derogated from by agreement.172 As regards Vietnam, it is a concern that Vietnam has so far not developed such mechanisms for protecting the fundamental interests of a third closelyconnected country and weaker parties. However, it is a common trend that those mechanisms will be adopted along with the codification of an express or implied allowance of choice of unconnected law. Moreover, the US model of requiring some connection to the chosen law is not suitable for Vietnam because the main purpose for requiring a substantial connection with the chosen law is to prevent parties to a fully domestic contract from escaping the local law.173 Meanwhile, Vietnam has exempted fully domestic transactions from the sphere of party autonomy in respect of relevant provisions of Vietnamese law, which is examined in the next part of this thesis. Therefore, the present writer would suggest allowing the choice of unconnected law as long as it is accompanied with an appropriate limitation mechanism. b) Domestic contracts In general, when no international character is present, the need for the parties to refer their contract to a legal order for sake of legal certainty is no longer significant because the affected state law can provide a predictable legal framework.174 Since the freedom of choice in Art. 769 of the VCC 2005 is located in Part VI of the Code, which is reserved for civil relations with foreign elements, it is logically construed that this freedom is granted solely to civil contracts with foreign elements. In addition, according to Art. 5(2) VCL 2005,175 the right to choose the applicable law is granted to commercial transactions involving foreign elements only; that means for commercial transactions not Art. 9(2) Rome I Regulation: “Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum.” 170 Art. 21 Rome I Regulation: “The application of a provision of the law of any country specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum.” 171 For example, Art. 7 on insurance contracts. 172 Art. 6 on consumer contracts or Art. 8 on individual employment contracts. 173 Symeonides 2010c, p. 524. 174 See Basedow 2012b, § 257, p. 150; Basedow 2008b, p. 719. 175 Art. 5(2) VCL 2005: “Parties to commercial transactions involving foreign elements may agree to apply foreign laws or international commercial practices if such foreign laws or international commercial practices are not contrary to the fundamental principles of the Vietnamese law.” 169

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involving foreign elements (domestic commercial transactions), this right is not provided, and Vietnamese law applies automatically. This restriction is even clearer for arbitration. Art. 14(1) VCA 2010 clearly states that “for disputes not involving foreign elements, the Arbitration Councils shall apply Vietnamese laws to settling them”. As firmly stipulated, party autonomy in respect of the choice of the applicable law is totally eliminated for domestic contracts in arbitration. The restriction of choice of law freedom for domestic contracts in Vietnamese legislation by way of eliminating altogether this right is different from EU law denoted in the Rome Convention 1980 and the Rome I Regulation in three aspects. (1) The foreign elements of the contract First, the approaches to the issue are different. While Vietnam approaches the issue from the perspective of a domestic contract, Rome I identifies the protected contract as the one which “all other elements relevant to the situation are located in a country other than the country whose law has been chosen”. Are the two contracts the same? Do the “relevant elements” in Rome I which are located in one country, and those which constitute a domestic contract in the Vietnamese approach, coincide with each other? In respect of Rome I, the elements that could be considered as “relevant” could be taken from those that would play a role in determining the law applicable in the absence of choice.176 Hence, those considered relevant are, inter alia, the place of performance, the residence of the contracting parties,177 and the place of contracting.178 At the same time, a choice of a foreign law179 and a choice of court or arbitration are irrelevant.180 Meanwhile, the relevance of some factors, such as the nationality of the contracting parties,181 the language or currency of the contract,182 or the law of the flag,183 is less clear. Apart from those factors, it should be mentioned 176 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 93; Calliess 2011, § 53, p. 83; Plender / Wilderspin 2009, § 6-065, p. 164. 177 Calliess 2011, § 53, p. 83. 178 Except when the performance is only domestic, see MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 93: “Auch ein Abschlussort im Bereich des gewählten Rechts ist ausreichend. Dies soll jedoch dann nicht genügen, wenn der Leistungsaustausch selbst nur Inlandsbezüge aufweist. Das bloße Führen von Verhandlungen soll nicht ausreichen.” 179 Calliess 2011, § 52, p. 82. 180 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 87. See Recital 15 Rome I Regulation. 181 See Calliess 2011, § 54, p. 83. 182 Calliess 2011, § 54, p. 83: “factors like the language or currency of the contract are usually considered as irrelevant, if not accompanied by other foreign elements which in sum constitute a legitimate interest in the individual case.” 183 See Plender / Wilderspin 2009, § 6-065, p. 164.

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that a foreign element may not need to exist in the contract in question, but it can exist in the preceding contract in the chain of commerce.184 Two domestic parties may have an interest in subjecting their contract to the same law that governs a related contract for the sake of commercial convenience.185 In sum, “a foreign element is relevant where it alters the situation in a way which results in a legitimate interest of the parties in making a choice of law”.186 As for Vietnam, other elements are considered to determine if there is a foreign dimension. The VCC 2005 has a definition of civil relations involving foreign elements in Art. 758: a civil relation is considered to involve foreign elements when at least one of three circumstances arises. First, at least one party is a foreign agency, organisation, or individual or overseas Vietnamese national. Second, the bases for establishing, altering, or terminating those relations are foreign laws; or they arise overseas. Third, assets linked to such relations are located overseas. If one construes that a contract is a civil relationship, a contract would be considered to involve a foreign element if at least one of those circumstances exist. However, those requirements are apparently not specialised for contract187 and are, in the present writer’s view, out-dated and inappropriate. It has to be emphasised that the laws of Vietnam do not provide an official definition or description of contracts involving foreign elements, or of international commercial contracts. Nevertheless, the Vietnamese Commercial Law has some descriptions as to the international aspects especially for contracts relating to the international sale of goods. However, the requirements for a sale of goods contract to be deemed international are not the same in Law 1997 and Law 2005. In the Commercial Law 1997 (VCL 1997), a definiFor example, a Vietnamese importer imports goods from a Thai company under a contract governed by Thai law. He resells these goods to another Vietnamese company in Vietnam. Although the second contract is internal on the surface, a foreign element is constituted if the importer can only get those goods from Thailand under the law of Thailand and has a strong interest in extending the scope of Thai law to contracts with his clients in Vietnam. If the interest of the parties is considered, the parties should be allowed to agree on the law of Thailand for the contract in Vietnam. 185 See Calliess 2011, § 54, p. 83–84; MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 93. 186 Calliess 2011, § 52, p. 83. 187 This construction might be compatible to the situation of China. See Liang 2012, pp. 87, 99: Before the enactment of the Chinese Act 2010, the international character of foreign-related contracts as one form of foreign-related civil relationships was ascertained from three aspects: the subject, subject matter and the legal facts involved in a civil relationship (according to Art. 178 of the Supreme People’s Court’s “Opinions on Several Issues Concerning the implementation of the General Principles of Civil Law of the People’s Republic of China” in 1988). However, after the Chinese Act 2010, no definition of foreign-related civil relationships is given in the Codification and “a strict or broad approach should be adopted is left to be decided by judges on a case-by-case basis.” 184

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tion of a contract for the international sale of goods was given, in which the international character was based on the different nationalities of the parties to the contract.188 This way of exerting the international character was criticised by many Vietnamese scholars.189 They point out that in the practice of signing and performing international sale of goods contracts, the ascertainment of internationality based on the nationality of the merchant encounters much difficulty and complexity and in some cases is impossible because the laws of different countries rely on different criteria to ascertain the nationality of a legal person.190 The VCL 2005 varies from the 1997 version, imposing no direct definition of a sale of goods contract. However, Art. 27 of this Law191 characterises an international sale of goods transaction as entailing a transfer of goods across the border.192 If this article is seen as guidance to the internationality of international sale of goods contracts, it leaves out of its scope many other international sales of goods contracts, e.g., contracts concluded with foreign entities where the goods are not carried across the border. For the purpose of deciding whether the parties are allowed to choose the applicable law, this right is not provided for those contracts since they are not considered international although there may be a clear international element, for example, one party being a foreign subject. To the view of the present writer, Art. 27 should be seen solely as a definition of sale of goods contracts and not of their international character (or lack of it). Overall, it can be concluded that Vietnamese law currently is unclear about the internationality of international contracts and that a broader interpretation of the internationality of the contract should be developed so that it can cover at least those examples of contracts mentioned above. In facilitating the courts in the assessment of the internationality of a contract, Art. 1(2) Inter188 Art. 80 Vietnamese Commercial Law 1997 [Contracts for sale and purchase of goods with foreign traders]: “A contract for sale and purchase of goods with a foreign trader is a contract for sale and purchase of goods entered into between one party being a Vietnamese trader and another party being a foreign trader.” 189 Dương Anh Sơn 2004, p. 2. 190 Hanoi Law School 2006b, p. 48: There are four methods to ascertain the nationality of a legal person. First, by the place where it was established; second, by its domicile; third, by the identity and nationality of its capital shareholders; and fourth, by the place where the institution carries out its business. 191 Art. 27(1) VCL 2005: “International purchases and sale of goods shall be conducted in the form of export, import, temporary import for re-export, temporary export for reimport and transfer through border-gates.” 192 It can be recognised that the approach of identifying the international character of a contract based on the different nationalities of the parties as stipulated in Vietnamese Commercial Law 1997 manifests an influence of the Soviet theory that a contract is international only when one party is a foreigner. Meanwhile, the later version of Commercial Law 2005 reflects a French theory when focussing on the flow of values crossing the border. See, for more about Soviet and French approaches, Lando 1976, para. 24-64.

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American Convention can offer an example. It provides that “a contract is international if the parties thereto have their habitual residence or establishments in different States Parties or if the contract has objective ties with more than one State Party”.193 Meanwhile, Art. 1(2) the Draft Hague Principles on Choice of Law for International Commercial Contracts, instead of pointing out which contracts are international, employs an inverse definition by providing that all contracts are international “unless the parties have their establishments in the same State and the relationship of the parties and all other relevant elements, regardless of the chosen law, are connected only with that State”. It is noted that the Draft Hague Principles on Choice of Law for International Commercial Contracts have clarified the point that the choice of a foreign law is not counted as a relevant element.194 Using the same technique as the Hague Principles, the Unidroit Principles assume a broadest possible interpretation of international contracts195 to the extent that they exclude only those situations where no international element at all is involved.196 (2) The technique of limiting the choice of law as regards domestic contracts The second difference between Vietnamese and EU law is that Art. 3(3) Rome I Regulation does not prohibit the parties to domestic contracts from choosing the law of another country to govern their contracts. When the parties have done so, the chosen law has to give way to the application of the provisions of the law of the domestic country that cannot be derogated from by agreement.197 Meanwhile, in Vietnam, foreign chosen law is eliminated altogether, and Vietnamese law applies wholly to the contract. If the purpose of the restricting choice of law in domestic contracts is to prevent the evasion of law, the European approach is more reasonable as it does not eliminate altogether the foreign chosen law. In fact, it balances, on the one hand, the parties’ wish to refer their contract to a foreign legal system that contains many provisions that are preferable over domestic law and, on the other, the necessity to protect certain imSee comment on the provision in Rodriguez / Albornoz 2011, pp. 496, 497. See The Draft Commentary on the Draft Hague Principles on Choice of Law in International Commercial Contracts, section 1.21. 195 In Hardjowahono 2005, p. 186, this broad interpretation of PICC is suggested for the ASEAN Private International Law Convention, which is hypothetically built on the model of the Rome Convention 1980. The author claims that “the ‘transnationality’ of commercial contracts should not be confined to the strict ‘place of business in different states’ test and otherwise leans more towards the rather outermost‚ ‘residual’ test similar to the test applied in the Unidroit Principles.” 196 See the Preamble of PICC 2010. 197 Calliess 2011, § 52, p. 82: “The ratio of the norm is to prevent parties from contracting around the domestic mandatory norms of a country by the simple expedient of selecting the law which fails to contain such rules.” 193 194

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portant interests of the domestic country imposed through mandatory rules of that country that cannot be derogated from by agreement. To the impression of the present writer, there is no need to eliminate from the parties’ disposal foreign law altogether where it contains preferable rules; but in the event that law prejudices important interests protected by the domestic law, it has to give way to those interests. Moreover, since there is freedom of contract in Vietnamese law, the parties would be free to derogate from all dispositive rules of Vietnamese law. Why could they not do so by summarising these derogations through a choice of, for instance, Japanese law (except of course for the mandatory provisions of Vietnamese law)?198 Hence, much can be learned from the Rome I approach. (3) The unilateral character of the limitation under Vietnamese law The third difference between Vietnam and EU law regarding this aspect of restriction is that domestic contracts in relevant provisions of Vietnamese laws solely means contracts domestic to Vietnam, and, subsequently, the domestic law of Vietnamese law shall apply. This way of legislating is one-sided. It has not considered those contracts that are domestic to countries other than Vietnam. Will the restriction still hold true for those contracts? The Rome I Regulation is more comprehensive in this respect. Under Art. 3(3), the mandatory rules of a country whose law is not chosen by the parties may be applied where it is the law of the forum or of another country, so long as all other elements relevant to the situation at the time of the choice are located in that other country.199 Moreover, there is no different treatment whether that domestic country is a Member State of the EU or not.200 In Vietnamese practice, considering the published judgments and decisions of both courts and arbitrators, there have not been any cases where their entire factual matrix relates to one foreign country alone while the parties choose another law. If such a case were to happen, the possibility that Vietnamese courts would research and apply mandatory rules of that country is very unlikely because the theory as well as the practice of considering and applying the mandatory rules of a third country is unfamiliar to Vietnamese 198 Basedow 2012b, § 257, p. 150: “[C]hoice of law serves merely as a kind of proxy for the incorporation of substantive foreign law; it would be possible in theory that the contract contains a whole body of foreign dispositive law copied rule by rule. A choice of law abbreviates such lengthy and cumbersome procedures.” 199 MüKoBGB/Martiny VO (EG) 593/2008 Art. 3 para. 91; the same position can be found in the German Introductory Act 1994. See Kropholler 2006, p. 466: “Besondere Schranken der Rechtswahl errichte[t] Art. 27 III German Introductory Act 2011 für den ‘rein inländischen’ Vertrag, der im Zeitpunkt der Rechtswahl nur mit einem einzigen Staat verbunden ist […]”. 200 Brand 2011, p. 23.

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courts. The situation may be better for arbitration where the legal ideas are more current. c) Other contracts where the choice of law is restricted Apart from purely domestic contracts, Vietnamese law excludes the right of the parties to choose the applicable law as to three other categories of contracts. (1) Foreign investment in Vietnam In contracts relevant to foreign investment in Vietnam, the parties can choose foreign law only when Vietnamese laws do not have regulations relating to those types of investment activities. Art. 5(1) and (4) Vietnamese Law on Investment 2005 (VLI 2005) expressly stipulate as follows: “1. Investment activities of investors within the Vietnamese territory must comply with the provisions of this Law and relevant provisions of law. […] 4. With regard to foreign investment activities, which have not yet been provided for by Vietnamese law, the concerned parties may agree in contracts on the application of foreign laws and international investment practices if such application does not contravene the fundamental principles of Vietnamese law.”

In practice, Vietnamese courts have frequently handled disputes regarding foreign investment in Vietnam and have applied Vietnamese law to those contracts.201 (2) Contracts entered into and performed entirely in Vietnam The second category includes contracts entered into and performed entirely in Vietnam. These contracts are to be distinguished from purely domestic contracts because they are contracts with foreign elements, e.g., between a foreigner and a Vietnamese national, but have to be subject to Vietnamese law. According to Art. 759(1) VCC 2005, “a civil contract entered into and performed entirely in Vietnam must comply with the law of the Socialist Republic of Vietnam”. The practice in Vietnamese courts shows that the provision has been followed. They frequently apply Vietnamese law to contracts entered into and performed entirely in Vietnam.202 Strikingly, most of these contracts are employment contracts between foreign employers and Vietnamese employees and

One of those cases is Decision No. 11/2003/HDTP-KT dated 6 Nov. 2003 of the Supreme People’s Court, Cassation Decisions year 2003-2004, book 1, p. 306. This case concerned a joint-venture contract between a Vietnamese company and two Hong Kong companies. The court applied Vietnamese law to the dispute. 202 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 590. 201

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are frequently between foreign agents and Vietnamese employees for work done in Vietnam.203 It is noteworthy that Vietnam insists on the application of Vietnamese law and excludes the parties’ choice for this category of contracts. In the process of amending the Civil Code from the 1995 version to the 2005 version, there were French experts participating as consultants who suggested that Vietnam should regulate the issue in a softer way. They were worried that the strict application of Vietnamese law in those contracts, and the total exclusion of choice of law, would do harm to Vietnam because foreign investors would hesitate to invest in Vietnam. They then suggested that Vietnam should adopt, for example, the following regulation: “The parties can choose the applicable law to contracts entered into and performed entirely in Vietnam as long as that agreement is not contrary to rules of public policy”. Ultimately, however, those French experts’ suggestions were not incorporated into VCC 2005.204 (3) Contract relating to immovables in Vietnam The third category consists of contracts relating to immovables in Vietnam. According to Art. 769(2) VCC 2005,205 those contracts must comply with the law of the Socialist Republic of Vietnam. Similarly, those French experts warned that the stipulation of this exception, for the purpose of protecting the interests of Vietnam, may interfere with international trade. Again, those warnings did not find their way into the final regulation,206 according to which Vietnamese law is to be applied to all contracts relating to immovables in Vietnam, and the parties can in no way choose the applicable law. d) Contract where one party is presumed to be weaker As regards contracts where one party is perceived to be systematically in a weaker position, such as consumer contracts, employment contracts, and insurance contracts, both American and EU law assert some restrictions on party autonomy in respect of choice of law. For this purpose, EU law sets up categories of contracts where the choice of law is restricted. Meanwhile, the major means of protection in the US is the application of general fundamental public policy.207 Contracts where one party is presumed to be weaker can be classified into two categories based on the method of protection. For the first category that consists of consumer contracts and employment contracts, Arts. 6(2) and 8(1) 203 For one example, see Judgment No. 03/LDPT dated 8 Mar. 2004 of the Supreme People’s Court in Ho Chi Minh City. 204 Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 592, 593. 205 Art. 769(2) VCC 2005: “Civil contracts relating to immovables in Vietnam must comply with the law of the Socialist Republic of Vietnam.” 206 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 593. 207 Basedow 2012b, § 197, p. 124; Rühl 2012a, p. 193; see Brand 2011, p. 15.

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Rome I mandate that the choice of law agreement may not deprive the consumers or the employees of the protection provided by the mandatory rules of the lex causae. As can be seen, for the purpose of protecting the consumers and the employees from the consequences of a disadvantaged contractual choice of law, the technique of requiring the application of the mandatory rules of the law applicable in the absence of choice is used.208 Meanwhile, for the second group of contracts, including carriage contracts and insurance contracts, the choice of law is restricted by the technique of limiting choice to a number of laws presenting certain geographical requirements. Accordingly, Art. 5209 and Art. 7210 Rome I provide a list of relevant countries whose laws can be chosen. Additionally, there is criticism that franchise contracts constitute another type of contracts that need the protection more than “the infrequently operable limitations of Art. 3(3)–(4), 9, and 21”,211 but Rome I has left them out. As far as Vietnam is concerned, one may ask whether the country has any limitation on the choice of law for those categories of contracts. The answer is that Vietnam has not developed, in its Civil Code, a protection mechanism similar to Rome I. There are no conflict rules limiting the choice to a number of laws or binding the chosen law on the mandatory provisions of the lex causae that would be applicable in the absence of choice. Thus, properly speaking, for consumer contracts, employment, insurance contracts, contracts of carriage, and franchise contracts, the protective limitations are vested solely in the coverage technique of mandatory rules and public policy.

See Kuipers 2012, pp. 567, 568. Art. 5(2) Rome I restricts the choice to the law of the country where the passenger has his habitual residence, or the carrier has his habitual residence, or the carrier has his place of central administration, or the place of departure is situated, or the place of destination is situated. 210 Art. 7(3) Rome I restricts the choice to the following laws: the law of any Member State where the risk is situated at the time of conclusion of the contract; the law of the country where the policy holder has his habitual residence; in the case of life insurance, the law of the Member State of which the policy holder is a national; for insurance contracts covering risk limited to events occurring in one Member State other than the Member State where the risk is situated, the law of that Member State; where the public policy holder of the contract falling under this paragraph pursues a commercial or industrial activity or a liberal profession and the insurance contract covers two or more risks which relate to those activities are situated in different Member State, the law of the country of habitual residence of the policy holder. 211 Symeonides 2010c, p. 535: “In many franchise contracts, the franchisee is likely to be in a weak bargaining position as most consumers.” 208 209

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IV. The Proper Law in the Absence of an Effective Choice of Law by the Parties IV. The Proper Law in the Absence of an Effective Choice of Law

1. The use of the law of the place of performance in Vietnam Recently, in international contracts between Vietnamese and foreign parties, such as those involving sales of goods, investment, oil and gas, and loans, choice of law clauses have been employed. Nevertheless, the choice might be invalid in some cases. Apart from that, there might be other contracts where a choice of law is absent because the parties have forgotten to include an agreement or they cannot agree on the applicable law.212 When an effective choice of law is absent, it is stipulated in Art. 834(2) VCC 1995 and subsequently in Art. 769(1) VCC 2005 that: “The rights and obligations of the parties to a civil contract shall be determined in accordance with the law of the country where the contract is performed, unless otherwise agreed upon.” There are two points of note that can be taken from Art. 769(1). First, the scope of the conflict rule is not the contract with all issues as a whole but only the rights and obligations of the parties. Second, the connecting factor utilised is “the place of performance of the contract”. The use of this factor remains unchanged from VCC 1995 to VCC 2005. Meanwhile, in the world of private international law, the law designated for a contract, in the absence of choice, has evolved from the place of contracting213 to the place with the closest connection. 2. Difficulties in ascertaining the place of performance In Vietnam, from the time this connecting factor was adopted, difficulties in ascertaining the place of performance of the contract have been encountered. The question is where the place of performance of the contract is. Art. 769 VCC 2005 provides guidance as follows: “In cases where a civil contract does not specify the place of performance, the determination of the place of performance of the contract must comply with the law of the Socialist Republic of Vietnam.” Magnus 2009, p. 27. Lando 1976, para. 24-13: “The world of merchants, in the matter of the law applicable to contract began with lex loci contractus. Most authors, however, did not advocate any dépeçage, and it seems as if the application of the lex loci contractus was the prevailing rule in continental Europe during centuries. Later on the principle is criticised that in many cases, the place of contracting is only incidental. In the nineteenth century the place of contracting lost its paramount importance both in large parts of the European continent and in England. This was partly due to a change in the habits and the techniques of international trade.” 212 213

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As can be seen from this provision, when the parties have specified the place of performance in their contract, the substantive law of that place will apply to the contract. For example, if the contract says that delivery takes place in Hamburg, it means that Hamburg is the place of performance and, consequently, German law applies to the contract. The parties can agree on the place of performance in their contract.214 In cases where there is no such agreement, the place of performance of the contract has to be ascertained according to Vietnamese law. The problem is that Vietnamese laws (e.g., the Civil Code, the Commercial Law) contain no provision specifically on the place of performance of the contract. In fact, the nearest provision that they have relates to “the place of performance of civil obligations”. That is Art. 284 VCC 2005, according to which “in cases where there is no agreement, the place of performance of a civil obligation shall be determined as follows: a) the location of the immovable property, if the object of the civil obligation is an immovable property; b) the place of residence or head office of the obligee (creditor, not the debtor), if the object of the civil obligation is not an immovable property”.

It may well happen that the contract is bilateral, which means there are two obligations. The problem is that, in order to apply Art. 284 to determine the place of performance of the contract, Vietnam has to accept the practice of splitting a contract into multiple obligations.215 Moreover, after scissoring the contract into obligations, the court has to decide which obligation is more characteristic in order to elevate the place of performance of this characteristic performance to the place of performance of the contract. However, a comparison of Art. 284 and the Unidroit Principles of International Commercial Contracts 2004 and 2010 reveals many differences. According to Art. 6.1.6 of the Unidroit Principles 2004 and also 2010, Calliess 2011, § 2, p. 58. Lando 1976, para. 24-22, 24-23: The technique of splitting the contract seems to have originated in Germany with von Savigny in his famous “System des heutigen römischen Rechts” of the law of the place of performance. According to von Savigny, the seat of the contract obligation was its place of performance. Von Savigny acknowledged that in bilateral contracts in which each party is to perform his obligation in different countries, the application of the law of the place of performance may lead to the application of two different laws and thus to a splitting of the contract, but he claimed that this is in accordance with Roman law where a contract of sale was not infrequently concluded by means of two separate stipulations. The obligation and not the contract was the legal relationship on which to base the conflict rule, and so it was natural to localise every obligation in a country of its own. The technique was supported by Ludwig Von Bar; a few Scandinavian and Swiss writers advocated the application of the law of the domicile of the debtor. Swiss courts under the influence of von Savigny determined the questions relating to the performance of a contract by reference to the law of the place of performance. In theory this could have led to the application of two laws when the places of performance of the parties were situated in two countries. 214 215

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“if the place of performance is neither fixed by, nor determined from, the contract, a party is to perform: a) a monetary obligation, at the obligee’s place of business; b) at its own place of business if any other obligation”.

It can be seen that Art. 284 does not categorise monetary obligations as separate from other obligations (as the Unidroit Principles do). Instead, it separates civil obligations relating to immovable property. With this separation, it has the law of the location of immovables applied for contracts relating to immovables, which is partly secured already by Art. 769(2) VCC 2005.216 As for the monetary obligation, the fact that it has not been separated means that it takes the pattern of the place of performance like other obligations; that is, the place of the obligee (creditor). In this aspect, it is in line with the Unidroit principles (and also with English and Scandinavian law, where monetary obligations are to be performed at the place of the creditor’s domicile) but is nevertheless contrary to German law where it must be the place of the debtor’s domicile.217 However, as for non-monetary obligations, the divergences between Art. 284 and Art. 6.1.6 Unidroit Principles are significant. While Art. 284 designates the law of the place of residence of the obligee, the Unidroit principles provide for the domicile of the obligor. For example, take the delivery of goods in a sales contract: while Art. 284 points to the law of the buyer, the Unidroit Principles point to the law of the seller. Even case law cannot help clarify the situation because when there is no choice of law by the parties, Vietnamese courts generally apply Vietnamese law without explaining the reason for doing so.218 It is notable that the connecting factor of “the place of performance of contract” is also used in the jurisdictional rules of Vietnamese courts. Among the bases of jurisdiction of Vietnamese courts over contractual disputes, there is one special jurisdictional base when the place of performance of the contract is located fully or partly in the territory of Vietnam. 219 In one case, the court reasoned that although the labour contract was concluded abroad, the parties were Art. 769(2) VCC 2005 provides that civil contracts relating to immovables in Vietnam must comply with the law of the Socialist Republic of Vietnam. 217 Lando 1976, para. 24-170; Magnus / Mankowski 2012, § 140, p. 203: “the place of payment: English, Dutch, Italian and Greek law make it generally incumbent upon the debtor to physically seek out his creditor whilst German, French and Belgian law opted for the opposite approach favouring the debtor’s residence.” 218 For example, in Judgment No. 136/PT/KT dated 30 Sept. 1997 of the Supreme Court, the dispute was between a Vietnamese company and a Taiwanese company arising from a contract signed in 27 July 1993 with no choice of law; the court, with no reasoning, applied Vietnamese law. The same happened in Judgment No. 158/QD-TP dated 18 Sept. 2001 of the Supreme Court at Hanoi, relating to a contract between a Vietnamese company and a Japanese company. 219 Art. 410(2)(f) VCPC 2004. 216

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foreigners (Filipinos) and the applicable law was foreign law (Philippine law), the place of performance of the labour contract was in Vietnam since the construction was in Vietnam; therefore, the Vietnamese court assumed jurisdiction according to Art. 410(2)(f) VCPC 2004.220 In another case, in a dispute arising out of a sales contract between a Chinese company and a Vietnamese company, Hanoi City Court declared its jurisdiction under Art. 410(2)(f).221 In that case, the delivery and the payment had taken place in Vietnam. The identification of the place of performance of the contract for the Vietnamese courts’ assumption of jurisdiction encounters the same difficulties as the task of finding the applicable law regarding bilateral contracts. Therefore, in practice, the courts normally neglect to point out the place of performance of the contract in complex cases where only one obligation of the contract is performed in Vietnam and the other is not. Leading authors have suggested that in ascertaining the place of performance of the contract for the purpose of applying Art. 410(2)(f) VCPC 2004 to determine the jurisdiction of Vietnamese courts, the legislature should stipulate the following: the place of performance of the contract is to be agreed by parties. When there is no agreement, the ascertainment of the place of performance of the contract should be done according to Vietnamese law, unless the contract is a sales contract, service contract, or representation contract. In respect of those contracts, the place of performance should be stipulated by the legislature in a specific provision. For example, the Vietnamese legislature should establish a rule that the place of performance of a sales contract is the place where the goods are delivered under the contract.222 Three aspects of this suggestion could be considered. First, the place of performance of the contract could be agreed by the parties. This is similar to the regime of the Brussels I Regulation, which confers on the parties the option to agree on the place of performance.223 Second, the proposition of the fact-based concept for most categories of contracts actually resembles the method used in Art. 5(1)(b) Brussels I Regulation. The third point should be the most striking, namely that these authors suggest the application of Vietnamese law in cases not falling into those categories of contracts while in the Brussels I Regulation, Art. 5(1)(a), in ascertaining the place of performance of the obligations falling outside (b), the Tessili doctrine developed by the ECJ in 1976224 is used. That is, “under (a)225 one has still to ascertain the A case analysed in Phạm Công Bảy 1998. Judgment No. 84/2005/KDTM-ST dated 29 Sept. 2005 of Hanoi People’s Court. 222 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 568. 223 Magnus / Mankowski 2012, § 145, p. 206. Art. 5(1) Brussels I Regulation. 224 Case 12/76 Industrie Tessili Italiana Como v Dunlop AG [1976] ECR 1473, 1486. 225 Magnus / Mankowski 2012, § 23, p. 120: Art. 5(1)(a) actually has a very limited scope. The same is true for contracts falling outside the list of contracts of the Vietnamese author. 220 221

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applicable substantive law and must ask this law where it locates the place of performance in question.”226 In the opinion of the present writer, the approach of applying Vietnamese law is appropriate for Vietnam. The abovementioned Vietnamese authors must have understood the context of the Tessili doctrine: that the “ECJ was not prepared to opt for an autonomous solution” regarding the differences in the way Member States’ law determine the place of performance.227 The situation of Vietnam is totally different. Therefore, the solution of applying the lex fori is less complicated because it does not require the courts to investigate what law is applicable to the contract in the first step and then apply that law to find the place of performance of the contract. With this solution, the court only has to study Vietnamese law, which is simpler and less costly.228 For “the place of performance” in the context of choice of law, the mentioned authors also proposed a very innovative approach. They suggest that there should be a stipulation that the place of performance of the contract is the place of characteristic performance. Furthermore, they suggest a list of the places of performance of common contracts. For example, the place of performance of sales contract is the place of delivery of the goods; that of rental contracts is the place of delivery of the assets. They also propose guidance for the courts in determining the characteristic performance of the contract, saying that when the contract consists of both a payment obligation and the obligation of doing certain work, the latter should be taken as the relevant criteria. They go even further and suggest that when one party has to carry out work which takes place in many countries,229 the place of the more important part of the work should be taken into account.230 What these authors have suggested is indeed very suitable for the current legislative situation of Vietnam, in which the connecting factor of the place of performance of the contract is utilised. This could guide the courts so as to find the way out of the current ambiguities surrounding their duty to ascertain the place of performance of the contract. However, they have not tried to launch a more dramatic reform of the issue of the connecting factor of the place of performance of the contract for the purpose of determining the applicable law. As pointed out at the beginning, this factor is fixed by law (Art. 284 VCC 2005, the application of which is controversial, and the courts are obliged to follow this provision). Moreover, the connecting factor of the place of performance is out-dated. Furthermore, it gives no chance for a flexible escape from such a fixed rule. The present Magnus / Mankowski 2012, § 139, p. 202. Magnus / Mankowski 2012, § 138, p. 200. 228 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 567. 229 Judgment No. 45/2006/KDTMPT dated 31 May 2005 of the Supreme Court at Ho Chi Minh City. 230 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 600. 226 227

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writer therefore will advocate for Vietnam a reform in respect of a regime for determining the law applicable in absence of choice. In addition, a more detailed analysis regarding the characteristic performance theory and practice will be undertaken. 3. Development orientation for Vietnam regarding the law applicable to contracts in the absence of a choice of law For Vietnam, there are two approaches to the development of conflict rules for contracts in the absence of a choice of law. The first approach is to abandon the place of performance as the connecting factor and instead adopt the most closely-connected law principle. The second approach is to retain the place of performance of the contract as the connecting factor in the current Art. 769 VCC 2005 and to develop detailed rules for ascertaining this place. Both approaches then have to employ the characteristic performance test. This part of the thesis will examine which approach is more suitable for Vietnam. a) Adopting the principle of closest connection It is generally accepted that the place of performance of the contract as the connecting factor for the law applicable in the absence of choice is out-dated. Nowadays, the flexible method has prevailed and the law of closest connection has been employed in many countries231 in the world, such as the US,232 the EU,233 China,234 Japan,235 and several South American countries.236 Rühl 2012b, p. 393. The revolution started with the United States, where after the Second World War the rigid application of the place of contracting and the place of performance provided for by the First Restatement of the Conflict of Laws 1934 had given way to a more flexible method of “the most significant relationship” as developed in the Restatement Second of the Conflict of Laws 1971. See Lando 1976, para. 24-132. 233 The revolution affected European legislation as well. “Both Art. 4 Rome I Regulation and Art. 4 Rome Convention are based on the general principle that the law of closest connection should govern the contract and that the closest connection is generally best determined by the conflicts concept of characteristic performance.” See Magnus 2009, p. 28. 234 Strikingly, China has employed the closest connection principle in contract since 1985. See Yu et al. 2009, p. 424. Subsequently, Art. 145 of the General Principles on Civil Law 1986, Art. 126 Chinese Contract Law 1999, the 2007 Interpretation of the Supreme People’s Court, and Art. 41 of the Chinese Act 2010 have confirmed the closest connection principle established since 1985. See Tu / Xu 2011, p. 181. 235 Japan has recently switched, in the recent Japanese Act on applicable laws 2007 from the law of the place of contracting to the most closely-connected law; see Takahashi 2006, p. 311. 236 In South America, with the Inter-American Convention, although ratified by only Mexico and Venezuela, the adoption of the closest connection principle (Art. 9(1)) “constitutes a novelty for most of the states of the American continent accustomed to the use of 231 232

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While the closest connection doctrine has gained a global influence at least in contract, there have been no Vietnamese scholars advocating it for Vietnam. It should be noted that this doctrine has two major features. First, what kinds of factors should be taken into account in determining the closest connection? The Rome I Regulation, for example, provides no firm list. Under common law, the principal factors are “the place of residence or business of the parties, the place where the relationship between the parties was centred, the place where the contract was made or was to be performed or the nature and subject matter of the contract.”237

There is another list in § 188 of the Restatement Second of the Conflict of Laws, which includes: the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, and the domicile, residence, nationality, place of incorporation and place of business of the parties.238 The list could be longer: for example, Chinese authors have enumerated 20 possible factors.239 One may wonder whether those factors that failed to imply a choice of law agreement by the parties (e.g., the language of the contract, the choice of court agreement, the reference to provisions of the law of one country, the connection to preceding transactions) are seen as subjective or objective. Is it because they are candidates for the implied choice of law, which seeks to express the intention of the parties, that they might be considered to be subjective factors? If so, since the closest connection test is an objective test,240 would these factors not be considered for the purpose of finding the most closely connected law? In addition, there have been arguments which indicate that the search for the closest connection involves only geographical or phys-

rigid connecting factors, such as the venue or the place of performance.” See Rodriguez /  Albornoz 2011, p. 513. 237 Fawcett et al. 2008, p. 709; a similar list is given in Dicey et al. 2012, § 32-073, p. 1820, which makes reference to the case of Re United Railways of Havana, etc. Warehouses Ltd [1960] Ch. 52, 91 (CA), affirmed [1961] AC 1007, p. 11. 238 McDougal et al. 2001, p. 515. 239 See Yu et al. 2009, p. 432: “(a) place of contracting; (b) place of performance; (c) place of negotiation; (d) parties’ place(s) of business; (e) place of incorporation; (f ) place of loading or unloading the goods; (g) nature and location of the subject matter of the contract; (h) parties’ domicile(s); (i) parties’ place(s) of residence; (j) parties’ nationality or nationalities; (k) currency designated as that in which payment is to be made; (l) content and form of the contract, including any documents made with respect to the transaction, and the style and terminology in which the contract is drafted; (m) provisions quoted in the contract; (n) arbitration clause; (o) jurisdiction clause; (p) language used in the contract; (q) connection with a preceding transaction; and (r) whether any of the parties is a government.” 240 Calliess 2011, § 9, p. 60.

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ical factors,241 because the wording of both Art. 4 Rome Convention and Rome I Regulation refer to the term “country” instead of “system of law”. Consequently, legal connections, such as the terminology of the contract and choice of courts clause, are less important.242 Nevertheless, the proper position is that those factors should be considered in the test of closest connection to support an objective connection with a country, and no longer to indicate the parties’ intentions.243 In the Münchener Kommentar, the same factors as those candidates evident for an implied choice are analysed as indications of the closest connection under Art. 4(4) Rome I Regulation.244 That is to say, those factors could be seen as objective or subjective depending on their function. Therefore, this classification serves to complicate the readers’ comprehension. In my view, the closest-connected law should be determined by evaluating all relevant factors, “unlimited by the categorisation”,245 whether as objective or subjective, as geographical or legal. This is an appropriate approach, especially when the closest-connection law doctrine is utilised in the context of the default rule in Art. 4(4) Rome I Regulation. Under this rule, the most closely-connected law is to be found after the court fails to ascertain the characteristic performance of the contract. In fact, whenever the characteristic performance cannot be determined, those objective principal connections such as the place of performance and the habitual residence of the parties are also equal to both parties. Therefore, in order to tip the scale, reference has to be made to other slight factors such as the language and the terms of the contract. That is to say, if these factors are left out of the test because of the classification of them as subjective or nongeographical, the closest-connection test could hardly work for its designed purpose in Art. 4(4).246 What is the role of other factors such as the consideration of the policies and the interests of the relevant states, which are referred to in § 6247 of the See Apple Corps v Apple Computer [2004] 2 CLC, para. 57, p. 747. See, for more, Dicey et al. 2012, § 32-073, p. 1821, in which it is pointed out that “in practice the distinction between the connection with a country rather than with a system of law will make no difference”. 243 Fawcett et al. 2008, p. 710. 244 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 282. 245 Fawcett et al. 2008, p. 708; Apple Corps v Apple Computer [2004] 2 CLC, para. 60, p. 750. 246 See Apple Corps v Apple Computer [2004] 2 CLC, p. 751, para. 62(f): the reference to a provision of the California Civil Code, although non-geographical (but a connection with a legal system), is capable of demonstrating a connection. 247 §6 Restatement Second of the Conflict of Laws 1971: “Choice-Of-Law Principles. – (1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law. (2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include 241 242

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Restatement Second of the Conflict of Laws 1971? It should be noted that in the context of the courts in the US, when policy considerations guide the weighing of factors, the courts tend to end up weighing policies and coming to a view, and then find any supporting factors to be determinative.248 Therefore, it is anticipated that courts of developing countries like Vietnam may misuse the policy considerations to make the way to their own law.249 Moreover, while the solution of using policy considerations as the principle of choice is attributable to the fear that a mere counting of factors rather than a qualitative evaluation of them is too mechanical, it might bring about a loss of predictability in court decisions, for which the American Conflicts Revolution has been criticised.250 Therefore, the better approach should be not to include policy considerations in the fashion of the Second Restatement of the Conflict of Laws, but to designate a qualitative weighing of factors. The second feature regarding the closest-connection doctrine is the approach to evaluating the factors. After the underlying policy-based considerations are set aside, it should be agreed that a court should not just count the number of the connecting factors with particular states to see which state has more, but it should “also analyse the weight, the size and the type of each factor.”251 In addition, factors which relate to the issue in dispute should not be given greater voice, since the duty of the court is to determine the law that is most closely connected to the contract, not to the issue in dispute. In addition, it should be noted that the Rome I Regulation no longer allows the possibility of dépeçage, meaning the possibility of finding different laws which are closely connected to separate issues of the contract,252 while the American (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied.” 248 McDougal et al. 2001, p. 517. 249 For example, in China, some Chinese authors have suggested that, besides those factors, “the court may consider also the basic policies of laws, including substantive laws, and interests of the country and the party when determining the country of closest connection”, see Yu et al. 2009, p. 431. However, the present writer questions whether a Chinese court might only make use of those considerations for the purpose of applying Chinese law because the possibility of it taking account of other countries’ policies or substantive laws is indeed very unlikely. 250 See Basedow 2008a, p. 17. 251 Yu et al. 2009, p. 433. 252 Magnus 2009, p. 31: “In contrast to Art. 4(1) sent. 2 Rome Convention the Regulation does no longer mention the possibility of dépeçage for the objectively applicable law.”

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approach of the “most significant relationship” may allow such a practice of the court.253 Furthermore, when concluding the contract, no one knows whether the contract will be disputed or not, or which issue of it will be debated. The dispute happens later on, and if the factors relevant to the issue in dispute are given more weight in deciding the applicable law, the principle of closest-connection would further lose its certainty. Therefore, for Vietnam, the present writer suggests that the courts should be allowed to put more weight on some factors relating to the contract, but not on the relevance of the factor to the dispute in question. However, the outstanding weight of one factor alone, such as the place of performance, should not suffice to establish the closest connection;254 attention must also be paid to factors which might be related to another state. When weighing the factors, the courts should abstain from the homeward trend of resorting to the lex fori. This trend means that the weight of the elements that connect the contract to the forum is increased.255 This is a natural habit of the courts of most countries in the world. A court usually focusses on some connectors with its own state, which might be the place of performance or the place of conclusion of the contract, and it highlights them to come to the corresponding application of the forum law. 256 In doing so, they may try to deny or reduce the connection with other states in fear of being obliged to apply foreign law. The forum trend is the most dangerous disease of the closest-connection principle that endangers Vietnam. Therefore, a disciplined approach must be followed; the weighing of the factors has to be done comprehensively, taking into account the connections to both the forum and foreign states. A factor should not be emphasised, or treated with greater deference, merely because it points to the forum state.

Symeonides 2006, p. 33. Dicey et al. 2012, § 32-073, p. 1820; for example, in the case Zivnostenska Banka v Frankman [1950] AC 57, p. 87, the court held that: “The place of performance is of course an important consideration in determining the proper law of a contract, and if the whole contract is to be performed in one place, as often it is not, that consideration is, I think, that much the more important. But it would be to ignore decided cases of high authority if we were to regard the place of performance as in any sense, determining the proper law as a matter of rule, whether it be for the contract as a whole or for one or more parts of the contract.” 255 Lando 1976, para. 24-162. 256 One example of this practice is China, where the courts usually “only consider the connection between China and the dispute to decide if the connection is close enough to conclude that China has the closest connection to the contract, usually listing the contacts with China.” See Yu et al. 2009, p. 434. They do so to make “the application of Chinese law look more persuasive, or, perhaps, better justified.” See Tu / Xu 2011, p. 199. 253 254

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b) Adopting the characteristic performance test If Vietnam adopts the principle of closest connection in the future, it should be noted that because this principle contains a certain degree of legal uncertainty, it has to be substantiated with the characteristic performance test.257 In the event that Vietnam wants to retain the connecting factor of the place of performance of the contract, the characteristic performance test also has to be employed. As mentioned earlier, Vietnamese authors have suggested that Vietnam should stipulate that the place of performance of the contract is the place of performance of the typical and characteristic obligation.258 (1) Identifying the characteristic performance Vietnamese authors also suggest that in a contract which contains both payment obligations and the obligation to perform a certain job, the latter should be taken as characteristic.259 This suggestion is very much in line with the nomination of the characteristic performance in the Giuliano & Lagarde Report, where it is pointed out that the characteristic performance of a bilateral contract is the performance for which the payment is due.260 However, the Vietnamese authors have not elaborated on the features of the characteristic performance, which are the classifying performance and the most significant performance.261 Since “payment does not distinguish types of contracts, but content of the counter-performance does”,262 the characteristic performance must be the one that classifies the contract.263 It stands for the typology264 and “marks the nature of the contract”.265 The second feature is that the characteristic performance must be technically more complicated, more important, more potentially risky, or put more generally, more significant. 266 Thereby “it usually constitutes the centre of gravity and the socio-economic 257 See Basedow 2008a, pp. 13, 17, 18 for the trend towards specification of more detailed rules and the conclusion that “the era of all-embracing and simple conflict rules for contracts and torts is definitely over.” See Rühl 2012b, p. 394, who also criticises the InterAmerican Convention’s adopting of the closest connection principle without substantiation as not capable of fostering the legal certainty and predictability needed to cope with the international transaction dilemma. MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 146; see also Ferrari 2009, p. 754: the concept of “closest connection” is empty, vague; greater precision should be provided by presumptions. 258 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 400. 259 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 600. 260 Giuliano & Lagarde Report, p. 24; Clarkson / Hill 2011, p. 221. 261 Badykov 2005, p. 272. 262 Badykov 2005, p. 271. 263 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 148. 264 Plender / Wilderspin 2009, § 7-008, p. 169; Gebauer 2011, § 42, p. 95. 265 Dicey et al. 2012, § 32-077, p. 1823. 266 Badykov 2005, p. 272.

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function of the contractual transaction.”267 Therefore, in determining the characteristic performance, the contract could be “put into its commercial context” and the court could look at the “global picture” in order to decide.268 (2) Geographical location of the characteristic performance After identifying the characteristic performance, it is settled in EU law that the contract is most closely connected with the law of the habitual residence of the characteristic performer. Meanwhile, Vietnamese authors have a different suggestion for Vietnam. Since the current connecting factor used in Art. 769 VCC 2005 is “the place of performance of the contract”, they suggest applying the law of the place of the characteristic performance rather than the law of the habitual residence of the characteristic performer.269 It may be deliberated which should be the most appropriate approach, specifically for the situation of Vietnam. In Vietnam, one may advocate the use of the place of the characteristic performance instead of the habitual residence of the characteristic performer. The principal arguments are as follows. First, if the place of performance is thought impossible to ascertain in some cases, the same is true for the habitual residence. Both in the Rome Convention Art. 4(2) and in the Rome I Regulation Art. 19(3), “there is no provision dealing with the situation where the habitual residence cannot be ascertained.”270 Besides, “difficulties also exist as to [the] habitual residence of a person.”271 Hence, the risk of being unable to find the applicable law still exists with the use of the habitual residence, although it might be lower compared to the use of the place of performance. Second, case surveys in other Member States indicate that, if the presumption of the law of residence of the characteristic performer is to be displaced, the connection which takes over is the place of performance.272 “It is also likely that the escape clause in the Rome I Regulation may most usefully be employed in those cases where the place of performance differs from the habitual residence or the place of business of the party who is identified in the specific cases in Art. 4(1) or 4(2).”273

In addition, the practice of the Chinese courts sheds some lights on the natural tendency of a court to presume that the factor that determines the closest connection is the place of the characteristic performance of the contract.274 Giuliano & Lagarde Report, p. 24, Gebauer 2011, § 42, p. 95. Apple Corps v Apple Computer [2004] 2 CLC, p. 744, paras. 49, 50. 269 Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 600. 270 Fawcett et al. 2008, p. 716. 271 Tang 2008, p. 797: “According to the natural meaning of habitual residence, a natural person could have no habitual residence or could have more than one habitual residence.” 272 See the survey of cases in Bělohlávek 2010, §§ 04-160–04-175, pp. 802–804. 273 Dicey et al. 2012, § 32-080, p. 1825. 267 268

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Hence, it can be asked why the habitual residence criteria is used, but not the place of performance, as the former does not escape altogether the risk of being unascertainable (which the latter suffers). Moreover, when the two places do not coincide, a court tends to find that the law of the place of characteristic performance is more closely connected to the contract than the law of the habitual residence. Meanwhile, the technique of locating the characteristic performance in the place of the habitual residence275 or business of the person effecting it in the Rome Convention (following Swiss doctrine) has been considered an innovation.276 In locating the contract, the courts now first look for the place of residence of the characteristic performer.277 Indeed, supporters of the habitual residence seem to have better arguments. First, it might be admitted that although habitual residence is not in every case ascertainable, it is far easier to locate compared with the test of having to identify the place of performance, which is described as “a gigantic task”.278 Second, difficulties will double when the performance is carried out in different places, which then necessitates a choice between the two places to find out which part of the contract is more significant.279 One of the major arguments against the place of performance is that this place may be chosen by the parties for purely commercial reasons which do not relate to the substance of the contract and do not indicate the centre of gravity. That means it has very little significance for the applicable law. For example, in respect of a sale of goods contract from Vietnam to Germany, the parties may agree on FOB Singapore because container freight rates are cheaper from Singapore than from Ho Chi Minh City. The application of Singapore law to the contract is, however, unjustified, as the applicable law in the absence of choice should be better suited for the contract in question. 274 Tu / Xu 2011, p. 190: there is a clear trend of some Chinese judges always taking the place of performance of the contract, which they usually mean to be the place of the characteristic performance of the contract, as the one that had the closest connection with the contract. 275 See Gebauer 2011, § 43, p. 95: “The relevant connecting factor under the Rome I Regulation is the habitual residence”; MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 152. 276 Plender / Wilderspin 2009, § 7-008, p. 169. 277 For example, see Bank of Baroda v Vysya Bank Ltd [1994] Lloyd’s Rep. 87. Indian law was subsequently displaced by the more closely connected law (English law); Marconi Communications International Ltd v PT Pan Indonesia Bank TBK [2005] EWCA Civ 422. 278 Mankowski 2010, p. 449. 279 (C-29/10) Koelzsch v Luxembourg [2002] 2 WLR 262. This ECJ case concerned Art. 6(2)(a) Rome Convention. “The employee had to carry out tasks in more than one contracting state, the country in which the employee habitually carried out his work was that in which the employee performed the greater part of his obligations towards the employer.”

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Another convincing argument for the habitual residence test is that in order to switch to the place of performance (by virtue of the escape clause), other elements of the case have to coincide with the place of performance: for example, that place is also the place of contracting.280 Therefore, the simple fact that performance takes place in a country other than the country whose law is designated by referring to the habitual residence is of itself insufficient to justify recourse to the escape clause.281 In the context of the EU, the criterion of habitual residence rightly prevails over the place of execution, especially when it is used in line with Rome II and Brussels I,282 ensuring the unity needed for the proper functioning of the European legislative system. (3) Limitation of doctrine of characteristic performance for the circumstances of Vietnam In employing the doctrine of characteristic performance, one has to be aware of much of the criticism, among which two points concern the situation of Vietnam. The first attack against this doctrine is the “home game” for the marketer, as he benefits largely from the designation of his own law.283 It is striking that, in worrying about this, the Inter-American Convention has eventually abandoned the use of the characteristic performance irrespective of whether it goes with the habitual residence of the performer or with the place of fulfilling the performance. The reason given is that under both ways, the exporters “have the possibility of selecting them.”284 As a consequence, the Convention ultimately chose to stay with the closest connection in its very flexible manner in which “the two criterions of habitual residence of the debtor and that of the place of fulfilment of the obligation must work cumulatively”.285 In fact, the

Samcrete Egypt Engineers & Contractors SAE v Land Rover Exports Ltd [2001] EWCA Civ 2019. In this case, in order for the presumption under Art. 4(2) Rome Convention to be displaced, the fact of the place of performance (the obligation to pay) in England was coupled with another fact (the consideration for the guarantee was the English company’s contractual obligation to supply its products from the UK). 281 Fawcett et al. 2008, pp. 719, 720. 282 Lein 2008, p. 184: “The role of habitual residence also becomes apparent in Art. 4(2) of Rome II, pursuant to which application of the law of the country in which harm occurred is rejected in favour of the law of the place of habitual residence when the person harmed and the potential liable person both have their habitual residence in the same country […]. Similarly, Art. 2 Regulation Brussels I, the general rule on allocation of jurisdiction, around which all jurisdictional rules must be based, opts for jurisdiction based on the principle of the defendant’s domicile.” 283 Mankowski 2010, p. 436. 284 Rodriguez / Albornoz 2011, p. 514. 285 Rodriguez / Albornoz 2011, p. 514. 280

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vagueness of the solution adopted is one of the reasons why only two countries (Mexico and Venezuela) ratified the Convention. The second concern relates to the quest of protecting the weaker party. As the principle can be said to have a weakness in the sense that it sometimes fails to protect weaker parties, with regard to consumer, insurance, and employment contracts,286 it has to be supplemented with different policies and rules.287 For the situation of Vietnam, where such specific policies and rules are lacking, the use of the principle of characteristic performance raises the need for them more than ever before. (4) Suggestion for Vietnam Since Art. 769 VCC 2005 uses the connecting factor of the place of performance of the contract, it is necessary to employ the characteristic performance doctrine. Even in the future, when Vietnam adopts the principle of closest connection to identify the law applicable in the absence of choice, characteristic performance will still have a role to play. For one thing, the use of the characteristic performance adds “foreseeability and certainty” to the vague concept of the most closely connected law.288 In addition, guidance (by statutory rules) is important for Vietnam. Furthermore, the privileged position bestowed on exporters from developed countries that will result from the use of the characteristic performance test may not be that concerning. In fact, besides the fact that the suppliers can gain efficiency from the standardisation of their relations,289 the importers can also benefit from lower prices.290 After arguing in favour of the characteristic performance, I make further reference to the place of habitual residence of the performer rather than the place of performance as the place of closest connection to the contract in the absence of choice. For one thing, there might be a presumption that when using the habitual residence of the characteristic performer, the advantages for the suppliers are more likely to become manifest. Nevertheless, as mentioned by the drafters of the Inter-American Convention, such benefits occur when using either criterion.291 The other significant reason is that the habitual residence of the performer is visible and more consistent than its competitor, the place of performance. Therefore, it will provide a valuable guideline for Vietnamese judges and practitioners. Mankowski 2010, p. 462. For example in Rome I: Art. 5 for consumer contracts, Art. 6 for insurance contracts, and Art. 7 for employment contracts. 288 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 146; Plender / Wilderspin 2009, § 7-005, p. 168. 289 Basedow 2006, p. 70. 290 Mankowski 2010, p. 459; Struycken 1996, p. 21. 291 Rodriguez / Albornoz 2011, p. 514. 286 287

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In particular, Art. 769 VCC 2005 refers to the place of performance of the contract, which does not exist. Therefore, a substitute has to be defined. As pointed out before, this should be the habitual residence of the characteristic performer. c) Whether or not to have fixed rules? Besides the closest connection principle and the characteristic performance doctrine, a country attempting to find optimal rules on the law applicable in the absence of choice may consider having fixed rules for specific contracts. The first question is whether a list of fixed rules is helpful. The argument in favour of a list is that the list helps the judge determine the applicable law more directly and releases him from the task of identifying which is the characteristic performance of the contract.292 It is especially useful for practitioners who are unfamiliar with the choice of law issue.293 Nevertheless, it is argued that such facilitation is not worth the difficulties the list engenders. Classifying contracts into types294 is a complex task that can sometimes lead to confusion. For example, the judge may waste time classifying a contract into the category of either sales or services when it manifests both characteristics while, if he ignores such a task, he may easily come to the same result by applying the law of the habitual residence of the debtor of the characteristic performance.295 A fixed list is also criticised as it cannot completely enhance certainty and overcome the difficulties of the characteristic performance rule because it contains those contracts that make it easy to identify the characteristic performance while leaving out those contracts which are more difficult to categorise, such as barter contracts, joint venture agreements, publishing contracts, or research cooperation agreements.296 It can, however, be contended that a list does more than just clarify the principle of characteristic performance in simple cases. Although it is true that a list does not cover peculiar contracts, such as barter contracts, it indeed has lent clarity to some contracts where it is not totally clear which is the characteristic performance, e.g., franchise and distribution contracts.297 As a result, a list of hard and fast rules was introduced in the Rome I Regulation. Elsewhere, a list of fixed rules has been adopted in many codifications, such as in Switzerland,298 China,299 and Russia.300 Japan, on the other 292 293 294 295 296 297 298

Fawcett et al. 2008, p. 723. Magnus 2009, p. 33. See MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 16. Magnus 2009, p. 32. Max Planck Comment on Green Paper, pp. 43–44; Tang 2008, p. 792. Magnus 2009, p. 33. Art. 117 Swiss Private International Law Code 1987.

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hand, does not have a list of fixed rules.301 In the draft stage of the Japanese Act 2007, although the inclusion of a list of hard rules was considered to help clarify the principle of the closest connection by identifying the characteristic performance of certain contracts, the concern about the difficulties in the classification of contracts prevented the codification of such a list.302 For Vietnam, a list of fixed rules is recommended. The reason is that Vietnamese courts and judges always want to have concrete rules to apply. When the rules are unclear, even where the legislature intends to give the judges discretion in deciding the case based on the particular circumstances, the judges are normally passive and prefer to follow hard rules whether they are statutory or contained in an Interpretation of the Supreme Court. The second reason is that if no fixed rule is provided, judges in different provincial courts of the country may interpret the closest connection principle in different ways because the doctrine is completely new to them. Although there will be difficulties in classifying complex contracts (particularly for a country new to the principle of closest connection and the characteristic performance test), a fixed rules list is needed, at least for the common types of contract cases. d) How to cope with contracts not falling into the list of fixed rules For a number of contracts which are not covered by the list, or where the elements of the contract are covered by more than one category, Art. 4(2) Rome I Regulation provides that the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. As regards the first condition, there is one problem concerning the classification of contracts. In respect of the definition of the eight types of contracts, an especially narrow or wide interpretation of, for example, contracts for the provision of services affects the result of whether a contract falls into this list or is to be dealt with separately using the characteristic performance test.303 In the meantime, the second condition raises an argument regarding the situation where a contract bears elements of two or more types of contract but 299 In the case of China, fixed rules were already included in the 1987 Interpretation of the Supreme Court of China on the Foreign Economic Contract Law 1985, but were abandoned in 1999. Amazingly, those rules appeared again and increased in number from 13 to 17 in the 2007 Interpretation of the Supreme Court. See Tu / Xu 2011, p. 180. 300 Russia has the largest number of fixed rules: 19. Art. 1211(2) of the Civil Code of the Russian Federation (with the Additions and Amendments of 20 Feb., 12 Aug. 1996, 24 Oct. 1997, 8 July, 17 Dec. 1999, 16 Apr., 15 May, 26 Nov. 2001, 21 Mar., 14, 26 Nov. 2002, 10 Jan., 26 Mar. 26, 11 Nov., 23 Dec. 2003), available at . See Badykov 2005, p. 269. 301 Basedow 2008a, p. 13. 302 Takahashi 2006, p. 319. 303 Tang 2008, p. 793.

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can still be fitted in one type. For example, a contract of sales contains terms of services such as training for the customer on how to use the product, or a licence contract with elements of services, or a financial service contract includes an element of sale.304 Should this contract be treated as not falling into the list and subject to the characteristic performance rule, or should it be “squeezed” into one category of contract if it is easy and possible to do so? It is suggested that the characteristic performance rule should be applied only when it is impossible to classify such a mixed contract in one category.305 If we agree on this approach, the next challenge is to fit a mixed contract into a category. According to Recital 19 Rome I Regulation,306 the task is to pick up the elements that constitute the centre of gravity of the contract – the determination of which will be instructive as to the appropriate category – and the fixed rule of that category will apply. 307 Those concerns may create an impression that the use of the catch-all-rule utilising the characteristic performance is not desirable. Is it better to resort directly to the closest connection principle when the list cannot be applied? In any event, if the catch-all-rule utilising the habitual residence of the characteristic performer is applied but the law found is different from the law of the place of performance, it may well happen that the closest connection principle is applied to replace the former law with the latter. Therefore, the direct resort to the closest connection might be the better option. Moreover, the recourse to the characteristic performance test adds one unnecessary step to the process of finding the most closely connected law and therefore increases the cost and the length of the court proceedings.308 However, that reasoning is incomplete. It fails to consider a number of contracts which cannot be matched to the list but the characteristic performance of them can nonetheless be identified. The characteristic performance test should keep its leading position in being applied to as many contract situations as possible (with the closest connection principle, because of to its uncertainty, serving a role in exceptional cases only). 304 For example, Shamil Bank of Bahrain & Beximco Pharmaceuticals Limited and Others [2003] 2 All ER (Comm) 849. 305 See more in Tang 2008, p. 794. 306 Recital 19 Rome I Regulation: “Where there has been no choice of law, the applicable law should be determined in accordance with the rule specified for the particular type of contract. Where the contract cannot be categorised as being one of the specified types or where its elements fall within more than one of the specified types, it should be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. In the case of a contract consisting of a bundle of rights and obligations capable of being categorised as falling within more than one of the specified types of contract, the characteristic performance of the contract should be determined having regard to its centre of gravity.” 307 See more analysis in Magnus 2009, p. 47. 308 Badykov 2005, p. 281.

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The analysis above provides Vietnam with an orientation. For a proposed provision applying in situations not covered by the fixed rules, three points should be to be kept in mind: the definition of types of contracts,309 the optimal method for dealing with contracts having elements of more than one type of contract, and, finally, resort must be first to characteristic performance rules before the ultimate saviour of the closest connection principle.310 e) The order and co-ordination of the closest connection principle, the characteristic performance test, and fixed rules The interrelation between the closest connection, the characteristic performance, and fixed rules is another issue that should be addressed. The order of them in the relevant legislative provision on the law applicable in the absence of choice may well indicate and influence their co-operation. The traditional ordering has begun with the closest connection principle, followed by the characteristic performance as a method to determine the closest connection, and then a list of presumptions mostly developed under the characteristic performance test. This structure can be seen in the Rome Convention, Chinese provisions,311 and Art. 1211 of the Russian Civil Code.312 309 In the sense that the scope of each type should neither be too specific nor too broad. See, for more, Gebauer 2011, § 3, p. 88, where it is pointed out that “[t]he more specified the types of contract that are covered by such a listing rule, the higher the degree of probability that the different types will overlap. In this regard, paragraph 1 (Art. 4 the Rome I Regulation) can be seen as a compromise in listing a certain number yet not too many types of contracts.” 310 Gebauer 2011, § 41, p. 95. 311 He 2012, p. 63. Referring to Art. 145 the General Principles of the Civil Law of the People’s Republic of China 1986, Art. 126 Contract Law 1999 and Art. 5 Rules 2007, He states that “China first emphasizes the closest connection and then lays down a list of connecting factors for various specific contracts – mostly based on characteristic performance as a supplement to the traditional closest connection approach.” See also Tu 2011, p. 677. 312 Art. 1211 Russian Civil Code is as follows: “Where there is no agreement of parties on applicable law, the contract shall be subject to the law of the country with which the contract has the closest relation. The law of the country with which a contract has the closest relation shall be deemed the law of the country where the party responsible for the performance under the contract of crucial significance for the content of the contract has its place of residence or main place of business, except as otherwise ensuing from the law, the terms or substance of the contract or the group of circumstances of the case in question. A party responsible for the performance under a contract of crucial significance for the content of the contract shall be a party which, in particular, is the following, except as otherwise ensuing from law, the terms or substance of the contract or the group of circumstances of the case in question: 1) a seller – in a sales contract; 2) a donor – in a donation contract; […] etc.”

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In the case of the Rome Convention, the structure has been criticised: “Many courts in Europe are puzzled by this tortuous reasoning, because they do not know whether to begin at §1 or at §2.”313 As a result, the Green Paper on the conversion of the Rome Convention of 1980 put forward two approaches. The first approach was to delete the first paragraph of Art. 4 (which states the principle of the closest connection as a general theme of the assessment of the law applicable in the absence of choice) and to emphasise the exceptional character of paragraph 5 (which lays down the principle of closest connection as a correction of the absurd result reached by the presumptions). The purpose of this approach is to have the court begin with the presumptions and thereby achieve a higher degree of certainty. The second approach is to retain paragraph 1 as a coverage principle and amend paragraph 5 so as to emphasise the point that paragraph 5 is only to be applied in exceptional cases.314 For Vietnam, where most judges are inexperienced in international cases, direct and easy application is desirable. Therefore, the idea of placing fixed rules at the beginning of a future article is very appealing. However, we need to consider the second approach of retaining the first position of the closest connection principle, which has been strongly advocated by the Max Planck Institute in its two comments on the Green Paper and the Rome I Proposal. The Max Planck Institute envisaged that there is still the need to retain flexibility. It is concerned that “if the courts are deprived of this flexibility it will be quite likely that they will tend to characterise contracts in hard cases falling outside the fixed rules in order to regain flexibility.”315 In the meantime, in order to cope with the need for certainty, the Max Planck Institute’s solution has been to draft the exception clause more narrowly.316 Moreover, another argument in favour of placing the closest connection principle in the first position is the international practice outside the EU of putting the general test of closest connection first and supplementing it with presumptions.317 However, supporters of the first approach claim that “the closest connection comes close to being a non-rule”,318 which means it is a kind of doctrine so widely recognised that it leads to reasoning without the need to state it. The debate in the EU sphere ultimately settled in favour of the first approach. In the Rome I Regulation, “the methodology is turned on its head”.319 Art. 4 Elodie 2008, p. 223. Green Paper on the conversion of the Rome Convention of 1980 on the law applicable to contractual obligations into a Community instrument, COM(2002) 654 final, 14.1.2003, Brussels, p. 25, 26. 315 Max Planck Comment on the Commission’s Proposal of Rome I, p. 37. 316 Max Planck Comment on the Green Paper, p. 41. 317 Max Planck Comment on the Commission’s Proposal of Rome I, p. 37. 318 Magnus / Mankowski 2004, p. 158. 319 Plender / Wilderspin 2009, § 7-001, p. 167. 313 314

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begins with the hard and fast rules, and the principle of the closest connection, which is mentioned at the end of the article, plays only a residual role. Obviously, with this methodology, the Rome I Regulation has differentiated itself from the legislation outside the EU. However, the present writer feels that both approaches can lead to the same result, provided that the courts have a certain degree of knowledge. In the Rome I Regulation, since Art. 4 deliberately stresses the need for certainty by putting the list on top, the courts have to keep in mind the closest connection as the baseline coverage principle. In the situation of China and Russia, while they have the closest connection situated at the beginning of the legislative provision, they should acknowledge that it is just the general approach. Whether the closest connection principle should be stated as the primary approach (or could be skipped, but not abandoned, to provide more certainty while the courts generally keep in mind the principle) seems to depend on the level of development of legislation and judicial skills. Where the principle is already settled and the courts have borne in mind such an approach, there might be no need for a statement of it at the very beginning at the expense of losing certainty. That might be the situation in the EU. Nevertheless, for Vietnam, because of its new introduction, the closest connection principle needs to remain at the beginning position in order to confirm the use of this principle instead of other alternatives, such as the place of performance, the place of contracting, or governmental analysis. If it is skipped (as in the situation of EU), there is a significant risk the courts would try to squeeze the contract at hand into one category of contract even though it is not suitable.320 When the courts rely too heavily on fixed rules, they may undermine the possibility of resort to the closest connection principle (which provides flexibility in hard cases). The lesson from China may illustrate the need for the closest connection test. The idea, of some legislators, to delete the statement of the closest connection test and make the characteristic performance rule applicable directly in the Chinese Act 2010 was eventually suspended. The reason was that, in case of contracts having no characteristic performance, the abstract test of closest connection would work better than the attempt to squeeze contracts into certain categories.321 In conclusion, it is suggested that the order of paragraphs in a future legislative provision for Vietnam should begin first with the closest connection principle. The second position is for the fixed rules which are developed based on the characteristic performance test. The third paragraph is the characteristic performance rule for cases falling outside the list of fixed rules, and This risk has been recorded in many Chinese courts in applying their 2007 Interpretation of the Supreme Court. See more in Tu / Xu 2011, p. 200. 321 Tu / Xu 2011, p. 200. 320

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finally there is the escape and default clause of closest connection. This ordering is different from the Rome I because there is still the closest connection at the beginning. However, it should be noted that it is also not the same as the provisions of China and Russia, where although the closest connection is at the front, the subsequent order is the characteristic performance test and then the fixed rules. In this suggestion for Vietnam, fixed rules are placed before the characteristic performance test to enhance certainty and fulfil the need for easy application. The characteristic performance test is placed after the list to solve those cases of complicated contracts and to maintain the general implication of the characteristic performance law as the backbone of the closest connection principle. This ordering is indeed the one proposed by the Max Planck Institute. f)

Escape clause

(1) The danger of misapplying the escape clause and practical worries for Vietnam The rules for classes of contracts help increase certainty on the one hand but may introduce rigidity on the other hand. The escape clause is a corrective tool allowing resort back to the closest connection principle. Vietnam, as mentioned earlier, currently utilises the place of performance of the contract as the main connecting factor; and the principle of closest connection has not yet been employed. Therefore, there is no escape clause now. However, as the present writer suggests, alongside the adoption of the closest connection principle, a list of presumptions for specific contracts, and the characteristic performance test, the introduction of an escape clause will have to be elaborated. The core idea of the escape clause is that the presumptions are disregarded if it appears from the circumstances of the case that the contract is more closely related to another country. One example of the wording and the content of an escape clause is Art. 4(5) Rome Convention, which provides that “[…] the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country”. Since the nature of the escape clause is more or less to deviate from the mainstream result created by the characteristic performance test in the form of either presumptions or hard rules, the escape clause seems to be an opponent of the presumptions. While the presumptions aim at predictability, the escape clause pulls them back to flexibility and justice for individual cases when the predictable result (on the basis of the presumptions) is far from appropriate in the circumstances. In other words, the interaction between these two devices helps control the balance between predictability and flexibility in order to reach the best outcome of the applicable law.

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Nevertheless, the crucial point is to know when and in what circumstances the escape clause should jump in to interfere with the test of presumptions. Take the escape clause set out in the Rome Convention above, for instance: the point for interference is when it appears from the circumstances as a whole that the contract is more closely connected with another country. This wording, however, remains ambiguous, and the caution needed when applying it is not adequately emphasised. As a result, it is described as “a dangerous device” which, when used carelessly, could turn into “a means for establishing a home-bound trend, a forum bias in order to apply the lex fori.”322The practice of the English courts regarding Art. 4(5) Rome Convention suggests that, “in many cases, the consequence of applying Art. 4(5) or not applying it was that English law applied.”323 This is exactly what is anticipated for Vietnam, or for any other state in the world, and more so for developing countries with judges inexperienced in private international law. It would be very likely that the courts will make use of the escape clause when it supports the courts’ practical purposes to apply the lex fori; otherwise the courts will just ignore it.324 Moreover, since the law of Vietnam currently uses the place of performance criteria, when the law changes to the closest connection principle with presumptions or hard rules as suggested above, the courts may retain their views in favour of the place of performance and try to switch to it by the use of the escape clause. (2) Demand for cautious application and stricter wording Along with the demand that the courts exercise caution in their application of the escape clause, there is a need for the revision of the wording of the escape clause to guarantee caution in its use, which has been done in the conversion of the Rome Convention to the Rome I Regulation. Now, in the Rome I Regulation, the escape clause is worded as followed: “when it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply”. Bearing in mind that Rome I has converted the presumption of the Rome Convention into a list of fixed rules and deleted the commencing paragraph denoting the principle of closest connection, the escape clause of Rome I is different from that of the Rome Convention in two respects. The first is the addition of the expressions “it is clear that” and “manifestly”, and the second change is that “the expression ‘the circumstances as a whole’ has been replaced by ‘all circumstances of the case’.325 All of these changes 322 323 324 325

Magnus / Mankowski 2004, p. 160. Dicey et al. 2012, § 32-080, p. 1825. Magnus / Mankowski 2004, p. 160. Plender / Wilderspin 2009, § 7-075, p. 196.

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aim to emphasise the exceptional character of the escape clause. Moreover, the stricter wording utilising the expression “manifest” is in line with the escape clauses expressing the principle of proximity in Rome II Art. 4(3).326 (3) Appropriate approach for the displacement In the effort to develop an appropriate approach for the court to refer to when interpreting the escape clause, it is important to note that “the escape clause should not be too broadly interpreted because it will unduly restrain the scope of application of the rule developed in paras 1 and 2. On the other hand, if the escape clause is interpreted too strictly, it could not help correct the rigid and detrimental application of the hard rules where needed.”327

The restrictive approach was exercised by a Dutch court in the case of Société Nouvelle des Papeteries de l’Aa SA v BVMachinefabriek BOA.328 In this case, although “Only the place of business of the characteristic performer pointed to Dutch law: all the other elements of the case connected the contract to French law”, 329 the Hoge Raad retained the former as the applicable law. According to this case, the escape clause can only be invoked when the country to which the hard rule points to “has no real significance”. 330 While this approach seems to serve the aim of the expression “manifestly” well, it is accused of being too extreme.331 Since the hard rules are developed on the ground of the habitual residence of the characteristic performer, the connection between the country the hard rules point to and the contract may not be strong enough, but it is rarely not relevant. Therefore, the threshold of this approach is too high for the escape clause to have any effect.332 The present writer believes that the decision of the Hoge Raad in the mentioned case could have been different if the issue of the applicable law of the contract had been decided on its own, and not for the purposes of establishing jurisdiction.333 There is an impression that when the result of the applicable law affects the establishment of jurisdiction, the chance of the escape clause being Lein 2008, p. 185. MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 244. 328 1992 Nederlands Jurisprudentie 750. This case is discussed in Struycken 1996, p. 19; see also Tang 2008, p. 798. 329 Struycken 1996, p. 21. 330 Struycken 1996, p. 20. 331 Clarkson / Hill 2011, p. 224. 332 Tang 2008, p. 798. 333 In this case, as described in Struycken 1996, p. 21, the court was asked to rule on the question of jurisdiction, which is established on the basis of the place of performance of the contractual obligation upon which the claim is based. In determining this place, the law applicable to the contract had to be ascertained. If Dutch law applied to the contract, the place of performance was the Netherlands. Conversely, if French law was applicable, the Dutch court would not have jurisdiction. 326 327

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applied is lower. The reason might have something to do with the desire for predictability in the establishment of jurisdiction because a change in the applicable law would spread its uncertainty and unforeseeability to the establishment of jurisdiction,334 which could be beyond the expectation of the parties. This extreme approach has been disapproved by the ECJ in Intercontainer Interfrigo SC (IFC) v Balkenende Oosthuizen BV.335 The fifth question sought a ruling regarding the application of the escape clause of Art. 4(5) Rome Convention, asking whether the country designated by the presumption has to have no genuine connecting value so as for the escape clause to apply.336 The ECJ replied that “Art. 4(5) of the Convention must be construed as meaning that, where it is clear from the circumstances as a whole that the contract is more closely connected with a country other than that determined on the basis of one of the criteria set out in Art. 4(2) to (4) of the Convention, it is for the court to disregard those criteria and apply the law of the country with which the contract is most closely connected.”337

The proper approach therefore should be neither too extreme nor of course too frequently invoked such that the hard rule approach can be evaded. It should strike a reasonable compromise between the two extremes. Accordingly, a mere prevailing connection to another country than that pointed to by the hard rule does not suffice. In addition, it should be a requirement that the circumstances supporting the connection to another country must be of a particular and weighty nature, while the connection designated by the hard rule must be relatively trivial.338 This indeed suggests a comparative exercise between the connection of the law presumptively applicable to the contract and that of the law which would displace it. Moreover, the exercise must proceed in the following way: only when there is a “clear preponderance of factors” in favour of the latter law should the escape clause prevail.339 However, the tricky question is how a clear preponderance is to be shown? Is it possible to stipulate inflexible rules denoting situations of clear preponSee Pocar 2009, p. 348: If Art. 4(3) is interpreted loosely, it may be turned to at the discretion of the courts to make changes to the presumption of jurisdiction based on the applicable law. 335 Case C-133/08 Intercontainer Interfrigo SC (IFC) v Balkenende Oosthuizen BV [2009] ECR I-9687. 336 Intercontainer Interfrigo SC (IFC) v Balkenende Oosthuizen BV, para. 50. 337 Intercontainer Interfrigo SC (IFC) v Balkenende Oosthuizen BV, para. 64. 338 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 248. 339 Plender / Wilderspin 2009, § 7-076, p. 196: This approach is inspired by two cases: first, the French Cour de cassation: Danzas & Westra v Tapiola [2007] Rev. crit. dr. int. pr. 592 and, second, Caledonia Subsea v Microperi 2003 S.C. 70, Inner House, Court of Session; see also the English case of Samcrete Egypt Engineers and Contractors SAE v Land Rover Exports Ltd [2002] EWCA Civ 2019. 334

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derance to guide that court? The answer has been in the negative340 because it might cause more difficulties than advantages.341 Nevertheless, it should be noted that there are two likely types of situations where the use of the escape clause could be suggested. The first situation belongs to the place of performance. It is true that in most cases342 decided under the Rome Convention, where the escape clause applies so as to deviate from the law of habitual residence of the characteristic performer, it points to the law which coincides with the place of performance.343 Although, as pointed out earlier, the place of performance alone could not justify a deviation from the law of the habitual residence of the characteristic performer,344 it may happen in extraordinary cases that the place of performance is so intensive that it “locates the centre of gravity of the contract unambiguously in another country.”345 However, it is believed that even in those cases such intensiveness must be supported by the full circumstances of the case.346 In turn, there is one note regarding the requirement of the supporting circumstances of the case. Does it mean that all other relevant factors, apart from the habitual residence of the characteristic performer, have to point to the law of the place of performance? This seems to be what is implied by the wording of the version of the escape clause in the Rome I Regulation (“all circumstances of the case”) instead of that of Rome Convention (“the circumstances as a whole”). The latter way of wording seems to focus on the quality 340 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 246; Plender / Wilderspin 2009, § 7-077, p. 197. 341 Magnus / Mankowski 2004, p. 161: Many reasons are given: “overloading of wording; the diligent weighing of contracts would be additionally required; examples could easily be mistaken as sub-rules; escape clauses would be constructed in similar way as to the closest connection principle of Article 4 with a list of fixed situations and a roundabout principle of more closely connected […]”. 342 See cases listed in Bělohlávek 2010, §§ 04-160–04-175, pp. 802–804: “case law pertaining to the place of performance in a different state of the party effecting characteristic performance and the qualification of the closest connection of the contract to a specific law is abundant.” 343 For example, two English cases: Kenburn Waste Management Ltd v Bergman [2002] CLC 644; Marconi Communications International Ltd v PT Pan Indonesia Bank Ltd [2007] 2 Lloyd’s Rep 87. 344 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 248; Plender / Wilderspin 2009, § 7-078, p. 197; Fawcett et al. 2005, p. 710. 345 Plender / Wilderspin 2009, § 7-078, p. 197: Example given: “a company having its place of business in Luxembourg wishes to have built in that country a large commercial centre and to that end concludes long-term construction contracts to be performed at the centre with building contractors established in Germany, France and Belgium”: it is apparent that “all contracts have their closest connection with Luxembourg”. 346 Bělohlávek 2010, § 04-157, p. 802; Definitely Maybe (Touring) v Marek Leberberg Konzertagentur [2001] 1 WLR 1745.

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while the former may create an impression of the quantity requirement. It is understandable that the stricter wording in the Rome I Regulation’s version of the escape clause was designed to make the clause truly exceptional. It is, however, not especially justified. There might be cases where both parties perform significant duties in another country although the remaining insignificant factors do not really point to that other country. These are those cases for which the escape clause was designated. Therefore, the wording of “the circumstances as a whole” should be preferred; which means “it should not require that all other objective factors of the case apart from the habitual residence of the performer have to unitedly point to the other law.”347 The second guidance, which is in fact the only one stipulated in Recital 20 of the Rome I Regulation, provides for the situation of intimately connected contracts. This recital reads “[…] In order to determine that country (the country more closely connected to the contract), account should be taken, inter alia, of whether the contract in question has a very close relationship with another contract or contracts.”

(4) Concerns regarding the connecting contracts. The question is raised as to the circumstances in which two or more contracts could be considered so closely related that the existence of one contract can be used as an important connecting factor to determine the country of closest connection of the other contract. It is supposed that “these contracts should have substantive connections to each other; where the existence of one depends on that of another.”348 A clear discussion can be found in the Münchener Kommentar. A mere external coincidence alone, for example where contracts are executed in one deed, does not lead to the application of one and the same law.349 For the accessory connection to prevail, the contracts have to be interconnected to the extent that they are content-related, form a whole together, and are connected to a united economic purpose.350 In the Münchener Kommentar, analysis is also given to specific web contracts.351 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 248. Tang 2008, p. 799. 349 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 252. 350 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 para. 252. Besides, in Okoli 2013, p. 480, “it is suggested that the test in determining whether the contracts have a very close relationship is to examine the object, terms of the contract and surrounding circumstances of the case objectively. Where the court finds that the contracts are closely linked, coexist or are intimately connected either because the contracts are combined within the same legal document or share the same purpose in the commercial transaction, it should apply the doctrine of accessory allocation.” 351 MüKoBGB/Martiny VO (EG) 593/2008 Art. 4 paras. 258–266: Angelehnte Verträge, Sicherungsverträge, Ausfüllung von Rahmenverträgen etc. Okoli 2013, p. 480 gives a list of examples of contracts that have a close relationship. 347 348

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Default rule

One might have the impression that all possible situations might be covered by a system with fixed rules, a catch-all rule of characteristic performance, and an escape clause. However, there are still unresolved cases which are not settled using the three conflict rules given above. They are those contracts that neither fall into the list of hard rules in Art. 4(1) of the Rome I Regulation nor present a characteristic performance for the purposes of Art. 4(2). Barter contracts, joint venture agreements, and cooperation contracts are the most frequently given examples.352 In addition, certain licence contracts353 and contracts involving several parties performing interrelated obligations354 are also mentioned. To cope with those situations, Art. 4 Rome I Regulation has, for its last paragraph, a so-called default rule, providing that: “When the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected”. In order to find this law, the task of counting and weighing all relevant factors of the case will arise again. Consequently, there has been objection to the need for such a default rule, arguing that if one has failed to come to an answer by weighing up the performances in an attempt to find the characteristic performance, how could the outcome be different by trying to weigh all factors which mostly have been weighed in connection with the performances? To put it differently, the addition of such a default rule will just complicate the court proceedings.355 This argument is in fact misleading for many reasons. First, when ascertaining the country with which the contract is most closely connected, factors taken into account are not limited to those related to performance.356 In fact, the action of weighing the two performances to find the characteristic one is embedded in the nature of the contract.357 Therefore, it is more a considera-

There is one case of a web contract that is usually discussed. That is Bank of Baroda v Vysya Bank Ltd [1994] Lloyd’s Rep. 87, which involved an international letter of credit. See more in Morse 1994, pp. 567–569; Struycken 1996, pp. 22–24; Okoli 2013, pp. 477– 478; Plender / Wilderspin 2009, §§ 7-082–7-084, pp. 199–200. 352 Magnus 2009, p. 49; Bonomi 2008, p. 175. 353 Bonomi 2008, p. 175. 354 Plender / Wilderspin 2009, § 7-086, p. 202. 355 Badykov 2005, p. 281. 356 Mann J dismissed the argument that factors taken to be weighed must be performance-related in the case of Apple Corps v Apple Computer [2004] 2 CLC, p. 750, concluding that “I consider that I am entitled to take a broad approach to the question of connection, unlimited by any categorisation of the relevant factors.” 357 According to the Giuliano & Lagarde Report, p. 20, “the submission of the contract […] to the law appropriate to the characteristic performance defines the connecting factor of the contract from the inside, and not from the outside by elements unrelated to the es-

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tion of the legal and economic structure of the contract. Meanwhile, in the test of weighing all factors of the case to determine with which country the contract is most closely connected, the variety of factors to be considered is wider, with the participation of factors such as the place of conclusion of the contract, the language of the contract, the currency, reference to the law of specific countries, or the relation of that contract to other contracts. Furthermore, while the characteristic performance test only considers the connection of the countries of origin of the parties to the contract, the closest connection test in fact considers any countries involved in the transaction and therefore may conclude in favour of a third country, notwithstanding the fact that in most cases it will come out in favour of one party’s country. Take an example: two companies, one established in France and one in Germany, conclude a joint-venture contract involving the construction of a five-star hotel in Luxembourg. The performances of the two parties are balanced. The closest connection might be the one with Luxembourg. Besides, there are those factors that are neutral and cannot be attached to any of the performances such as the language of the contract and the place of contracting. The crucial point is that when the two performances are balanced in a contract, it often happens that other factors pointing to the two laws are also equal.358 In such a case, the determination of the closest connected country is equally difficult. As a result, those factors that ultimately tip the scale are themselves relatively less important.359 It cannot be denied that the court in using the default rule has to take up very slight factors. However, it is such slight factors that help to find the way out of the tricky situation whereas the characteristic performance considera-

sence of the obligation such as the nationality of the contracting parties or the place where the contract was concluded.” 358 For example in the case Coast Lines Ltd v Hudig and Veder Chartering NV [1972] 2 QB 34, p. 44, “the circumstances do not point to one country only. They point equally to two countries.” 359 Such as in the case of Coast Lines Ltd v Hudig and Veder Chartering NV, where the law of the ship’s flag was taken as a pointer in a charterparty contract when all other things were equal. The second case of LG Dortmund, 8 April 1988 [1989] IPRax, p. 51, involved a barter contract between a German party and a Dutch party. It was said in the judgment that in this case the characteristic performance could not be determined. There was subsequently nothing more than a determination of the applicable law through other circumstances. The primary factor taken was that the contract was concluded in Germany and in the German language; German law was therefore applied. In the third case, Apple Corps v Apple Computer [2004] 2 CLC, para. D, p. 753, while “most of the connecting features are weak or neutral […] the question is a very difficult one”, Mann J arrived at “weightier factors in favour of England that the Trade Mark Agreement is part of an overall settlement of English litigation […]”.

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tion itself cannot. Therefore, “it suffices here that a slight balance in favour of a certain law can be ascertained.”360 While “it is impossible to formulate rules of thumb as to what factors a court should take into account or give predominant weight to”,361 Recital 21 of the Rome I Regulation makes reference to the relationship of the contract in question with another contract or contracts, a factor which did not exist at the time of the Rome Convention 1980.

V. Concluding Remarks V. Concluding Remarks

VCC 2005 contains three articles (Arts. 769–771) on choice of law rules for contracts; these do not satisfy the need for more detailed codification in this field. There is no rule defining the scope of the governing law. There is only a rule providing that the content of a contract is governed by the law of the place of performance of the contract. The purpose of this rule is to distinguish the content of the contract, which is subject to the law governing the contract, from the form of the contract, which is subject to other laws. Nevertheless, the scope of the term “content of a contract” is vague; it seems to expressly cover only rights and obligations (Art. 769) and the limitation period of lawsuits (Art. 777). Therefore, the term should be clarified better, or a rule regulating the scope of the applicable law in the manner of Art. 12 of the Rome I Regulation or Art. 9 of the Draft Hague Principles on Choice of Law in International Commercial Contracts should be developed. Neither does Vietnamese law contain a rule designating the law applicable to the material validity of the contract like Art. 10 of the Rome I Regulation, and the suggested approach is to subject the material validity of the contract to the governing law. Those issues that are not covered by the governing law are form, capacity, and representation. The Vietnamese provisions on the law applicable to form and capacity are not compatible with modern codifications, e.g., Art. 11 and Art. 13 of the Rome I Regulation. There is no rule on representation. In that context, with respect to the rule on form, Vietnam should provide for more laws according to which the form of the contract can be valid, which corresponds to the principle of favor negotii. In addition, a rule in the manner of Art. 13 Rome I Regulation, which prevents an individual from envisaging his incapacity under another law to the surprise of his partner, might be added to the Vietnamese rule on legal capacity to enter into a contract. At the same time, appropriate conflict rules on representation should be elaborated. Party autonomy was imported to Vietnam relatively late; the principle is vaguely embodied in Art. 769 VCC 2005 but in a clear manner in some spe360 361

Magnus 2009, p. 50. Plender / Wilderspin 2009, § 7-090, p. 203.

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cialised documents, such as VMC 2005 or VCL 2005. Accordingly, Vietnamese law allows the parties to choose the law applicable to their contracts. In the event that the literature in the Vietnamese language on the matter is not sufficient, it should be borne in mind that the recognition of party autonomy is needed and that the fear that a choice of law may be asserted by merchants with strong economic power to the detriment of those of a less-developed country is not justified and should not accommodate a prohibition of the freedom of choice of law for contracts. As regards the modality of the choice of law, Vietnam should develop a rule, like Art. 3(1) of the Rome I Regulation or Art. 4 of the Draft Hague Principles on Choice of Law in International Commercial Contracts, to provide that the choice can be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. A dispute-resolution clause is a strong indication of a tacit choice of law but should not be conclusive. In other words, a jurisdiction clause should be corroborated by other factors of the case so as to constitute a tacit choice in favour of the country of that jurisdiction. Apart from a jurisdiction clause, a number of other factors can be indicators of a tacit choice of law, but their strength varies from one to another. The subsequent conduct of the parties, which the Vietnamese courts have often relied on to infer a tacit choice of the law of the forum, should be upheld only when they are reliable, clear, and strong indicators of such a choice. The courts should not exploit them as an expedient to resort to the lex fori. Although there are no precise guidelines as to the operation of the indications of a tacit choice, Vietnam should not do away entirely with tacit choice. For one reason, the treatment of those factors indicating a tacit choice at the stage of party autonomy is different from the consideration of the same factors at the stage of inferring an objectively closely-connected law once the party choice fails. For another reason, Vietnamese law (which is different from EU law that designates the closest connection principle for the applicable law in the absence of choice) stipulates the law of the place of performance instead, which will eliminate the chance of those tacit choice indicators being examined later on. In the future, Vietnam should codify that the parties can choose the law applicable to the whole or only part of the contract, or choose two or even more systems of law to govern their contract. In addition, there should be an acknowledgement of certain requirements on the choice of multiple laws; inter alia, the parts of contract that are subject to different laws must be separable in order not to create insurmountable difficulties in their application. Vietnamese legislation should also have a provision regulating the possibility of the parties choosing the applicable law after the conclusion of the contract, or changing the applicable law. In addition, the provision should contain the proviso that the change in the applicable law shall not prejudice the formal validity of the contract or adversely affect the rights of third parties.

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The validity of the choice of law is another matter that is untouched by Vietnamese legislation or literature. Vietnam should incorporate the well-established private international law rule that the agreement on the choice of law is determined by the putative chosen law. Moreover, the choice of law term is independent from the contract that contains it; consequently, the invalidity of the contract does not necessarily lead to the invalidity of the choice of law. The provision should also provide the following exception: a party may rely on the law of the country in which he has his habitual residence to establish that he did not consent to the choice of law, if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law chosen. Furthermore, there should be a conflict rule for the scenario where the parties include standard terms designating different applicable laws, which is called “the battle of the forms”. As for formal validity, the choice of law agreement should not be required to be subject to any requirement as to form. Regarding the choice of non-state law at the level of private international law, it is believed that Vietnamese legislation allows a choice of non-state law in arbitration in accordance with VCA 2010, while in the court context the choice of law is still mainly restricted to state law. Although it appears from the wording of the relevant provisions that Vietnamese legislation allows a genuine choice of international commercial practices, the practice of international commercial disputes before the Vietnamese courts suggests that these norms have in fact been incorporated. In general, the present writer suggests neither an allowance of the direct choice of non-state law nor a classification of the different types of non-state rules in order to allow only certain ones. The appropriate solution for Vietnam is to employ the technique of incorporation of those rules, so that the application of these norms is still subject to the mandatory rules of the lex causae. Vietnamese law is silent on whether it allows a choice of unconnected law, although Vietnamese scholars have advocated for such an allowance. Nevertheless, when allowing such a choice, Vietnam should develop mechanisms to limit the incompatible effect of the choice on the fundamental policy of the law closely connected with the contract and on weaker bargaining parties. Under Vietnamese law, parties to domestic contracts are not entitled to choose a foreign law to govern their contract. Nevertheless, Vietnamese law is currently unclear about the internationality of international contracts. A broad interpretation of the internationality of the contract should be developed in the future. The technique used is different from EU law as Vietnamese provisions eliminate altogether this right instead of requiring the application of the mandatory rules of the domestic law. In fact, the technique of the Rome I Regulation is more reasonable as there is no need to eliminate foreign law altogether when it contains rules preferable for the parties. In the event that that law prejudices important interests of the domestic law, the mandato-

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ry rules of the domestic law will override it. In addition, domestic contracts under Vietnamese law should cease to be unilateral, in that they should extend to other countries as well. Apart from domestic contracts, Vietnamese law restricts the right of the parties to choose the applicable law as to contracts relevant to foreign investment in Vietnam, contracts entered into and performed entirely in Vietnam, and contracts relating to immovables in Vietnam, although there were calls for lifting the restriction of choosing foreign law for the latter types of contracts in the process of amending VCC 2005. As regards contracts where one party is presumed to be weaker, Vietnamese law has not developed a protection mechanism similar to that of the Rome I Regulation. There are no conflict rules limiting the choice to a number of laws or binding the chosen law to the mandatory provisions of the lex causae that would be applicable in the absence of choice. Therefore, until these mechanisms are employed, the protective limitations are vested solely in the coverage technique of mandatory rules and public policy. Under Vietnamese law, the law applicable to a contract in the absence of choice is the law of the country where the contract is performed. Nevertheless, difficulties in ascertaining the place of performance of the contract have often been encountered. The application of Art. 284 VCC 2005 to identify the place of performance of the contract is unjustified. There have been Vietnamese authors who suggest stipulating the place of performance of the contract as the place of performance of the characteristic performance. They also suggest that Vietnamese legislation should establish a rule fixing the place of performance of common contracts such as sales contracts. Nevertheless, a more dramatic reform of the connecting factor for the law applicable in the absence of choice needs to be elaborated. Accordingly, Vietnam should adopt the principle of closest connection. In employing this doctrine, two points should be made clear. First, the closest connected law should be determined by evaluating all relevant factors, unlimited by categorisation, whether objective or subjective, geographical or legal. Meanwhile, the test should not be directed by the policy considerations of the relevant states since courts of developing countries like Vietnam may misuse the policy considerations to pave the way to the lex fori. The second point that should be borne in mind is the approach taken toward evaluating factors. The courts should avoid a merely mechanical counting of factors, weighing those factors instead. Factors relating to the issue in dispute should not be given more weight since the courts’ role is to determine the law most closely connected to the contract, not to the issue in dispute. The place of performance of the contract may be a significant factor, but it alone does not suffice to establish the closest connection. In addition, when weighing the factors, the courts should abstain from the homeward trend of resorting to the lex fori, which may induce them to place emphasis only on those factors that support the connection to the home law.

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The principle of closest connection should be substantiated by the characteristic performance test. In identifying the characteristic performance, it should be noted that the characteristic performance of a bilateral contract is the performance for which the payment is due. It is the performance that classifies the contract and constitutes the centre of gravity and socioeconomic function of the contractual transaction. After identifying the characteristic performance, the contract should be held to be most closely connected with the law of the habitual residence of the characteristic performer, rather than the law of the place of performance of the characteristic performance, as suggested by Vietnamese authors. The task of identifying the latter place is difficult in many cases; for example, when the performance takes place in different places. Moreover, the place of performance may be chosen by the parties for purely commercial reasons which do not indicate the centre of gravity of the contract and have little significance for the applicable law. Furthermore, the simple fact that performance takes place in a country other than the country of habitual residence of the characteristic performer is of itself insufficient to justify recourse to the escape clause of the closest connection. Meanwhile, the habitual residence of the characteristic performer is visible and more consistent than the place of performance; it therefore will provide valuable guidance for Vietnamese judges and practitioners. A list of fixed rules for specific contracts is recommended for Vietnam as it helps inexperienced judges to determine the applicable law, at least for common contracts. For a country new to the principle of closest connection, the need to have concrete rules to apply outweighs the difficulties in classifying some complex contracts. For contracts that are not covered by the list or where the elements of the contract are covered by more than one category, they should be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. This step is necessary before the final resort to the closest connection test when the characteristic performance cannot be identified. The order of the paragraphs containing the closest connection principle, the characteristic performance, and the fixed rules in a legislative provision on the law applicable in the absence of choice may well indicate the way they will relate to each other. For Vietnam, the closest connection principle, due to its new introduction, should hold the foremost position and should not be skipped (as in Art. 4 of the Rome I Regulation). The second paragraph contains the fixed rules to fulfil the need for easy application. The third paragraph is the characteristic performance rule for cases falling outside the list of fixed rules. This test is placed after the list to maintain the search for the characteristic performer law in other contracts. Finally, there is the escape and default clause of closest connection. The next suggestion for Vietnam is to employ an escape clause as a corrective tool to resort back to the closest connection principle. The escape clause

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will disregard the presumptive applicable law appointed by either the fixed rule or the characteristic performance test, if it is clear from the circumstances of the case that the contract is more closely connected to another country. Therefore, it helps to retain flexibility and justice in individual cases. The point when the escape clause should interfere with the presumptive applicable law is very crucial. The escape clause should not be too easily invoked, as it would then engender uncertainty as to the applicable law. The threshold for its activation, on the other hand, should not be so high that it cannot generate the corrective effect where needed. The escape clause, therefore, should prevail where there is a clear preponderance of factors in favour of the law of another country. Although there is no need to stipulate inflexible rules denoting situations where the escape clause should operate, the two likely situations are where the place of performance is in another country (which must be supported by the circumstances of the case), and cases of intimately connected contracts (in which two or more contracts could be considered to be so closely related that the existence of one contract can be used as an important connecting factor for determining the country of closest connection of the other contract). Nevertheless, for the accessory connection to prevail, the contracts have to be interconnected to the extent that they are content-related, form a whole when taken together, and connected to a united economic purpose. Finally, the proposed article on the law applicable in the absence of choice needs a default rule of the closest connection to deal with those contracts that neither fall into the list of hard rules nor present a characteristic performance, e.g., barter contracts. It should be noted that the test of weighing all factors for the purpose of finding the most closely connected law in this step is different from the weighing of the two performances to find the characteristic one, which is more a consideration of the legal and economic structure of the contract. The variety of factors considered is wider and the candidate countries is not limited to just the countries of origin of the parties to the contract. The factors that may ultimately tip the scale may be relatively insignificant, but they are generally helpful. Like the escape clause, the default rule gives weight to the relationship of the contract in question to another connected contract or contracts.

Part 3

Part 3 – Tort Part 3 – Tort

I. Introduction

I. Introduction

Alongside the integration process, Vietnam is becoming more and more involved in cross-border torts. With a simple search on the Internet, one finds numerous articles on the topics of cross-border environmental damages1 and

1 , visited 10 July 2015. On this website, the Vietnam Environmental Administration (belonging to the Resources-Environmental Ministry) has warned that, on a yearly basis, the Ba Lat Hong River, which has its source in from Van Nam, China, deposits on the coastal waters of Ba Lat water front (Nam Dinh Province) a discharge of approximately 37.3 billion m3 of water, which consists of up to 232 thousand tons of biochemical oxygen demand, 353 thousand tons of chemical oxygen demand, 31 thousand tons nitrogen, more than seven thousand tons of phosphorus and 29 million tons of TSS (organic waste), more than four thousand tons of heavy metals, 210 tons of pesticides, 343 tons of chemical fertilisers and more than 13 thousand tons of oil. The sources of these emissions are industrial, agricultural, trading and urban manufacturing facilities on Vietnamese territory and are in no small part from the basin located in the territory of China, for which up to now the cross-border discharge has not had an accurate assessment figure although there have been many inspection teams set up on the Hong River. The oil spill phenomenon, which has appeared in coastal waters of the West Bac Bo (Tonkin) Gulf for many years, is causing great concern in the prevention and control of trans-boundary pollution. From 1987 to 1997 there were 89 oil spills and from 1997 to 2010 there were 50 oil spills at sea. The oil spill in February 2007 was the largest and caused heavy economic losses to coastal provinces as it took place for several days and the amount of oil collected was over 1,721 tons. Demolition of old ships in the West Coastal of Tonkin Gulf is also a major threat to the environment. According to Greenpeace, up until 2010, an average of 3,000 ships were dismantled each year. The process of dismantling old vessels discharges into the marine environment toxic substances such as mercury, copper, lead, zinc, iron and radioactive, organic cyanide compounds, and residues of wash water tank ships which contain many bacteria and exotic organisms. The problem of cross-border waste transport is currently also a “hot” issue in the ports when some firms have, accidentally or intentionally, illegally imported environmental pollutants. In Hai Phong port there currently exists approximately 7,000 tons of “steel scrap”, mainly waste cans, boxes, used metal boxes which contained beverages, food, grease, paint, chemical substances, organic solvents etc.

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toxic imported products mainly originating from China.2 Traffic accidents involving foreigners is also an issue of concern.3 In addition, in the field of medical treatment, there have been a considerable number of fraudulent misstatements,4 which have severely affected the livelihood of the plaintiffs. Surprisingly, there have not been many cross-border tort cases reported in Vietnam by specialised authors or by official journals and magazines in the field of law.5 This is mainly because the Vietnamese community has not been aware of the potential to take action of this sort. It is also because of the enormous technical legal difficulties likely to be faced by the court as well as by the lawyers in dealing with cross-border tort cases. On the world scale, tort law is an area of very little harmonisation, even within Europe.6 Uniform “non-state” laws, such as the rules recently presented in the Draft Common Frame of Reference so far only play a minor role in torts cases.7 Legal differences exist regarding all major aspects of tort law.8 2 , visited 10 July 2015. This website warns that certain products from China contain toxic chemicals: fruit such as apples and oranges; vegetables; beans; milk with Melamine; cooking oil; toothpaste. 3 The most severe accident was the boat flipping on Ha Long Bay on 3 Oct. 2012 which killed 5 (Taiwanese) foreigners: , visited 10 July 2015. Another boat flipping which gained much public attention happened on Sai Gon River in 2011 and killed 3 Chinese tourists , visited 10 July 2015. For road accidents, one can refer to the bus accident in Khanh Hoa, which injured 13 foreigners of different nationalities , visited 10 July 2015. On the other hand, there have also been traffic accidents caused by foreigners, for example, a French-caused motorbike accident in Ninh Thuan injuring a local woman , visited 10 July 2015. 4 There have been many traditional Chinese clinics with Chinese nationality doctors providing fraudulent treatment to Vietnamese patients. For example, a traditional Chinese Clinic named Đông Y Hoa Việt Hữu Hào, situated at 601 Giai Phong street, Hanoi diagnosed a healthy woman with an “incurable disease” and prescribed expensive unknownorigin medicine to her , visited 10 July 2015. 5 Only two cases have been commented on in Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 657, 663: Judgment No. 275/2006/DSST dated 29 March 2006, Ho Chi Minh City People’s Court, and Judgment No. 1164/2006/DSST dated 31 Oct. 2006, Ho Chi Minh City People’s Court. The first case relates to intellectual property rights. 6 Lookofsky / Hertz 2009, p. 109: Even within Europe, so far very little substantive tort law has been harmonised, and major divergences between the tort laws of Member States still exist. 7 von Hein 2009a, pp. 156, 157. 8 Lookofsky / Hertz 2009, p. 109: Such as the boundary between strict liability and fault-based liability; compensation for indirect damage and third-party damage; compensation for non-material damage, including third-party damage, compensation in excess of actual damage sustained (punitive and exemplary damages); the liability of minors; assessment (“amount”) of damages, particularly in respect of personal injury, and limitation periods.

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Regarding Vietnam, the differences in tort law compared to other countries is even more dramatic. While the effort of harmonisation of substantive tort law seems very difficult, one may think of the enhancement of conflict rules for tort (in terms of both international harmonisation and clarification at the internal level), in order to, at least, get to know which law might apply to a cross-border tort relationship when it happens. For example, one may think first of party autonomy. However, the special aspect of tort cases is that “an accident is rarely planned”,9 which means party autonomy for tort has been less frequently encountered as an issue than for contract conflicts.10 Consequently, this section will concentrate on the general conflict rules for tort. The author will first describe the Vietnamese tort conflict rules, then address the difficulties with the application of these rule and the need for improvement. In order to determine an orientation, the writer will briefly examine a number of approaches as to the general rule of tort conflicts deployed across Europe, the United States and two major countries of Asia (Japan and China). Based on this brief analysis, the author will draw out (in her opinion) the most suitable and progressive approach for Vietnam, including consideration of the preferred approach from the perspective of international tort jurisdiction for the Vietnamese courts, as prescribed by the VCPC 2004.

II. Vietnamese Conflict Rules for Tort II. Vietnamese Conflict Rules for Tort

It is important to locate the level of development of conflict tort law in Vietnam. For that purpose, the first statutory rule for tort conflicts to mention is the one stipulated in the Civil Code 1995. Before that, there had been no case law reported by any literature in Vietnam. The reason is that Vietnam had just opened itself to the outside world (also to international civil relations) in 1990 with the Communist Party’s policy of “Doi moi”. Therefore, it is unknown whether there were any cases and, if there were, the way in which the court found the applicable law or whether the court was influenced by any legal tradition or precedent. From the moment such a statutory rule was enacted in 1995 in Art. 835, it remained unchanged until the transformation of this Civil Code to the Civil Code of 2005 with Art. 773.

von Hein 2011a, § 12, p. 406. There is a significantly lower number of agreements on the applicable law in the area of torts than for contracts. Thus, the systematic ordering of the rules in the final Rome II Regulation may well reflect their respective importance in daily court practice. 10 von Hein 2009a, pp. 156, 157. 9

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“Article 773. Compensation for damage outside contract 1. Compensation for damage outside contract shall be determined in accordance with the law of the country where the act causing such damage takes place or where the actual consequences of such act arise. 2. Compensation for damage caused by an aircraft flying in international airspace or by a sea-going ship sailing in international waters shall be determined in accordance with the law of the country of which such aircraft or ship bears the nationality, unless otherwise provided for by the maritime or aviation law of the Socialist Republic of Vietnam. 3. In cases where the act causing damage occurs outside the territory of the Socialist Republic of Vietnam and the person who causes the damage and the victim are both Vietnamese citizens or legal persons the law of the Socialist Republic of Vietnam shall apply.”

As can be seen from Art. 773(1), the principle of lex loci delicti is used. This principle is acknowledged in Vietnam by lecturers and researchers in the area. They give two supporting arguments. First, determining the place where the tort occurs most of the time is easy and that facilitates the settlement of cases before the court. In addition, the principle makes it easier for the court to investigate, collect evidence, and verify damages. Second, in general, the place where the tort occurred is the place that has the closest relationship to the types of disputes in the field of tort. Thus, the advantages of this principle are summarised as simple, easy to apply, certain, and foreseeable as to the determination of applicable law.11 When the place where the tortious act takes place and the place where the damage arises are in different countries, the ubiquity principle is provided. That is, there could be a choice between the two laws. The point of concern for Vietnamese scholars is the fact that the article does not say who is entitled to choose: the plaintiff or the court.12 Until now, there has been no literature on this issue, and no stance taken by authors, which means the current research situation of Vietnam poses a concern. As regards case law, crossborder tort cases adjudicated by a Vietnamese court are extremely rare. In those cases (as in all cases of other civil relations), cross-border torts were regarded as purely domestic situations, regulated as a matter of course by Vietnamese law. The fact that the court has not reasoned about the choice of its own law prevents any preference or even presumption about who is authorised to choose between the two available laws. Art. 773 also includes (sub-section § 3) a regulation relating to cases where the act causing damage occurs outside the territory of the Socialist Republic of Vietnam, but the person who causes the damage and the victim are both Vietnamese citizens or legal persons, in which situations the provision designates the application of Vietnamese law. Meanwhile, in the field of maritime tort, there are more clarified conflict rules. Art. 773(2) provides for, generally, the law applicable to compensation 11 12

Nguyễn Hồng Bắc 2009, p. 167. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 667.

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for damage caused to a seagoing ship sailing in international waters, which means a tort committed on the high seas. The designated applicable law is the law of the country of which such ship bears the nationality, unless otherwise provided for by the maritime law of the Socialist Republic of Vietnam. In fact, the VMC 2005, in Art. 3, has clarified the issue as follows: “Article 3. Principles of application of laws in case of conflict of laws 1. Legal relations relating to ownership of property on board seagoing vessels, charterparties, crew employment contracts, contracts of carriage of passengers and luggage, the division of salvage remuneration between the owner and crew of the salving ship, the recovery of property sunk on the high seas or incidents occurring on board seagoing vessels on the high seas, shall be governed by the laws of the flag states. 2. Legal relations relating to general average shall be governed by the law in force in the country of the place where the seagoing vessel calls at immediately after such general average occurs. 3. Legal relations relating to collision, salvage remuneration, or the recovery of property sunk in the internal waters or territorial sea of a country shall be governed by the law of such country. Legal relations relating to collisions or salvage operations performed on the high seas shall be governed by the law of the country whose arbitration or court is the first to deal with the dispute. Collisions occurring on the high seas or the internal waters or territorial sea of another country between seagoing vessels of the same nationality shall be governed by the law of the flag state. 4. Legal relations relating to contracts of carriage of cargo shall be governed by the law of the country where the cargo is delivered as contracted.”

In addition, there been some valuable research and welcome suggestions for how the law can apply to non-contractual obligations arising out of an act of unfair competition. It has been suggested that the general conflict rule for tort above is not appropriate and should not apply to this kind of non-contractual obligation because the determination of the place where an act of unfair competition takes place and the place where damage occurs is not simple. Therefore, a conflict rule should be formulated for non-contractual obligations arising out of acts of unfair competition. In fact, it was proposed that such a rule13 should be inserted into a special Law (Law on competition), which was enacted by the Vietnamese Congress in 2005.14 As the proposal was not accepted, it suggests there is a lack of direction for the development of conflict rules for non-contractual obligations in Vietnam. Apart from that issue, there has been no further elaboration on specific torts such as product liability, environmental damages, infringement of intelIn circumstances where no agenda on changing the relevant chapter of the Civil Code 2005 as regards civil relations with foreign elements (Chapter VII) has been approved, which means there will not be changes in conflict rules for non-contractual obligations in the near future. 14 Đỗ Văn Đại 2001, p. 3. 13

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lectual property rights, or other torts. In Art. 773 itself, we can also see the absence of an escape clause that could insert some flexibility for the court to do justice in individual cases. Overall, there are many gaps for suggestions and improvement of the conflict rule for tort in general and the Article on the general rule in particular. One of the main tasks of this work is to find a suitable development solution or orientation for Vietnam’s private international law. This task will include a survey of worldwide approaches to conflicts in tort law.

III. Approaches to Tort Conflicts III. Approaches to Tort Conflicts

1. Double actionability rule “Double actionability” is the common law rule that existed in England before the enactment of the Private International Law (Miscellaneous Provisions) Act 1995 (PILA 1995).15 It originated from the well-known case of Phillips v Eyre,16 which propounded the principle that a claim must be actionable according to two laws: the forum law (England) and the law of the place where the tortious acts occurred (lex loci delicti).17 This principle however was later held to admit exceptions in which either law could be replaced by the law of the country that had the most significant relationship with the issue or with the whole case. In Boys v Chaplin,18 the lex loci delicti was excluded and the court applied solely the lex fori, which is not only one branch of the double actionability rule but also the law of the place that has the most significant relationship with the parties of the case (both parties were normally resident in England).19 Meanwhile, in Red Sea Insurance Co Ltd v Bouygues SA20 and Pearce v Ove Arup Partnership Ltd,21 the lex fori gave way to the law of the country more significantly related to the case, which was also the second branch of the double actionability rule (lex loci delicti).22 Since the courts in those cases escaped only from one branch of the double actionability rule and applied the other, scholars have doubts on whether the exception could displace both branches with a third law. They also express

15 This Act is downloaded from the website of “the official home of UK legislation” . 16 Phillips v Eyre (1870) L.R.6 Q.B.1. 17 Dicey et al. 2012, § 35-006, p. 2199; Plender / Wilderspin 2009, § 18-002, p. 495. 18 Boys v Chaplin (1971) AC 356. 19 Dicey et al. 2012, § 35-008, p. 2201. 20 Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190 (PC). 21 Pearce v Ove Arup Partnership Ltd [2000] Ch. 403 (CA). 22 Dicey et al. 2012, §§ 35-008 – 35-011, pp. 2201–2202.

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concern about satisfactory grounds for the displacement.23 However, these are not the main criticisms against this rule.24 The two major defects that led to its abandonment in common law countries were the prominent role given to the lex fori and the unfair advantage given to the defendant when the claim had to satisfy two laws.25 China used to have the double actionability rule in Art. 146(2)26 General Principles of Civil Law 1986,27 but there is no similar provision found in the new Chinese Act 2010. The rule currently remains in Art. 22 of the Japanese Act 2006,28 which maintains the core content of the principle of “double actionability” due to the Japanese legislature’s own concerns and rationales.29 Nevertheless, the Japanese author Nishitani criticises the article as “ill advised”30 and suggests, although with little confidence, that “the Japanese Act should renounce the principle in the future, in order to circumvent a possible criticism that Japan is enclosed in excessive unilateralism and protectionism at the expense of cooperation of legal systems.”31

Dicey et al. 2012, § 35-008, p. 2201. Because the first doubt could be solved by cases, and the second concern exists for the other rule, for example the lex loci delicti, as well. 25 Dicey et al. 2012, § 35-013, p. 2204: “because the claimant could not succeed in any claim unless both the lex fori and the lex loci delicti made provision for it, whereas the defendant could escape liability by taking advantage of any defence available under either of these laws.” 26 “An act committed outside the People’s Republic of China shall not be treated as an infringing act if under the law of the People’s Republic of China it is not considered as infringing act.” 27 He 2009, p. 220. 28 Art. 22 Japanese Act 2006. This article is not titled as “double actionability” but as “Public Policy Limits in Tort”, alongside another general public policy provision (Art. 42). It provides “(1) Where events that should otherwise be governed by foreign law applicable in tort do not constitute a tort under Japanese law, recovery of damages or any other remedy under the foreign law may not be demanded; (2) Even where the events that should otherwise be governed by the foreign law applicable to tort constitute a tort both under the foreign law and under Japanese law, the injured person may not demand recovery of damages or any other remedy not recognised under Japanese law.” English translation in Annex II of Jürgen Basedow/Harald Baum/Yuko Nishitani (eds.): Japanese and European Private International Law in Comparative Perspective (2008). 29 Nishitani 2007b, p. 192. The primary concern of the legislature was that Japanese companies doing business in the US should not be subject to punitive damages before Japanese Courts. 30 Nishitani 2007b, p. 192. The general public policy clause (Art. 42) acts as a last resort to protect the social, economic, and moral order of the forum state, as was decided by the Supreme Court of Japan concerning the exequatur of a California judgment that had condemned a Japanese company to pay punitive damages for its breach of contract. 31 Nishitani 2007b, p. 192. 23 24

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There have been no rules, presumptions, or research suggesting that a tortious act which has taken place in another country must be actionable under Vietnamese law to set up a legitimate claim. In other words, this rule has found no footing in Vietnam. 2. Lex loci delicti as a universal encounter While common law countries like England32 have switched to the lex loci delicti (the place of commission of tort),33 it has long been the main general rule in almost all continental European countries34 such as Germany35 or France.36 Moreover, Switzerland also makes use of the lex loci delicti as a subsidiary rule. 37 In Asia, Japan employs the rule in Art. 17(1) of the Japanese Act of 2006.38 The rule is not only prominent in national law, but also in EU law as all proposals of the Rome II Regulation suggested its application.39 Recital 15 of this Regulation affirms that “lex loci delicti is the basic solution for noncontractual obligations in virtually all the Member States.” Although the principle is nearly universal, its interpretation differs in different countries or pieces of legislation regarding cases where the tortious act and the damage occur in different countries. The lex loci delicti then transforms into different variations: place of injury, place of acting, or both under the so-called theory of ubiquity.40 With the issuance of PILA 1995, ss. 11, 12. Dicey et al. 2012, § 35-012, p. 2202. 34 Kadner Graziano 2008, p. 247. 35 Art. 40(1) German Introductory Act 2011: “Tort claims are governed by the law of the country in which the liable party has acted. The injured party can demand that instead of this law, the law of the country in which the injury occurred is to be applied […]”. 36 Lookofsky / Hertz 2009, p. 112: The author refers to two cases: Latour v Guiraund [1948] D. 357 and Kieger v Amigues 56 Rev. crit. dr. int. pr. 728 (1967), in which although both parties are French residents, the French court did not resort to the common habitual residence clause to apply French law but consistently applied lex loci delicti; Plender /  Wilderspin 2009, § 18-005, p. 497. 37 Art. 133(2) Swiss Private International Law Code 1987: “If the tortfeasor and the injured party do not have their place of residence in the same State, the claims shall be governed by the law of the State in which the tort was committed. If the injury occurs in another State than the State in which the act that caused injury arose, the law of that State shall be applicable if the tortfeasor should have foreseen that the injury would occur there.” The present writer refers to the English translation of this Code, from the website , visited 2 Apr. 2013. 38 Art. 17(1): “The formation and effect of claims arising from tort shall be governed by the law of the place where the results of the acts causing the damage arose. However, where the occurrence of the results in such place would usually be unforeseeable, the law of the place where the acts causing damage occurred shall govern.” 39 Kadner Graziano 2008, p. 247. 40 von Hein 2011a, § 5, p. 401. 32 33

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a) Place of acting Not many countries nowadays employ the place of acting for their general rule. Its two prominent representatives are s. 11(1) PILA 199541 and Art. 44 Chinese Act 2010.42 However, the English rule of s. 11(1) gives up its role when elements of the tort occur in different countries; for double locality cases, s. 11(2) takes over and provides for the place of damage or the place having the most significant connections. Meanwhile, it is striking to see the place of acting in an exclusive manner for general tort law in Chinese Act 2010. Supporting arguments for this connecting factor are far fewer than those against. One idea could be the theory of “global welfare” of Toshiyuki Kono, who believes that the prime role of private international law rules is to reduce the number of torts, which in turns serves the world’s welfare.43 Therefore, the control of conduct leads to the application of law of the place of acting. However, there are many good arguments from the opposite side. For example, the place of action is often “unforeseeable for the victim and can easily be manipulated by the tortfeasor”.44 Moreover, it may not correspond to the victim’s insurance, which may be structured based on his legal environment.45 In fact, the place of acting can hardly stand alone as the main conflict rule for general tort law. Reference could be made to Germany with Art. 40 of the Introductory Act 2011, in which the place of acting is supplemented by a choice between it and the place of damage suffered by the victim. In addition, with the exception of industrial action (Art. 9), where the place of acting applies in an exclusive manner, its role in Rome II is marginalised into an alternative in environmental damage (Art. 7). Moreover, in respect of product liability, it comes into play under the form of the place of establishment of the producer, with the condition that the marketing of the product is unforeseeable to him (Art. 5(1) Sent. 2).46 A study of Hanoi Law School47 and a Vietnamese popular Commentary48 suggest amending Art. 773 VCC 2005 into a clear-cut application of the law of the place where the act causing damage takes place. The place where the actual consequences of such act arise should be considered only when it is

41 Art. 11(1): “The general rule is that the applicable law is the law of the country in which the events constituting the tort or delict in question occur.” 42 Art. 44 [Tort in general]: “Liability in tort is governed by the law of the place where the tortious act occurred […].” 43 Kono 2008, p. 228. 44 Bach 2010, § 16, p. 71. 45 Leible / Lehmann 2007, p. 721; von Hein 2011a, § 11, p. 405. 46 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 11. 47 Trần Thị Huệ 2009. 48 Hoàng Thế Liên 2013, p. 596.

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impossible to determine the place of acting.49 Notably, they did not support their suggestion with any arguments. b) Ubiquity approach Germany provides an example of the ubiquity approach. Art. 40 of the Introductory Act 2011 provides for a plaintiff-friendly principle of ubiquity which allows the plaintiff to choose between the law of the place where the defendant acted and the law of the place of damage. The advantage of this principle is that it helps to avoid cases of undercompensation by granting the victim the best level of redress protection.50 However, on the other hand, there are many disadvantages. For example, the choice between the two possible applicable laws would render the applicable law unforeseeable,51 or the defendant bears more liability because the victim has the protection of not one but two laws.52 Moreover, it is unfair for a local case victim if a cross-border victim is potentially in a better position just because the place of acting and the place of injury are in two countries.53 Furthermore, if the victim does not exercise her choice, the place of acting may benefit the tortfeasor. Therefore, the ubiquity principle may not stand as a general rule for tort conflicts. Even the German courts “already tend to use the law of the place in which the legally protected interest was harmed whenever a victim brings an action under German law, by interpreting it as an implied choice of law.”54 Nevertheless, it may be upheld in relation to specific torts, for example environmental damage as prescribed in Art. 7 Rome II. Perhaps because of those disadvantages of the ubiquity principle as a choice rather than a clear decision,55 (with the exceptions of Germany, Italy,56 Poland,57 and Vietnam), most countries do not prefer it for the main rule of tort conflict. Moreover, the Vietnamese rule of ubiquity should improve from being an ambiguous choice between the two possible laws to providing either statutoriNguyễn Hồng Bắc 2009, p. 171. Bona 2006, p. 259. 51 Bona 2006, p. 259. 52 Fröhlich 2008, p. 45. 53 Fröhlich 2008, p. 47. 54 von Hein 2003, p. 528; Fröhlich 2008, p. 47. 55 Kropholler 2006, p. 525. 56 See more in Ballarino, Bonomi 2000, p. 125: “To protect the injured party, a special provision contained in Article 62 now confers on him/her the right to request application of the law of the State where the wrongful Act occurred.” See Italian Law No. 218 of 31 May 1995 on Reform of the Italian System of Private International Law. The English translation is found in Giardina 1996. 57 Stone 2010, p. 386. 49 50

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ly or by court’s practice that the plaintiff is entitled to choose. The rule should also prescribe the place of acting beforehand, which applies if the plaintiff does not exercise his right to opt for the place of damage. The legislature however should be aware of the numerous criticisms of the ubiquity principle, of which the most serious for Vietnam is that the plaintiff may be unaware of her right to choose the place of damage. In that case, the place of acting applies, and the aim of avoiding under-compensation is no longer accomplished. One alternative could be to omit the place of acting as a default rule and assign the choice to the court whenever the plaintiff does not exercise it. 58 c) Place of damage – Approach of Rome II The place of damage/injury is the starting point of the Rome II Regulation. Art. 4(1) stipulates that “unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the event giving rise to the damage occurred […]”. The question is why EU legislators prefer this connecting factor. While in the context of international jurisdiction the ECJ had explained that the concept of “the place where the harmful event occurred” referred to both the place of acting and the place of damage,59 the definitive choice in favour of the place of damage as prescribed in Art. 4 Rome II Regulation increases legal certainty as compared to the ubiquity rule.60 Nevertheless, one may argue that if a firm choice of one out of two laws promotes certainty, a choice of the place of acting can attain this target as well. The difference is that the place of damage, moreover, strikes a reasonable balance between the interests of both the tortfeasor and the victim, as stated in Recital 16 Rome II Regulation.61 On the part of the victims, although the place of damage does not equip the victims with a liberal choice like the ubiquity principle, it takes account of their expectations. Since a victim often

58 He 2009, p. 217. China used to assign the choice to the court instead of the victim: Art. 187 of the 1988 Opinion on the General Principle of Civil Law stipulates that the lex loci delicti shall include both the law of the place of where the tort is committed and the law of the place where the result of the tort takes place. Where the two laws are inconsistent with each other, the People’s Court may elect which law to apply. The English version of this 1988 Opinion is found at , visited 23 July 2015. 59 Case 21/76, Handelskwekerij G J Bier BV v Mines des Potasse d’Alsace SA [1976] ECR 1735, [15]. 60 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para.19; Schoeman 2011, p. 375. 61 Recital 16 Rome II Regulation: “A connection with the country where the direct damage occurred (lex loci damni) strikes a fair balance between the interests of the person claimed to be liable and the person sustaining the damage, and also reflects the modern approach to civil liability and the development of systems of strict liability.”

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sustains damage in the country that she has social or legal connections with,62 and which is usually her country of residence, the application of that law, therefore, satisfies her expectations towards the applicable law. On the part of the tortfeasor, there is criticism that the place of damage rule may produce unfair result for the defendant when the occurrence of the injury in another state is unforeseeable to her.63 It should be contended that the place of damage abroad is generally foreseeable to her in most cases.64 Where the predictability defence is likely to emerge (especially true in product liability torts), it has been handled by a specific rule (e.g., Art. 5(1) sent. 2 Rome II) which designates the application of the law of the place of the establishment of the producer instead. If one holds the unpredictability criticism for other cases apart from product liability, they may cite countries such as Japan or Russia, which have already adopted the foreseeability defence in their general torts rule whilst they also have a specified conflict rule for product liability. Indeed, Art. 17 of the Japanese Act 200665 and Art. 1219 Russian Civil Code66 add to its place of damage rule that if that place is unpredictable,67 the place of conduct shall apply. However, the insertion of a foreseeability requirement may create unfairness because the victim has no influence on it.68 The applicable law then depends on whether the tortfeasor succeeds in rebutting the presumption.69 Furthermore, the tortfeasor may become careless and the potential victim overly cautious, which may inhibit cross border relations.70 Therefore, its insertion to fill the gaps in rare cases does not justify the effort.

Hamburg Group for Private International Law 2003, p. 11. Symeonides 2008, p. 19; Hay et al. 2010, § 17.3, p. 796. 64 Nishitani 2007b, p. 180. 65 Art. 17 Japanese Act 2006: “The formation and effect of claims arising from tort shall be governed by the law of the place where the results of the acts causing the damage arose. However, where the occurrence of the results in such place would usually be unforeseeable, the law of the place where the acts causing damage occurred shall govern.” 66 Art. 1219(1) Russian Civil Code [The Law Governing Obligations Emerging as a Result of Infliction of Harm]: “Obligations emerging as a result of infliction of harm shall be governed by the law of the country where the action or other circumstance that has served as ground for damages claim occurred. In cases when the action or other circumstances caused harm in another country, the law of that country may be applied if the person causing the harm foresaw or should have foreseen the onset of the harm in that country.” 67 Nishitani 2007b, p. 180, footnote No. 29: “According to the explanation of the Ministry of Justice, the foreseeability is aimed at the place of the harmful event, not the substantive result.” 68 Nishitani 2007b, p. 180. 69 Nishitani 2007b, p. 181; Nishitani 2007a, p. 556. 70 Kono 2008, p. 234. 62 63

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There is concern that the lex loci damni rule impairs the policies of deterrence of the country of the place of conduct when “the state of conduct prescribes higher standards of conduct for the tortfeasor than the state of injury”.71 The resolution of Rome II is to include an article (Art. 17) requiring the consideration of the rules of safety and conduct of the place of acting when assessing the conduct of the tortfeasor,72 which ensures that the behaviour control function of tort law is not significantly impaired by the designation of the lex loci damni rule.73 There is also the criticism that the place of injury is sometimes difficult to locate in cases of nonphysical injuries such as violation of privacy, defamation, and unfair competition,74 especially when the injury has occurred in many states.75 Moreover, courts in many states of the US have escaped the rigidity of the place of damage rule in the First Restatement of Law on the Conflict of Laws by considering other techniques such as renvoi, characterisation, or public policy.76 The crucial point is that those cases featuring difficulties in localising the place of damage, especially when the damage occurred in different countries, have been addressed by special rules for specific torts. For example, the general rule in the Rome II Regulation yields to 5 leges speciales applicable to, respectively, product liability, unfair competition, damage to environment, intellectual property rights, and industrial action. Invasion of privacy and defamation have been excluded from the scope of Rome II and they deserve a special rule that will be developed in the future. In addition, the lex loci damni rule is accompanied by the common habitual residence rule and the escape clause. 3. Place of residence of the victim Since traffic accidents are the most frequent torts77 regulated by the general rule,78 the habitual residence of the victim, which is frequently proposed for Symeonides 2008, p. 19. Art. 17 Rome II Regulation [Rules of safety and conduct]: “In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.” 73 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 paras. 4, 19. 74 Stone 2010, p. 386; Hay et al. 2010, § 17.7, p. 801: “Locating damage in cases of nonphysical injuries such as defamation, invasion of privacy, unfair competition, and fraud was not always easy.” 75 The American Law Institute 1971, p. 143. 76 Hay et al. 2010, § 17.8, p. 804. 77 von Hein 2009a, p. 154: “Traffic accidents were at the centre of the U.S. conflict revolution in the 1960s – just think about Babcock v Jackson – and they played an important role in the European discussion about developing more flexible approaches to tort 71 72

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traffic accident torts,79 may be the appropriate connecting factor for the general rule. Although the application of the victim’s home law does not necessarily mean a higher level of compensation or longer limitation period,80 it favours the visiting and the secondary victims to the extent that it provides for the redress that matches their social and economic background.81 This satisfaction stimulates tourism,82 which a tourist country may consider. However, there is concern that the designation of the victim’s home law will amount to higher premiums,83 which would mean a higher proportion of uninsured vehicles.84 Nevertheless, this criticism in fact has little ground in

conflicts in Europe as well, e.g., with regard to the ‘Auflockerung’ pursued by the German Federal Court of Justice in the 1980s and 1990s.” 78 von Hein 2009a, p. 154: “Traffic accidents are precisely the kind of everyday, garden-variety torts which are sufficiently dealt with by the general rules and which therefore do not merit the creation of particular, tailor-made conflicts rules.” 79 Consultative Paper on the Compensation of Victims of Cross-Border Road Traffic Accidents in the European Union on 26 March 2009, available online at : Policy Option 6 on compensation awards and Policy Option 8 on limitation periods proposed the application of the law of the habitual residence of the victim. 80 “Choice of Law for Cross Border Road Traffic Accidents”, a document requested by the European Parliament’s Committee on Legal Affairs written by Jenny Papettas, 15 Nov. 2012 available on internet at (hereafter “Note 2012”), p. 22. 81 Bona 2006, pp. 258, 267; see “Compensation of victims of cross-border road traffic accidents in the EU: comparison of national practices, analysis of problems and evaluation of options for improving the position of cross-border victims”, report prepared by law firm Demolin Brulard Barthélémy for the European Commission and available at: , hereafter “Rome II study on compensation of cross-border victims in the EU 2009”, p. 282. 82 See more of this argument in Rome II study on compensation of cross-border victims in the EU 2009, p. 287. 83 The Rome II study on compensation of cross-border victims in the EU 2009 mentions another disadvantage of the application of the law of place of residence of the victim, which while guaranteeing the victim the level of compensation of their residential country and induces them to return, the rule has in one way or another encouraged unprepared tourists and those who have neglected to research the culture of the country they are visiting. This is however hardly a practical concern because tourists may never think of an accident abroad. 84 See more in the Rome II study on compensation of cross-border victims in the EU 2009, pp. 284–290. This report also mentions the difficulties of a fault-based system in that “this will create problems when fault is shared between the parties to the accident. In that case, it is unclear which law would apply. The result could be a discriminatory outcome to the victim who is the party at fault. In particular, one could expect that litigation on the determination of fault will increase as a means to determine applicable law […]. This will lead to more litigation on the issue of fault as the tortfeasor will contest his or her fault or claim with argument that fault is partly shared so that his or her own laws apply.”

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the context of EU because the insurance premiums are unlikely to increase.85 Furthermore, with regard to cases where the victim, instead of suing the wrongdoer,86 has brought the actions directly against the insurers in the victim’s home court as prescribed by Rome II Regulation87 and the Motor Insurance Directive (MID),88 she can sue in her home court and have her home law applied. It is believed that the insurers are in superior position compared to the average victim;89 therefore, the application of the home law of the victim may not produce unfairness. Nevertheless, the social and legal context of Vietnam is different. The possibility for the victim to bring a direct action against the insurer has not been legislated for, and the financial burden rests mainly on the wrongdoer. Civil liability insurance is set up with a ceiling amount of compensatory money that the insurance company has to pay. If the compensation exceeds that level, the tortfeasor has to bear the rest of the cost. The burden is exacerbated by the fact that the proportion of uninsured vehicles is still high90 although civil liability insurance for vehicles is compulsory. In addition, unlike the EU, the adoption of the connection to the place of the residence of the victim in Vi85 Note 2012, p. 22: “Furthermore, a number of factors would mitigate the potential impact on insurance companies of a change in the law to this effect. Firstly, evidence suggests that in the majority of claims dealt with by insurance companies, liability is not contested. Secondly, evidence suggests that the majority of claims arising out of traffic accidents are low in value. Thirdly, it would seem that the numbers of traffic accidents of a cross border nature represent a small percentage of all traffic accidents. These factors together mean that a change in choice of law rules for direct actions would be unlikely to have a major impact on the way insurers conduct their business.” See also “Feedback Statement Consultation on the compensation of victims of cross-border road traffic accidents in the European Union” of the European Commission of 7 Oct. 2009, available at , p. 7. 86 In which case, the victim will have to sue in a foreign state because Brussels I provides for jurisdiction at the habitual residence of the tortfeasor/defendant (Art. 2) or at the place where the tort was committed (Art. 5(3)), and that court would have to apply the victim’s home law, which is a foreign law. 87 Art. 18 Rome II Regulation: “The person having suffered damage may bring his or her claim directly against the insurer of the person liable to provide compensation if the law applicable to the non-contractual obligation or the law applicable to the insurance contract so provides.” 88 EU Motor Insurance Directive 2009/103/EC L 263/12 16 Sept. 2009. 89 Note 2012, p. 21: “Their knowledge of the system, financial resources and access to information about the law is far superior that of the average victim. This is particularly so since insurers, by virtue of the MID are already exposed to the laws in each Member State and must have appointed a claims representative to deal with claims brought in those countries. The victim on the other hand is likely to be a one-time claimant, struggling to cope with the effects of the injuries or other losses suffered.” 90 See more at the e-newspaper of Đà Nẵng City , visited 10 July 2015.

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etnam may lead to an increase in insurance premiums because of the high number of traffic accidents in the country, which means a relatively high number of cross-border traffic accident claims. Furthermore, it may create unfairness between a local and a cross-border case. In sum, while the habitual residence of the victim may be suitable for a claim by a victim against the insurer, it is not suitable for traffic accident torts or as the general rule because of the Vietnamese legal and social situations. The better solution is to incorporate a specific legislative provision91 containing the content of Recital 33 to the Rome II Regulation92 to stimulate the court’s consideration of the actual circumstances of the victims in crossborder traffic accidents.93 Meanwhile, the habitual residence could be arguably more appropriate for special torts concerning the infringement of personal rights such as defamation.94 4. Proper law approach The lex loci delicti has received the most severe attack in the US, where it was, as a result, abandoned in many states.95 A number of methodologists have proposed many modern approaches, such as Currie’s Interest Analysis or the Better-Law Approach of Leflar.96 The most influential approach is, nevertheless, the “most significant relationship” test in the 2nd Restatement of the Law, Second, Conflict of Laws.97 Its general principle for tort conflicts states that the “rights and liabilities of the parties with respect to an issue in tort are deter-

In Feedback Statement 2012, p. 3, a number of respondents pointed to some uncertainty over the extent to which the restitution in integrum provision will apply as it is only included in the Preamble and not in the legislative provisions of the Regulation itself. 92 Recital 33 Rome II Regulation: “According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seized should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and costs of after-care and medical attention.” 93 Wallis 2009, p. 4 94 One example is Art. 46 Chinese Act 2010 [Infringement of personal rights]: “Liability for infringement, either via Internet or by other means, of personality rights such as the right to respect of a person’s name, image, reputation and privacy, is governed by the law of the aggrieved party’s habitual residence.” Another example is Article 19 Japanese Act 2006: “Notwithstanding Art. 17, the formation and effect of claims arising from the tort of defamation of another shall be governed by the law of the injured person’s habitual residence […]”. Meanwhile, defamation is excluded from the scope of Rome II. 95 Symeonides 2006, p. 63. 96 Dicey et al. 2012, § 35-005, p. 2197. 97 Symeonides 2006, pp. 65, 88: “Second Restatement is by far the most popular among the modern methodologies.” 91

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mined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties.”98 It should be understood that the most significant relationship approach guides the court to identify a country out of those relevant factors contained in § 145(2) of the 2nd Restatement of the Law, Second, Conflict of Laws under the policy and interest considerations laid down in § 6. The operation of this approach contains the assessment of substantive local laws. To put it in another way, it is more policy-oriented. Therefore, it is different from the continental rule of “closest geographic connection”, which seeks to ascertain the closest country in terms of the quantity and the quality of the factors.99 The US conflicts revolution is reflected in the European Parliament Position of 6 July 2005100 through the escape clause of the general rule (Art. 4(3)). A list of factors is set out for the consideration of the exception, three of which manifest the evaluation of policies: “the need for certainty, predictability and uniformity of result”, “protection of legitimate expectations”, and “the policies underlying the foreign law to be applied and the consequences of applying that law”. The Parliamentary Report101 even suggested deleting many particular tort rules as a general rule with a flexible escape clause can accommodate the variety of torts.102 Nevertheless, the proposal of the European Parliament was rejected by the Commission and, as can be seen, the Rome II Regulation uses the lex loci damni rule. Meanwhile, the 2nd Restatement is said to give the judge unlimited discretion because although the general rule is followed by separate rules for particular torts103 or individual issues,104 the presumptive rules they provide can be escaped easily by the accompanying exception.105 In addition, it can be noticed that those presumptive rules prefer the place of injury,106 by giving

Restatement, Second, Conflict of Laws § 145(1) (1971) [The general principle]. Hay et al. 2010, § 17.24, pp. 843–844; Symeonides 2006, p. 33. 100 Position of the European Parliament adopted at first reading on 6 July 2005 with a view to the adoption of Regulation (EC) No.../2005 of the European Parliament and of the Council on the law applicable to non-contractual obligations (“Rome II”), P6_TA(2005) 0284. 101 Report on the proposal for a regulation of the European Parliament and of the Council on the law applicable to non-contractual obligations (“Rome II”) (COM(2003) 0427 – C5-0338/2003 – 2003/0168(COD)), Committee on Legal Affairs, Rapporteur: Diana Wallis, hereafter “Report of European Parliament 27 June 2005 on the Proposal for Rome II Regulation”. 102 Art. 4(3)(c), (d), (e). 103 Restatement, Second, Conflict of Laws Title B. Particular Torts §§ 146–155. 104 Restatement, Second, Conflict of Laws Title C. Important Issues §§ 156–174. 105 Symeonides 2006, p. 91. 106 Hay et al. 2010, § 17.25, p. 845. 98 99

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this place a primary reference107 or by particularly pointing to this place in a second subsection.108 While the 2nd Restatement starts with a flexible approach to evaluating the policies of the countries relevant to the tort, it also attempts to promote precision through many particular rules. Conversely, the Rome II Regulation starts with a presumptive general rule to target predictability and then seeks to attain flexibilisation through the escape clause of closer connection and many particular tort rules. The difference between them, which is relevant to the circumstances of Vietnam, is that the former method requires capable judges who could produce justified individual decisions while taking advantage of the discretion provided. Therefore, the lack of a ready-made, clear-cut solution109 may cause difficulties for Vietnamese judges and lead to non-uniform application by the different local courts. In fact, the American conflicts revolution can hardly provide a suitable model for a country110 like Vietnam because of its particular character of favouring flexibility at the expenses of predictability of court decisions.111 Rather, the European approach which aims at a balance between predictability and flexibility, by employing the techniques of presumption and rebuttal,112 is more appropriate. Accordingly, the Vietnamese legislature should not approach tort conflicts from the general principle of policy analysis, but rather with a presumptive rule, which can be displaced by the rebuttal of a closer connection.

For example, Restatement, Second, Conflict of Laws § 146 [Personal injury], which provides that “the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principle of § 6 to the occurrence and the parties […]”. See Hay et al. 2010, § 17.25, p. 845. § 146 makes primary reference to the law of the place of injury. 108 See Hay et al. 2010, § 17.25, p. 845: “The same preference for the local law of the place of injury is expressed with respect to the following issues”: § 156, § 157, § 158, § 159, § 160, § 162, § 164, § 165, § 166, § 172. However, these sections refer first to § 145 (the general ‘most significant relationship’ test) and, “in a second subsection, particularise that the ‘applicable law will usually the local law of the state where the injury occurred’.” 109 Shapira 2000, p. 689. Even in Israel, the country that has traditionally followed the British and American proper law approach, the “Supreme Court expressed gross dissatisfaction with what it considered as chaos in the English and American choice-of-law jurisprudence” in tort cases. 110 For example, in Japan, “no traces of American Conflicts Revolution can be found”. See Basedow 2008a, p. 17. 111 Basedow 2008a, p. 17. 112 Basedow 2008a, p. 18. 107

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IV. Proposal for Vietnamese Law IV. Proposal for Vietnamese Law

1. Place of harm as the primary rule First, a proposal for a general rule for tort conflicts for Vietnam should exclude the double actionability rule because the rule is out-dated and gives too many advantages to the defendant. The policy analysis approach is also not suitable. The legal tradition of Vietnam has favoured statutory rules over court discretion. The chaotic results of a policy-oriented methodology may be exacerbated by the fact that most Vietnamese judges are inexperienced with international tort cases. The quest for predictability and consistency of court decisions in Vietnam will rather support the model of presumption and rebuttal. Meanwhile, the place of residence of the victim is not an appropriate connecting factor for the general rule for tort conflicts. In fact, Vietnam records a high number of traffic accidents and the country, despite that, wants to promote tourism. The designation of the law of the place of residence of the victim can therefore ensure that a visiting victim will receive compensation in accordance with the cost level in his/her country. However, the concern of Vietnam relates to the increase of insurance premiums which will result in an even higher number of uninsured vehicles, and the financial burden on the wrongdoer which may in turn lead to the failure to fully compensate the victim. The place of residence of the victim should therefore not be the connecting factor for the general tort rule. In that context, the popular lex loci delicti rule is clearly the solution. Therefore, the Vietnamese version of the ubiquity rule set out in Art. 773(1) VCC 2005, which does not indicate whether the victim or the court is entitled to choose between the law of the place of acting and that of the place of injury when damage occurs in different countries, is no longer appropriate. Even if the rule is upgraded to the version of the German ubiquity rule, it would still not be the best solution because it cannot ensure legal certainty in the finding of the applicable law. The suitable place for it might be in environmental damages. In the meantime, the place of acting places the victim in an adverse position as they may receive an unexpectedly low level of redress. Although its role could be maintained in certain specific torts, the suggestion of some Vietnamese authors of employing it in place of the ubiquity rule should not be followed. In conclusion, the most appropriate solution for Vietnam is the place of harm, which ensures the proper protection of the victim whilst not undermining the expectations and the interests of the tortfeasor.

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2. The suitable connecting factor for the tort conflicts rule from the perspective of the international jurisdiction of Vietnamese courts over tort cases The international civil jurisdiction of the Vietnamese courts is regulated by Art. 410 VCPC 2004. Paragraph 1 of Art. 410 provides that the Vietnamese courts’ jurisdiction to resolve civil cases and/or matters involving foreign elements shall be determined under the provisions of Chapter III VCPC 2004, entitled “Court’s Jurisdiction”. Unlike paragraph 1, paragraph 2 of Art. 410 lists the situations that fall into the jurisdiction of Vietnamese courts, among which the following are relevant to tort cases: – Art. 410(2)(a) “The defendant is a foreign agency or organization, which is headquartered in Vietnam or the defendant has a managing agency, branch or representative office in Vietnam”; – Art. 410(2)(b) “The defendant is a foreign national or stateless person who permanently resides, works, lives in Vietnam or has assets in the Vietnamese territory”; – Art. 410(2)(d) “Civil cases or matters related to civil relations which are established, changed or terminated on grounds prescribed by Vietnamese law, or which happen in the Vietnamese territory but involve at least one party being a foreign individual, agency or organization”; – Art. 410(2)(e) “Civil cases or matters related to civil relations which are established, changed or terminated on grounds prescribed by foreign laws or which happen in foreign countries, but involve only parties being Vietnamese citizens, agencies or organizations and either the plaintiff or the defendant resides in Vietnam”. The current literature on Vietnamese international jurisdiction is sparse and insufficient. The following analysis refers to the assessment of one Vietnamese author.113 According to him, apart from the bases of jurisdiction provided by Art. 410(2), the international jurisdiction of Vietnamese courts, which is relevant to tort cases, could materialise by referring to provisions of Chapter III of the VCPC 2004, as prescribed by Art. 410(1). Consequently, the first reference of this type is made to Art. 35(1)(a) of the VCPC 2004, by which a Vietnamese court has jurisdiction over international disputes (including torts) when the Vietnamese defendant resides, works or has its headquarters in Vietnam.114 The second reference is to Art. 36(1)(a), which provides that a Vietnamese court has jurisdiction over cases where the foreign defendant has properties (which could include a bank account) in Vietnam.115 The third reference is made, specifically for tort disputes, to Art. 36(1)(d), by which the Vietnamese courts would have 113 114 115

Đỗ Văn Đại / Mai Hồng Quỳ 2010, pp. 83–107. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 100. Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 105.

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jurisdiction over tort disputes in which the plaintiff resides, works or has its headquarters in Vietnam.116 It should be noticed that of the first and the second references (which are applied to civil disputes including tort, and have supporting case law), most of them are regarding commercial contracts.117 There have not been many noncontractual obligation cases where jurisdiction is found under the two references. The second reference, in fact, should be read accompanied with the situation listed in Art. 410(2)(a) to grant jurisdiction to the Vietnamese court at the location of the defendants’ property when the plaintiff lacks information about the address of the defendant. It therefore should not be seen as a separate base of jurisdiction but only as supplement to the base under Art. 410(2)(a). Regarding the third reference as being specific to tort, one has to be cautious. This type of jurisdiction is put forward by one author118 but has not been instanced in any reported case so far. This basis of jurisdiction, if advanced together with the connecting factor of the place of residence of the victim (plaintiff) for the purpose of applicable law, would unduly favour the victim plaintiff. He can sue at home and have his home law applicable to a tort that may have happened in another country and with a foreign tortfeasor.119 The tortfeasor is at an unfavourable position because he may not be able to foresee the application of the law of the place of residence of the victim accompanied with the jurisdiction of that court. From the view of a balance between the parties, this practice should not be preferred. The present writer personally disapproves of the third reference above. However, in case Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 659. Regarding the first reference, see Judgment No. 401/2007/KDTM-ST dated 6 Mar. 2007 of the Ho Chi Minh City Court regarding a case between a plaintiff (Singapore company) and a defendant (a Vietnamese company) where the court found that it had jurisdiction on the grounds that the Vietnamese defendant had its headquarters in Ho Chi Minh City. Or Judgment No. 2281/DSST dated 29 Dec. 2003 of Ho Chi Minh City Court in a case where the plaintiff was a Hong Kong company and the defendant a Vietnamese company with its headquarters in Ho Chi Minh City. Or Judgment No. 256/KTST dated 21 Oct. 2004, Judgment No. 300/2005/KDTM-ST dated 3 Oct. 2005 of Ho Chi Minh City Court. For jurisdiction over a Vietnamese citizen with habitual residence in Vietnam, see Judgment No. 25/2003/HĐTP-DS dated 25. Aug. 2003 of the Supreme Court, Judgment No. 08/QĐ-HGT dated 11 July 2001 of the Thua Thien Hue Provincial Court, and Judgment No. 367/DSPT dated 29 Nov. 2004 of the Supreme Court at Ho Chi Minh City. As regards the second reference, see Judgment No. 37/2006/KTTM-ST dated 14 and 20 Apr. 2006 of the Hanoi City Court regarding a case between a defendant (Chinese company (Summit)) and a Vietnamese plaintiff based on the fact that the defendant had a L/C in a Vietnamese bank. 118 This author is Đỗ Văn Đại, who holds a PhD from France and whose proposition is thus influenced by the corresponding French doctrine of jurisdiction established on the basis of the plaintiff being French. 119 So far, under EU law, this possibility is only proposed for traffic accidents where the victim sues the insurer directly in the victim’s home court. See Note 2012, p. 21. 116 117

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it might be taken up by the courts, in order to avoid a manifestation of excessive privilege to the plaintiff,120 “the place of residence of the victim” has another negative vote. There may be concern that these references are not legitimate because those provisions in Chapter III VCPC 2004 are designated for territorial jurisdiction. The idea of Art. 410(1) in fact should be understood as to further allocate the lower court levels when the international jurisdiction has materialised in accordance with the list of bases under Art. 410(2). Nevertheless, there is reason to believe that such references are needed, especially with regard to the first as it grants Vietnamese courts with international jurisdiction over Vietnamese defendants (and this basis has not been provided by any of the bases in Art. 410(2)). If this reference is excluded, Art. 410 cannot capture the numerous cases where jurisdiction is assumed based on the sole fact that the Vietnamese defendant is resident in Vietnam. Moreover, the fact that Art. 410(1) is placed before Art. 410(2) may mean that Art. 410(1) implies more than a detailed territorial allocation in respect of the lower courts, in which case it would have been placed in the second paragraph instead. At the same time, while the second reference appears to be a detailed supplement to the bases of jurisdiction, the third reference should however be excluded because of its far-reaching character. Returning to the list of situations falling into the jurisdiction of a Vietnamese court, one can observe that international tort jurisdiction is mainly found for the place of residence of the defendant (both Vietnamese and foreigners), and the place of the tortious act (if we exclude the third reference above). With this analysis in mind, we can now elaborate on those mentioned approaches in order to either confirm, or state concerns about, the proposed deployment of lex loci damni as the applicable law for general torts in respect of the situation of Vietnam. We can start with the place of acting. The application of this law obviously brings the lex fori to the court whose jurisdiction is instituted based on the place of acting – of the tort – being in the territory of Vietnam. Since it is more than apparent that a Vietnamese court is most familiar with its own law, this connecting factor has the advantage of ease of application – a facilitation that is really at the heart of legal proceedings of international disputes in Vietnam. Moreover, this place often coincides with the place of residence of the defendant. However, if we take the criteria of bringing the lex fori to a Vietnamese court, the ubiquity approach is the best solution, as with the right to choose the law at hand, Vietnamese courts would make the best of this ambiguous conflict rule and resort to their own law as often as possible. Even In EU law, ECJ cases such as Case C-220/88 Dumex France v Hessische Landesbank [1990] ECR I-49; Case 364/93 Marinari v Lloyds Bank Plc [1995] ECR I-2719 disapprove such a coincidence. 120

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if the right to choose is granted by statutory law to the victim/plaintiff, since this right would hardly be recognised and chosen by the victim, the court would take the chance to interpret this as an implied choice in favour of the lex fori. The question is whether the application of lex fori is always an optimal solution for tort conflicts. If the answer is yes, apparently there is no need to formulate any objective choice of law rule for tort. Instead, a simple rule firmly stating the application of the lex fori is the only one needed, or even no conflict rule needs to be codified. In the context of these arguments, one should consider the application of the most approved candidate, the lex loci damni. At first glance, this law does not coincide with any of the bases of jurisdiction. However, one can imagine that this place can in fact be the same place as the place of acting in a number of cases and also as the place of residence of the defendant in another number of cases. That means it can still bring the application of lex fori to the court in certain cases, but in no way all (the situation may be accused of creating forum-shopping), and at the same time it strikes more of a balance in respect of the defendant (than the place of residence of the victim) and fosters certainty (at least when compared to the ubiquity approach). Overall, the place of injury proves to be the good solution when considered from the perspective of jurisdiction of Vietnamese courts. When applying it to the mentioned bases of jurisdiction, it helps to find a compromise between the advantages and disadvantages of the place of acting, the place of residence of victim, and the ubiquity approach. It is not extreme like those candidates, but it provides a balanced position, which could help the courts to take advantage of the chance of applying the lex fori to certain cases and at the same time avoid the somewhat arrogant instant application of lex fori and strike a balance between the interests of the parties involved. 3. Direct/indirect damage and locating direct damage Besides employing the place of damage as the connecting factor instead of the place of acting, Art. 4(1) Rome II also makes irrelevant the place of any indirect or consequential damages that occur in the chain of the tort. Recital 17 makes this clear in stating that “the law applicable should be determined on the basis of where the damage occurs, regardless of the country or countries in which the indirect consequences could occur.” This is the so-called “first impact rule”. a) Differentiating between direct and indirect damage The task of distinguishing between direct and indirect damage is not always easy. However, it has been done in the context of jurisdiction under Art. 5(3) of

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the Brussels Convention. In Bier BV v Mines de Potasse,121 the ECJ has interpreted “the place where the harmful event occurred” in Art. 5(3) to cover both “the place where the damage occurred” and “the place of the event giving rise to it”. Regarding whether the former covers also the place of consequential damage, the ECJ has given a negative answer in Dumex France,122 Marinari,123 and Kronhofer v Maier.124 Accordingly, places of damage such as “financial losses sustained by second victim in another state”125 and “financial or other non-material consequences following the initial damage suffered by the victim in another contracting state”126 are in fact places of indirect damage. Therefore, the courts of these places, which usually are the place of domicile of the plaintiff, do not have jurisdiction over claims against the tortfeasor. The consistency between Brussels I and Rome II required in Recital 7 Rome II suggests that those ECJ cases could be transposed to the context of Art. 4(1) Rome II to assist in clarifying the distinction between direct and indirect damage. That means that those consequential damages should be treated as irrelevant for the determination of the applicable law. To put it in another way, the law applicable to these damages should be the same law that is designated through direct damage.127 In particular, the transposition by referring to Marinari v Lloyds works well for “financial and other non-material consequences sustained elsewhere”. This is also the case put forward in the EU Commission’s Explanatory Memorandum accompanying the Rome II Proposal128 in order to exclude the indirect damage for ascertaining the applicable law according to Art. 4(1). 121 Case 21/76 Handelskwekerij G.J. Bier BV v Mines de Potasse d’Alsace SA [1976] ECR 1735. 122 Case C-220/88 Dumex France SA and Tobacoba v Hessische Landesbank [1990] ECR I-49. 123 Case C-364/93 Marinari v Lloyds Bank Plc [1995] ECR I-2719. 124 Case C-168/02 Kronhofer v Maier [2004] ECR I-6009. 125 For example, the facts of Dumex France v Hessische Landesbank [3]: Dumez and the other claimants (established in France) sought compensation for the damage which they claimed to have suffered owing to the insolvency of their subsidiaries established in Germany, which was brought about by the suspension of a property-development project in Germany for a German prime contractor, allegedly because of the cancellation by the German bank defendant (Hessische Landesbank) of the loans granted to the prime contractor. 126 For example, the facts of Marinari v Lloyds Bank Plc [3]: Mr Marinari, the claimant, who was resident in Italy, had presented promissory notes to a Manchester branch of Lloyd’s bank. This had led to the promissory notes being sequestrated and the claimant being arrested. After his release, he sued Lloyd’s bank in Italy, claiming not only payment of the face value of the promissory notes but also compensation for the damage he claimed to have suffered as a result of his arrest, breach of several contracts and damage to his reputation. 127 Dickinson 2008, §§ 4.36–4.45, pp. 313–318. 128 COM(2003) 427 final.

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The first case on Art. 4(1) Rome II, however, is an English decision, where the claimant suffered financial damage in England after an accident in Spain; this decision confirmed the exclusion of the place of indirect damage when the court decided that “the applicable law under Art. 4(1) was the law of the country in which the damage occurred, and that damage was the injury and consequential loss and damage suffered at the hands of the tortfeasor.”129 Meanwhile, as regards material damages such as the “deterioration in the physical condition of the person or property”, the influence of Marinari (whose views are prescribed primarily for financial damage) seems less obvious. Moreover, Recital 17, in stating that “in cases of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged”, may suggest that personal injury or damage to property, whether immediate or reflective, should be treated as direct damage. Nevertheless, Marinari may have had another influence. The ideology expressed by the ECJ in Marinari, Dumez and Kronhofer is that the treatment should not favour the victim unduly. 130 In addition to this tendency, the exclusion of these consequential damages, such as the deterioration of health status after an accident in another country, enhances foreseeability of the applicable law131 – an aim set up in recital 16 Rome II Regulation.132 With regard to damage suffered by second victims, the transposition from Dumez suggests subjecting them to the law of the place of damage to the first victim. Accordingly, where the parent company established in one country suffers damage because of the insolvency of their subsidiary in another country (like Dumez), the damage sustained by the parent company will be held to be consequential damage. Similarly, where a person is injured (and suffers losses) in a road accident in one country and the case involves defendants in another, the place of damage under Art. 4(1) is the place of accident rather than the place of residence of those defendants. 133 Nevertheless, it should be noted that Dumez in fact shed light primarily on financial damage suffered by the second victim. Therefore, it is difficult to agree on the transposition as regards cases of consequential material damage suffered by the second victim when that damage does not flow directly from the original tortious act or the second victim does not have a relationship to the first victim. For example, a person, after being injured in an accident in country A, becomes mentally ill in country B and injures another person in that country. Recital 17 appears to propose the treatment of the injury suffered by the second victim as the first damage for the 129 Jacobs v Motor Insurers Bureau [2010] EWHC 231 (QB), [2010] 1 All ER (Comm.) 1128, [40]. 130 Marinari v Lloyds Bank Plc, [13]; Dumex France v Hessische Landesbank, [19]. 131 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 30. 132 Dickinson 2008, § 4.38, p. 315. 133 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 96.

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purpose of applicable law. In that situation, Dickinson expresses his confidence in favour of the Dumez solution only for “financial and other nonmaterial damage that reflect or flow from the primary victim’s damage” and leaves open the possible different treatment between the two types of damage.134 On the other hand, Plender / Wilderspin are more determined. They focus on the lack of the consequent link between two losses sustained by the first and second victim and assert that the applicable law for the claim of the second victim should be the law of the place of secondary damage. 135 The fact that the applicable law would be unforeseeable to the tortfeasor of the accident is put forward by Plender/Wilderspin as a matter of substantive law along with the concern of “novus actus interveniens which breaks the chain of causation”.136 In fact, the application of the law of the place of the second victim’s damage also makes the court decision less foreseeable, which is inconsistent with Recital 16 Rome II. Moreover, if the issues of substantive law such as the chain of causation are irrelevant for the conflict task as pointed out by the ECJ in Marinari, 137 the focus on the two criteria of causation as favouring the law of the place of the second damage must fail. In conclusion, Recital 17 probably is not intended to raise consequential material damage to the level of direct damage for this purpose. Therefore, the first impact rule under Art. 4(1) Rome II should be interpreted in the sense of maintaining the consistency between rules of applicable law and jurisdiction and the foreseeability of the applicable law, even in peculiar cases concerning material damage sustained by a second victim. Considered from the perspective of Vietnam – and bearing in mind that the place of damage is only a proposed rule and that there is no parallelism between this connecting factor for applicable law and the connecting factors for jurisdiction (in fact as mentioned earlier, Vietnamese international jurisdiction for tort is established mainly based on the place of residence of the defendant and the place of acting) – unless the law of jurisdiction is changed one day, the need for a unified interpretation and transposition between jurisdiction and applicable law as regards the place of direct damage is less vital. Nevertheless, the quest of certainty and foreseeability of the applicable law suggests that the court should treat financial loss or consequential injury sustained elsewhere by the first or second victim as irrelevant. b) Locating damage (direct) The second task in applying Art. 4(1) Rome II, as well as any other rule employing the lex loci damni, is to locate the damage (the direct damage, after 134 135 136 137

Dickinson 2008, §§ 4.43, 4.45, pp. 317, 318. Plender/Wilderspin 2009, § 18.012, p. 501. Plender/Wilderspin 2009, § 18.012, p. 501. Marinari v Lloyds Bank Plc [18].

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excluding the consequential) in a country. This task may involve evidential difficulties in some peculiar cases.138 (1) Personal injury and damage to property As regards personal injury and damage to property, four types of cases where difficulties usually arise are cases of damage to goods in transit, cases of exposure to harmful substances, cases concerning an unborn child, and personal injury resulting from a deliberate or negligent misstatement. The most discussed case in the first situation is Reunion europeenne SA v Spliethoff,139 in which the goods were damaged when the ship passed through the territory of many countries as well as the high seas; therefore, it was unclear as to the point in time and the place where the damage occurred. The ECJ in fact has decided to refer to “the place where the actual maritime carrier was to deliver the goods”  140 as the place where the damage arose for the purpose of jurisdiction according to Art. 5(3) Brussels Convention. The interpretation is believed to be able be transposed to Art. 4(1) Rome II to identify the place where the damage occurs because it fits with the policies of Rome II, as expressed in Recitals 6, 14, and 16, that require the courts to rely on an objective ascertainable factor that is most closely connected to the damage.141 On the other hand, there is suggestion of avoiding a fictitious or fortuitous locus of damage by resorting to the escape clause in Art. 4(3). Of course, Art. 4(3) for this purpose should be given a broad interpretation so that it can bypass the need for the place of damage under Art. 4(1) to have been ascertained,142 which the systematisation of Art. 4 requires.143 The second situation involves a claimant being exposed to a harmful substance (asbestos or noxious dust) in one (or more countries), but the disease develops in a second country when he/she returns home,144 and is possibly even diagnosed in a third country. There has been no relevant ECJ case even for jurisdiction purposes. The policy of Rome II for an objectively ascertainable factor leads to the first country (the country of exposure)145 as the country where the injury occurs.146 Dicey et al. 2012, § 35-025, p. 2210; Dickinson 2008, § 4.47, p. 319. Case C-51/97, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV [1998] ECR I-6511. 140 Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV [33-5]. 141 Dicey et al. 2012, § 35-025, p. 2210; Dickinson 2008, § 4.54, p. 322. 142 For the need of the country under Art. 4(1) or (2) to be ascertained before the escape clause intervenes, see MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 8. 143 Plender / Wilderspin 2009, § 18-23, p. 506. 144 For example, Puttick v Tenon Ltd [2008] HCA 54, (2008) 238 CLR 265. 145 Dicey et al. 2012, § 32-025, p. 2210 at fn. 140 suggests the country of first exposure in case of exposure in many countries such as in Puttick v Tenon Ltd. 146 Dicey et al. 2012, § 35-026, p. 2211; Dickinson 2008, § 4.58, p. 324; Plender /  Wilderspin 2009, §§ 18-21, 18-60, pp. 505, 519. 138 139

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The third difficult situation is in regards to an unborn child. The claim could be brought by the parents of a child conceived as a result of a failed treatment of sterilisation or vasectomy. The suggested country where the damage occurs under Art. 4(1) Rome II Regulation is the country where the child was conceived.147 That implies that the conception of the child is technically the direct damage for the purpose of Art. 4(1). As a result, the economic loss suffered by the parents in bringing up the child or the injury suffered by the mother during the pregnancy could all be considered to be indirect damage and subject to the law of the place of conception. The crucial point is to identify the damage as the conception of the child and to consider it as direct damage. Otherwise, if the economic loss of the parents is taken as the direct damage, it may lead to the location of the parent’s account148 or the place where the mother was when she became aware of the pregnancy149 or the place of habitual residence of the mother.150 However, this solution meets with the problem of morality when labelling the conception of a child as damage.151 To avoid this attack, it is suggested that the name be changed to a loss of autonomy in matters of family planning and upbringing.152 The second concern is that the place of conception may be fortuitous, for example, when the parents were travelling. It is envisaged that this is the case under which the escape clause under Art. 4(3) operates.153 The fourth difficult situation concerns personal injury resulting from a deliberate or negligent misstatement. The solution could be sought in a decision of the German Bundesgerichtshof of 2008,154 which involved a case where the doctor’s misstatement was given in Switzerland but the place where the medication was taken and also the place where the harm manifested was in Germany. The court decided that the place of damage under Art. 5(3) Lugano Dickinson 2008, § 4.65, p. 326. This is the solution of the Dutch case of Rechtbank Middlelburg, NIPR 2003 No. 53, 104. This place may have little connection to the tort and may therefore be fortuitous. 149 This is the solution of another Dutch case, Gerechthof’s-Gravenhage, Judgment of 14 Oct. 2004, NIPR 2005 No. 50. See the English summary of the decision at , visited 18 July 2015. The court ruled that “as far as material damage is concerned, the place where the child was conceived and, as far as non-material damage (arising from the breach of the right to self-determination) is concerned, the place where the person in question was when she became aware of the pregnancy.” This solution favoured the place of discovery and therefore cannot be reconciled with the ECJ case of Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV. 150 This solution is not in line with the ECJ case of Marinari v Lloyds Bank Plc because it may lead to the recognition of the jurisdiction of the courts of the plaintiff’s domicile. 151 Dickinson 2008, §§ 4.62, 4.63, p. 326. 152 Rees v Darlington Memorial Hospital [2003] UKHL 52; [2004] 1 AC 309, [123] (Lord Millett). 153 Dickinson 2008, § 4.61, p. 325. 154 BGH 27 May 2008 – VI ZR 69/07, EuZW 2008, 447. 147 148

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Convention was in Germany.155 If this position is transposed to Art. 4(1) Rome II Regulation, the place where the damage occurs for the purposes of choice of law could be the place where the medication was taken and where the harm manifests itself.156 Where these two places differ, it is suggested that preference should be given to the place where the medication was taken.157 (2) Economic loss The task of locating damage in a country seems to be most difficult in the case of economic loss as direct damage.158 The difficulties result from the fact that economic loss is non-material;159 moreover, there is a wide variety of circumstances that makes it hard to generalise a formula.160 Nevertheless, we cannot bypass this step and resort directly to the escape clause because this treatment is inconsistent with the principle of foreseeability of court decisions as stated in Recital 16 Rome II Regulation. With that objective in mind, what can be done is to develop a criterion that marks the crucial point in the chain of tortious events that leads to economic loss. In cases of negligent or fraudulent misrepresentation, this approach involves a “reversibility test”, which means that damage is only sustained from the point that the adverse consequences on the victim are irreversible.161 This test will easily eliminate the place where the misrepresentation is received. After that, the reliance on the misrepresentation may consist of a chain of acts carried out by the victim. However, damage is incurred only in the place where the loss is inevitable.162 This approach could be illustrated by certain examples. In the first scenario,163 the claimant, in reliance on a misrepresentation, effected a payment164 or Bach 2010, § 20, p. 73. Plender / Wilderspin 2009, § 18-68, p. 523. 157 Plender / Wilderspin 2009, § 18-69, p. 524: It is noticed here that if there is a slight variation in the facts of the case the result could be quite different. That is to say, the above summary is nothing but guidance for locating the physical injury resulting from the misstatement. The solution therefore depends on the facts of each case. 158 Dicey et al. 2012, § 35-026, p. 2211: “economic loss not consequent on personal injury, death or damage to tangible property”; Lehmann 2011, p. 531: “Finding the geographical location of economic loss seems as impossible as nailing jelly to the wall.” 159 Lehmann 2011, p. 531; Dickinson 2008, § 4.66, p. 327. 160 Dicey et al. 2012, § 35-026, p. 2211. 161 Dickinson 2008, § 6.47, p. 328. 162 Plender / Wilderspin 2009, § 18-078, p. 528. 163 There are no ECJ decisions on the application of Art. 5(3) Brussels to a case of negligent misstatement, but there are relevant English decisions. 164 Minster Investments Ltd v Hyundai Precision & Industry Co Ltd [1988] 2 Lloyd’s Rep 621. For the purpose of jurisdiction under Art. 5(3) Brussels Convention, the court reasoned that damage was sustained in England as that was where the payment for the goods was made. 155 156

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released goods to the buyer165 to the benefit of a third party. The place of damage under Art. 4(1) Rome II Regulation166 is the country where the victim’s bank account was held167 or the location of the goods prior to the transfer.168 In the second scenario, the victim, on the faith of the misrepresentation, enters an unfavourable contract. The suggested solutions are however different depending on whether the detrimental contract is concluded with a third party or with the tortfeasor. In the former circumstance, the most appropriate place where damage should be taken to arise is the place where the claimant “takes steps necessary on his part to commit to the transaction”,169 and in doing so, he has “put himself out of his power to prevent the loss”.170 Dickinson, in the supplement work in 2010, uses the factually ascertainable criteria “where the victim (or his representative) took the final step necessary to create a legally binding obligation”.171 That means in a set of steps taken by the victim to commit itself to the detrimental agreement, what counts is where it takes the final step where the loss is no longer revocable by its will.172 It should be noted that this place is not necessarily the place where the contract 165 Domicrest v Swiss Bank Corporation [1998] EWHC 2001 (QB). Also for the purpose of jurisdiction under Art. 5(3) Brussels Convention, the court held that damage occurred in Switzerland and Italy, where the goods were released without prior payment, and not in England, where the decision was taken to release the goods or where the victim maintained its bank account (because the moneys due in accordance with the payment were not paid). 166 The following solutions are suggested also by Dicey et al. 2012, § 35-026, p. 2211. 167 Dickinson 2008, § 4.67, p. 328 suggests more clearly that “this country should be that in which the branch at which the account is held is situated or, in the case of Internet or other delocalised accounts, the bank’s habitual residence determined in accordance with Art. 23 Rome II.” Bach 2010, § 34, p. 80 suggests further that if the victim pays in cash, it is the place of actual payment. Lehmann 2011, p. 549 suggests that if a financial instrument constitutes the loss, the place of loss is the place of the intermediary with which the instruments were registered. For the place of damage in prospectus liability, see Garcimartín 2011. 168 Dickinson 2008, § 4.67, p. 328 notes that it is not the place where the victim gives instructions for its transfer. Bach 2010, § 35, p. 80 agrees with this and inserts the place where the carriage originated, i.e., the place of storage. 169 Dicey et al. 2012, § 35-026, p. 2211. 170 Plender / Wilderspin 2009, § 18-072, p. 525 fn. 170; see Maple Leaf v Rouvroy [2009] EWHC 257 (Comm), 214: “Once Maple Leaf (the claimant) had put it outside its control to prevent the loss. The harmful effect occurred. It is beside the point whether the contract was concluded when Maple Leaf sent its communication or when it was received.” See Art. 5(3) Brussels Regulation. See also Raiffeisen Zentral Bank v Tranos [2001] ILPr 85. 171 Dickinson 2010, § 4.67, p. 43. 172 This criterion was used in an English case, decided under PILA 1995 Morin v Bonham v Brooks EWCA [2003] Civ. 1802, in which the claimant purchased a car in Monaco in reliance on misleading statements made in England. The court held that the place where the damage occurred was in Monaco because it is the place where the misrepresentation was irrevocably acted upon. See Plender / Wilderspin 2009, §§ 18-073–18-076, pp. 527–528.

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was concluded173 because this place leads to fortuitous results when the parties conclude the contract in an international airport. Moreover, it meets with the different legal theories of whether the contract is concluded in the country of offer or of acceptance in the case of a contract entered into in absentia.174 The place where the contractual obligation has to be performed by the victim175 should not be taken because the victim has already incurred damage at the point he/she subjects himself to the transaction. The performance of the unfavourable obligations at a later point should be treated as consequential damage as in the case of exposure to a harmful substance mentioned in the part on physical injury above.176 Moreover, this place generally is no less difficult to locate than the place of contracting.177 If the induced transaction is with the tortfeasor, the point of effect of damage should be prolonged beyond the place of conclusion of the contract until the point in time and the place where “the victim or his or her representative irreversibly incurred expenditure178 or liability, or in which he lost control of assets179 or other resources in the performance of the contract.”180 This place Dicey et al. 2012, § 35-026, p. 2211; In the main work, Dickinson 2008, § 329 suggested the place in which the contract was concluded and argued that “although this fact maybe open to manipulation and does not in any event appear to provide a particular powerful connecting factor, it can be objectively ascertained and seems preferable (for example) to the place where the third party may enforce the contract against the victim or the place of performance of the victim’s obligations towards the third party”. 174 See more on this analysis in Bach 2010, § 40, p. 82. With these potential difficulties, the chance for the place of damage being displaced by the escape clause is higher, which is not consistent with the foreseeability objective stated in Recital 16 of the Rome II Regulation. 175 Suggested by Lehmann 2011, p. 548. 176 Bach 2010, § 37, p. 81. 177 Lehmann 2011, p. 549 also concedes this fact but reasons that the courts are familiar with the problem of locating the place of performance of contract in the context of the Rome I Regulation and the case law. 178 Alfred Dunhill Ltd v Diffusion Internationale de Maroquinerie de Prestige SARL [2002] 1 All ER (Comm) (EWHC), in which: AD, an English company selling luxury goods, brought an action against L, an Italian company, alleging that L had falsely represented that its fabrics would be suitable for AD’s goods and that in reliance thereon it had instructed the manufacturer of the goods, a French company, to enter into a contract with L. Under Art. 5(3) Brussels Convention, the court held that the damage had occurred in France, to where the fabric had been delivered, where production delays had occurred and where the cost of obtaining alternative fabric had been incurred. 179 Hillside (New Media) Ltd v Baasland [2010] EWHC 3336 (Comm), [2010] 2 CLC 986 is an English case regarding Art. 4 Rome II Regulation. When B first transferred funds to his online account, he became a creditor in respect of the funds so deposited. He suffered loss only when he was allowed to use those funds to place unsuccessful bets. At that point the loss that he suffered was that the value of the chose in action represented by the funds in the account was reduced. 173

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responds to the demand of the irreversibility test because this is the point when the claimant can no longer prevent the loss.181 From the time of conclusion of the contract to this moment, the victim can suspend its obligations arising from the detrimental contract with a misrepresentation defence.182 The “irreversible test” could be relied on in other cases such as misappropriation,183 inducing a breach of a contract,184 or an act of competition that exclusively affects the interests of a specific competitor.185 Nevertheless, the test may produce arbitrary results in some cases due to the diversity of facts, which renders high the chances that the escape clause in Art. 4(3) Rome II Regulation will be applied.186 (3) Suggestion for Vietnam Although the place of damage is difficult to locate in many cases, a judge should not bypass this step and resort directly to the escape clause because the systematisation of the general rule must be respected. In order to ascertain the most appropriate country where the damage occurred in certain hard cases of personal injury and damage to property, a court should identify, in a chain of facts, the objective ascertainable factor which is closely connected to the injury or the damage suffered. As regards direct economic loss, e.g., arising out of fraudulent misrepresentation or misappropriation, the task is to identify the crucial point from which the loss became inevitable. The suggested technique is to apply an “irreversibility test”, which means to detect the point when the loss suffered by the victim is no longer revocable.

In this situation, the solution of looking at “the place of the assets of the party that has been pushed into an unwanted contractual relation” is appropriate. See Magnus /  Mankowski 2012, § 238, p. 256. Lehmann 2011, p. 548 criticises this solution in many respects, for: being hard to locate when assets are dispersed over several countries, being unpredictable for the tortfeasor; and coinciding with the victim’s domicile. 180 Dickinson 2008, § 4.67, p. 328. 181 Dicey et al. 2012, § 35-026, p. 2211; Plender / Wilderspin 2009, § 18-072, p. 525. 182 Dickinson 2008, § 4.67, p. 328; Bach 2010, § 37, p. 81. 183 Suggesting “the place where an asset (tangible or intangible) is taken from the claimant’s control”, see Dicey et al. 2012, § 35-026, p. 2211. 184 Suggesting “the country where the performance should have taken place”, see Dicey et al. 2012, § 35-026, p. 2211 and Dolphin Maritime & Aviation Services Ltd v Sveriges Angartygs Assurans Forening [2009] EWHC (Comm.) 716, [2009] 1 CLC; Dickinson 2010, § 4.68A, p. 44; Plender / Wilderspin 2009, § 18-091, p. 532. 185 Art. 6(2) Rome II Regulation, suggesting the place where the confidential information was disclosed to the defendant; see the example and suggestion in Dickinson 2008, § 4.68, p. 329. 186 Dickinson 2008, § 4.67, p. 329; Plender / Wilderspin 2009, § 18-078, p. 528.

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In addition, it should be borne in mind that those techniques may not produce fair results in difficult cases because of the potential diversity of facts. Therefore, there is considerable scope for the escape clause to intervene. c) Maritime torts Vietnamese legislation has paid considerable attention to maritime torts. In the VCC 2005, Art. 733(2) provides for, generally, the law applicable to compensation for damage caused by a seagoing ship sailing in international waters, which means torts committed on the high seas. The designated applicable law is the law of the country of which such ship bears the nationality, unless otherwise provided for by the maritime law of the Socialist Republic of Vietnam. Moreover, Art. 3 VMC 2005, namely “Principles of application of laws in case of conflict of laws” has provided guiding rules for the law applicable to certain maritime torts. According to Art. 3(1) VMC 2005, internal torts,187 which occur when the vessel is sailing on the high seas, shall be governed by the law of the flag state. This solution has received certain supporting arguments in the EU.188 It has long been alleged that ships on high seas are deemed to be part of the territory of the State of which it flies the flag.189 More significantly, in the EU Commission’s Proposal of Rome II Regulation 2003, there was Art. 18,190 which (although not surviving into the final Regulation) promotes the presumption that damage which occurs on a ship which is sailing on the high seas could be considered as occurring on the territory of the state of which the ship flies the flag. However, with regard to internal torts happening in territorial waters, Art. 3 VMC 2005 does not provide a direct answer. Nor can a solution can be inferred from Art. 773(1) VCC 2005, which refers to the lex loci delicti. In such a context, it might be helpful to look at the suggestion given for the Rome II Regulation regarding this category of torts. While common law may

187 In Basedow 2010b, p. 132, internal torts are torts “which exclusively produce damage on board a single vessel.” 188 See MüKoBGB/Junker VO (EG) 864/2007 Art. 4 paras. 35, 143. 189 Winter 1954, p. 115; Plender / Wilderspin 2009, § 18-041, p. 514. 190 Proposal for a Regulation of the European Parliament and the Council on the law applicable to non-contractual obligations (“Rome II”), Brussels, 22.7.2003, COM(2003) 427 final, 2003/0168 (COD), Art. 18 [Assimilation to the territory of a State]: “For the purposes of this Regulation, the following shall be treated as being the territory of a State: […] b) a ship on the high seas which is registered in the State or bears lettres de mer or a comparable document issued by it or on its behalf, or which, not being registered or bearing lettres de mer or a comparable document, is owned by a national of the State.”

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propose that the locus of the damage is the law of the littoral state,191 and although this reference accords with international law,192 the right solution should be the law of the flag state due to a number of reasons. First, the authority of the ECJ case DFDS Torline A/S v SEKO Sj193 suggests the law of the flag state for internal torts whether the vessel is on the high seas or in territorial waters.194 Second, it is suggested that the law of the littoral state is not as constant as the law of the flag when the ship sails through the waters of many states and even the high seas,195 and that that law may be subject to manipulation and forum shopping.196 Therefore, the solution suggested for Vietnam as regard internal torts is the law of the flag state, both when the vessel is shipping in the territorial waters or on the high seas. Besides, it should be noticed that in cases of a flag of convenience or port of convenience,197 other connecting factors may take over.198 Another point that is significant for the Rome II Regulation with regard to internal torts is that they are likely to be subject to the law governing the maritime venture as the pre-existing relationship under Art. 4(3) Rome II.199 This treatment is however not yet available in Vietnam because of the lack of an escape clause in the manner of Art. 4(3) Rome II Regulation. With regard to external torts200 happening in the territorial waters of a country, Art. 3(3) VMC 2005 suggests that the law applicable to those torts such as collisions, salvage remuneration, and recovery of property sunk is the See, for more on the position under common law and under the PILA 1995, in George 2007, pp. 161–165. This is also the solution given in Dicey et al. 2012, § 35-033, p. 2215. See also Plender / Wilderspin 2009, § 18-049, p. 516. 192 Dickinson 2008, § 4.49, p. 320. Specifically accords to Art. 2 UN Convention on the Law of the Sea. 193 Case C-18/02, DFDS Torline A/S v SEKO Sjöfolk Facet för Service och Kommunikation [2004] ECR I-1147. The case involved the interpretation of Art. 5(3) Brussels Convention as well. In finding the place where the damage occurred, the ECJ made comment on the role of the flag as follows: “[…] The nationality of the ship can play a decisive role only if the national court reaches the conclusion that the damage arose on board the Tor Caledonia (the ship). In that case, the flag State must necessarily be regarded as the place where the harmful event caused damage.” [44]. 194 Basedow 2010b, p. 133. 195 Basedow 2010b, p. 133. 196 George 2007, p. 166. 197 It is also suggested that if the flag is different from the port of registry, the latter should prevail. See George 2007, p. 140. 198 See Basedow 2010b, p. 133: the connection to the law of the flag state “may be rebutted by other connecting factors such as the central administration of the ship-owner, the place of registration, the homeport and the nationality of the master, the officers or the parties to the dispute”. 199 Basedow 2010b, p. 137. 200 This category of torts is delineated in Basedow 2010b, p. 132 as those “which produce damage either on several ships or outside a ship”. 191

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law of the littoral state. This is also the settled solution in reference to EU law. What should be suggested further for the Vietnamese rule is a solution for external torts occurring on the continental shelf and in the economic zone. The Weber201 judgment suggests that those external torts occurring in these zones involving activities such as the exploration and exploitation of natural resources above and on the sea-bed and in the subsoil be subject to the law of the coastal state.202 In addition, it is suggested that pollution caused by vessels or fish farms in the waters above the continental shelf or in the economic zone be governed by the law of the coastal state.203 That solution is inferred from the 1992 Protocol amending the 1969 Convention on civil liability for oil pollution, to which all coastal member states of the EU, and Vietnam, are parties. The kind of torts that receive controversial solutions for the applicable law are collisions on the high seas.204 Fortunately, Art. 3(3) VMC 2005 provides a clear solution: “Legal relations relating to collisions or salvage operations performed on the high seas shall be governed by the law of the country whose arbitration or court is the first to deal with the dispute.”

The reference to the lex fori205 is in fact the most appropriate solution206 compared with others, such as the general maritime law,207 the law of the flag state of the damaged vessel208 or the ship at fault,209 the law of each flag state210, or the law of the flag state which is more favourable to the plaintiff.211 Case C-37/00 Hebert Weber v Universal Ogden Services Ltd. ECR 2002, I-2013. Basedow 2010b, p. 138: Moreover, “collisions between installations such as offshore-windmills or drilling rigs and vessels are therefore subject to the law of the coastal state”; see also Plender / Wilderspin 2009, §§ 18-054, 18-055, p. 517. 203 Basedow 2010b, p. 138. 204 Or in the waters above the continental shelf and in the economic zone. 205 This solution is expressly employed by the Dutch Civil Code in its Art. 164. See Dutch Civil Code Book 10 – On the Conflict of Laws (19 May 2011), Translation by M.H Ten Wolde/J.D Knot/N.A. Baarsma, in: Yearbook of Private International Law 13 (2011), pp. 657–694. Art. 164: “To the extent liability for damages caused by a collision on open seas is not covered by the ‘Rome II’ – Regulation, the law applicable thereto is the law of the state where the claim is submitted. The first sentence equally applies if damage has been caused by a sea-going vessel without a collision having taken place.” 206 See the reasoning in Basedow 2010b, p. 137. 207 This solution of the English common law is criticised in that it in fact does not exist. See George 2007, pp. 157, 158. 208 This approach is also suggested in MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 142; Dicey et al. 2012, § 35-003, p. 2196; Dickinson 2008, § 4.56, p. 323. 209 There is one German case (RG 6. 7. 1910, RGZ 74, 46–47) supporting the application of the law of the ship at fault (or the ship accused of being at fault), which is also the defendant. See also Winter 1954, p. 123. Both approaches do not work in collisions involving two ships where both are injured or both at fault. To continue to contend that it should 201 202

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Apart from that, Art. 3(3) VMC 2005 also stipulates the law of the common flag state of the seagoing vessels for collisions occurring on the high seas or the territorial waters or territorial sea. In addition, Art. 3(2) VMC 2005 regulates the legal issues relating to general average, which is governed by the law in force in the country of the place where the seagoing vessel calls immediately after such general average occurs. The most concerning issue is in fact the lack of an escape clause both in the general article for tort conflicts (Art. 773 VCC 2005) and in the specified article for conflicts in maritime torts (Art. 3 VMC 2005), which renders the application of the formulated rules rigid and unable to heal inappropriate results in individual cases. 4. Damage in different countries One of the most controversial and unsettled issues relating to the place of damage is the scenario when a single event leads to (immediate) damage in several states. The mosaic principle (“Mosaikbetrachtung” in German law) is stated in the Memorandum of the European Commission’s Proposal of Rome II 2003, providing that “where damage is sustained in several countries, the law of all the countries concerned will have to be applied on a distributive basis.”212 In addition, this principle has been followed by the ECJ in Fiona Shevill v Presse Alliance SA.213 Although the case relates to the special jurisdiction under Art. 5(3) Brussels Convention with respect to a defamation claim, the mosaic approach presented in it extends to other torts as well.214 According to it, the plaintiff has two options, either to bring an action with respect to the whole damages before the court at the place of acting or to sue at the different courts where damage dispersed. The disadvantage regarding the latter option is that each court of the places of damage is competent to determine the specific part of damage occurred in that state only.215 The most notable advantage of this approach is that if the plaintiff does not choose to file the claims at the court of the place of acting or the place of residence of the defendant but splits the claims to the courts of the several places of damage, each court of the place of damage will enjoy the opportunity to apply the law of the forum as regards the amount of damages incurred in be the law of the ship that sustains greater damage or is more at fault would make little sense because in order to measure damage one has to rely on the applicable law while in this case it is still being determined. 210 This approach meets with the problem of dépeçage; see Basedow 2010b, p. 136. 211 This approach is not suitable for Art. 4 Rome II Regulation. See more in Basedow 2010b, p. 135. 212 Memorandum, COM(2003) 427 final, p 11. 213 Shevill v Presse Alliance SA (C-68/93) [1995] ECR I.-415. 214 Magnus / Mankowski 2012, § 212, p. 243. 215 Bach 2010, § 58, p. 90; Plender / Wilderspin 2009, § 18-026, p. 507.

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its country.216 However, the advantage of applying the forum law can be countered by the fact that, for the plaintiff, he has to sue at the courts of many countries to collect each part of the damage he has sustained.217 As a result, from the standpoint of the plaintiff, it hinders his expectation to consolidate multiple proceedings.218 Nevertheless, one has to be perceptive to see that such a consequence of the fragmentation of proceedings in order to get the whole damages does not result from the mosaic principle as related to the applicable law. It indeed derives from the mosaic effect of the mentioned ECJ case, where the jurisdiction of the court at the place of damage is restricted to the amount of damage incurred there. Therefore, such a hindrance is not a direct disadvantage of the mosaic principle as considered in the context of the applicable law. Much more difficult is the challenging task of quantifying damages in many countries when the cases are concerned not with tangible damage to property but with pure economic loss whose extent is in part difficult to estimate when sustained in many countries.219 Apart from that, other disadvantages of the mosaic principle seem to bloom when the plaintiff, instead of suing at the place of damage, chooses to sue at the place of acting or the place of residence of the defendant. First, the court seised has to apply not one foreign law but several,220 and combine the different outcomes in a single award.221 The task could be more difficult when the claimant seek remedies222 which are granted by the law of one or more countries of damages but not all.223 There is concern that if the claim is to prevent an activity such as advertising on the internet, the prohibition of it in one country would produce global effects which will deprive the defendant of the activity in the countries whose laws allow it.224 The defendant in an injunction case of this kind, however, can rely on the law of these countries to defend against the negative claim.225 Thus, the effect of the injunction is reduced to operating in those countries under whose law such an act constitutes a tort.226 216 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 31; Dickinson 2008, § 4.74, p. 333; Bogdan 2010, p. 383. 217 Fröhlich 2008, p. 65. 218 Bach 2010, § 59, p. 90. 219 Plender / Wilderspin 2009, § 18-026, p. 507. 220 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 32; Bogdan 2010, p. 383. 221 Dickinson 2008, § 4.69, p. 330. 222 Dicey et al. 2012, § 35-028, p. 2212. 223 Dickinson 2008, § 4.70, p. 331: “Particular difficulties arise in the case of claims to prohibit future breaches of non-contractual obligations or to prevent further damage from an existing breach.” 224 Magnus / Mankowski 2012, § 213, p. 243. 225 Dickinson 2008, § 4.70, p. 331. 226 Bach 2010, § 55, p. 89.

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The situation is extremely difficult in the situation where the plaintiff seeks an injunction against the disclosure of confidential information. The concern in this case is not about the unjustified global effects of the injunction, but about the global worthlessness of the effort granted by the law of some countries but not others. Once the information is leaked out in one country due to the lack of the enjoinment under that country’s law, the injunction attained under the law of other countries is nullified. Consequently, the plaintiff is the party who suffers when the actionable remedies are reduced to the lowest level among those granted by all countries of damages.227 While these criticisms seem difficult to overcome, the mosaic principle has been backed up by the reasoning that, as regards the Rome II Regulation, most types of situations that may lead to such inconveniences are in fact excluded from the scope of Art. 4228 (defamation229) or are regulated by their own special regimes (cartel damages230 and environmental damage231). As regards other cases of pure economic loss, which are nearly insoluble situations, other means could be expected: for example, the party may agree to subject the entire claim to one law232 or when the parties fail to plead many foreign laws, the court could replace them with the lex fori.233 These two expectations, however, seem illusory. A more appropriate solution should be found to locate the damage in a single country to avoid the difficulties of applying several potential conflicting laws, even for some rare cases. One solution is to apply the ubiquity principle when the plaintiff sues at the place of acting or the place of residence of the defendant. This approach is advocated by Jan von Hein. According to him, by granting the victim the right to opt for the law of the place of acting, we can overcome the troubles of the mosaic principle. It should be noted that the ubiquity principle is not used at the beginning; in fact, the lex loci damni approach is still the main rule. However, when damages spread over several countries, instead of engaging in the difficult or even impossible task of calculating damages according to many laws, the victim could choose to base his claim on one law (the law of the place of acting) only.234 He apparently takes the idea from the rule on cartel damages in Art. 6(3)(b), the only rule that deals explicitly with the issue of multiple applicable laws, and believes that this approach should be

Dickinson 2008, § 4.71, p. 331. MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 31; von Hein 2011a, § 15, p. 407; von Hein 2009b, p. 475. 229 Art. 1(2)(g) Rome II Regulation. 230 Art. 6(3)(b) Rome II Regulation. 231 Art. 7 Rome II Regulation. 232 Art. 14 Rome II Regulation. 233 Plender / Wilderspin 2009, § 18-027, p. 509. 234 von Hein 2009b, p. 480. 227 228

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extended at least to the violations of personal rights.235 Accordingly, the place of acting (whose law is chosen by the plaintiff) has to coincide with one of the places of damage. He also points out that the ubiquity approach here has nothing to do with substantive justice; it should be employed for the reason of “procedural economy and the ease of litigation”.236 However, it results in the fact that the law applicable may be that of the country where damage only occurred in a small percentage.237 That also means that it is now irrelevant that damage may have taken place in many countries, that one country may have suffered more, or that the majority of the damage was sustained in one country. Furthermore, this return to the place of acting somehow marks a failure of the lex loci damni rule when it comes to the situation of multi-country damage. The approach could not work if the place of acting does not coincide with any place of damage. Another solution is to ascertain the main place of damage, which can be called the centralising approach, which is believed to bring only one single predominant law to the claim, ameliorating the mosaic principle’s problem of fragmenting applicable laws. If the centre of damage coincides with the place of tortious act, the best result could be achieved when forum law is applied to the whole claim.238 Moreover, and importantly, the centralised applicable law does not deviate far from the loci damni principle, as it is the result of the weighing of parts of the damages in the countries involved. That means certain factors such as which country has sustained more damage or the indirect damages in each country are not left out of consideration as in the “ubiquity/place of action” approach. Nevertheless, another argument against the centralising approach is that “if damages spread equally among different countries, a “centre” of damages will hardly be determinable.”239 This problem, although it hardly happens, can be resolved by a broader (but also traditional) utilisation of the escape clause: considering other factors of the tort such as place of acting or the habitual residence of the parties in order to find out the country most closely connected with the tort. It hardly happens that the balance remains equal when such a consideration of all factors involved is taken.

235 von Hein 2009b, p. 481; Art. 6(3)(b) Rome II Regulation: “When a market is affected by a restriction of competition in more than one country, the victim who sues the defendant at his domicile – which is typically the centre of corporate activity – may choose to base his or her claim on the law of the court seised instead of the laws of the places of injury (the several effected markets), provided that the market in that Member State is among those directly and substantially affected by the anti-competitive act in question.” 236 von Hein 2009b, p. 480. 237 Bach 2010, § 57, p. 89. 238 Bach 2010, § 60, p. 90. 239 Bach 2010, § 56, p. 89.

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The only concern with the application of the centralising approach where the plaintiff wants to consolidate the damage at the court of the place of acting is that it needs an anchor in one of the provisions in Art. 4 Rome II. Could it be accommodated by virtue of the escape clause under Art. 4(3)?240 The answer is that the escape clause can only operate to designate the law of the main place when all other circumstances of the case also refer to that law.241 Can it be said that it can be used only to find the main place of damage beside its traditional function of ascertaining the most closely connected law to the tort with reference to all circumstances of the case? In order to do so, this escape clause has to be understood in a more flexible way242 if it is to allow this effect in the event of damage in multiple countries. Nevertheless, this interpretation of the escape clause seems to go beyond its wording. Therefore, it would produce more clarity if such an interpretation were supported by a decision of the ECJ or by a sub-section to the main rule in Art. 4(1), stating that where jurisdiction is not based on the place of damage, the court will centralise the damage to find the main place of damage. The escape clause therefore can maintain its designated operation, and it can play a role when damages are spread equally over different countries, in which case, all other factors will be taken into consideration in order to find the most closely connected country so as to ascertain an applicable law. In fact, it should be noted that in the context of the EU, plaintiffs sue more often at the place of damage, which in most cases is the plaintiffs’ habitual residence, rather than at the place of acting or the residence of the defendant.243 Therefore, there are few cases where the court at the place of acting or residence of the plaintiff has to ascertain the main place of damage. This point combines with the fact that most cases relevant to multi-state economic loss are outside of the scope of Art. 4(1), as mentioned earlier; only some cases of pure economic loss are concerned. It appears that the issue of damage in different countries is not greatly relevant to the application of Art. 4(1). For Vietnam, the bases of jurisdiction are different from the EU in many respects. Jurisdiction at the place of damage as the sole connecting factor has not yet been provided for in Vietnam. Moreover, although there are authors who propose that Vietnamese courts may have special jurisdiction for tort claims based on the place of residence of the victim 244 (in most of the cases coinciding with the place of damage), this base of jurisdiction is unjusti-

Rushworth / Scott 2008, p. 279. MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 32. 242 Mills 2009, p. 151. 243 Magnus / Mankowski 2012, § 205, p. 240. 244 Art. 410(1) combined with Art. 36(1) d) VCPC 2004; Đỗ Văn Đại / Mai Hồng Quỳ 2010, p. 659. 240 241

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fied.245 Moreover, this jurisdiction, if any, has not been restricted to only the part of damage incurred in Vietnam because there is no case such as Shewill. That means that even if a Vietnamese court confers jurisdiction on the place of residence of a Vietnamese plaintiff, it can decide the whole tort claim. In that circumstances, the advantage of the mosaic principle (in that that the court at the place of damage can apply its own law) no longer generates appropriate outcomes. Instead, the approach of finding the main place of damage is more appropriate. This approach should be done by virtue of a subrule to the main rule – the place of damage. Moreover, an escape clause in the manner of Art. 4(3) Rome II should be formulated in order to deal with situations where the main place of damage cannot be ascertained, in which situation all factors of the case should be considered to find out the country most closely connected to the tort.

V. Flexibilisation V. Flexibilisation

1. Exceptions for specific torts In fact, certain issues, e.g., the interests that a conflict rule aims at, locating damage in particular country and damage in different countries, do not frequently emerge in the application of Art. 4(1) Rome II because there have been specific torts which are designated for the particular characters of those torts and in which those issues are addressed. Although the ideas of specific rules for special torts was opposed by the EU Parliament, the tendency of national codifications has also been implemented by EU law in Rome II, which provides that detailed rules for special torts should be developed.246 The model of one general rule for the variety of specific torts is no longer appropriate.247 Recital 19 Rome II emphasises that approach in providing that “Specific rules should be laid down for special torts/delicts where the general rule does not allow a reasonable balance to be struck between the interests at stake.” In fact, each special rule from Art. 5 to Art. 9 Rome II has its own justifications for its existence. As for product liability,248 the conflict rule is driven by the objectives of “spreading the risks inherent in a modern high-technology society, protecting

245 See the reasoning in Part IV [Approach for Vietnam from the perspective of international jurisdiction of Vietnamese courts]. 246 Fallon 2008, p. 263. 247 Basedow 2008a, pp. 13, 18. 248 For more detailed analysis on Art. 5 Rome II, see Illmer 2009b; Fallon 2008, pp. 264–266; Huber / Illmer 2007, pp. 113–142; Schmid / Pinkel 2011; Illmer 2010a; von

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consumers’ health, stimulating innovation, securing undistorted competition and facilitating trade”, as given in Recital 20 Rome II. The place of damage rule cannot fulfil the task.249 Therefore, it has to give way to a more complex rule, which employs a cascade system of connecting factors, pointing first to the place of residence of the plaintiff, next to the place of acquisition of the product, and then to the place of damage, provided that each of the three factors coincides with the place of marketing of the product.250 As such, the rule appears to favour the plaintiff, although the privilege is controlled by the coincidence of those places with the place of marketing of the product, which pulls the interest scale back to the side of the defendant. In addition, the defendant is given additional protection by a foreseeability clause which enables the law of the place of his residence to apply if he could not reasonably foresee the marketing of the product in those places.251 It is believed that such a designation of connecting factors and a foreseeability defence can help to strike a balance between the interests of the parties and to fulfil the objectives given. In matters of unfair competition, as Recital 21 Rome II has pointed out, “the conflict-of-law rule should protect competitors, consumers and the general public and ensure that the market economy functions properly.” Therefore, Art. 6(1) designates the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected for a non-contractual obligation arising out of an act of competition. However, with regard to an act of unfair competition that affects exclusively the interests of a specific competitor, in accordance with Art. 6(2), Art. 4 applies instead. For a non-contractual obligation arising out of a restriction of competition, Art. 6(3)(a) provides for the application of the law of the country where the market is, or is likely to be, affected. Unlike product liability, as pointed out in Recital 21, “the special rule in Art. 6 is not an exception to the general rule in Art. 4(1) but rather a clarification of it.” That is, it is not a deviation from the loci damni rule; by locating damage in the country of the market affected, it is rather a step to concretise the place of damage rule in the context of unfair competition.252

Hein 2008, pp. 1695–1698; Dicey et al. 2012, §§ 35-039 – 35-064, pp. 2221- 2235; Pinheiro 2008, pp. 22–23; Rushworth / Scott 2008, pp. 283–284; Fawcett et al. 2008, pp. 806–809. 249 Explanatory Memorandum of Rome II Proposal 2003, p. 14: “Connection solely to the direct damage is not suitable here as the law thus designated could be unrelated to the real situation, unforeseeable for the producer and no source of adequate protection for the victim.” 250 See Art. 5(1) Rome II. 251 MüKoBGB/Junker VO (EG) 864/2007 Art. 5 para. 22; Fallon 2008, p. 279. 252 Rushworth / Scott 2008, p. 282; Dicey et al. 2012, § 35-056, p. 2230; Fallon 2008, p. 287; Pinheiro 2008, p. 23.

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The determination of the location of damage is usually difficult in cases of abstract damage like unfair competition. Therefore, Art. 6, in clarifying that the place of damage in the circumstances of unfair competition is the place of the market affected, helps to prevent the relevant courts from identifying the place of damage as the place of injury of the individual victim, which might point to the seat of their diminished assets rather than the market affected.253 In addition, the codification of the special conflict rule in Art. 6 enhances the foreseeability of court decisions compared to a general place of damage rule.254 Furthermore, the rule set out in Arts. 6(1)(a) and 6(3)(a), may in fact lead to a different applicable law from the one designated under Art. 4(1) because the former is not subject to the common habitual residence rule and the escape clause in Arts. 4(2) & (3) due to the concentration on the market functions which precludes the intervention of those exception rules.255 As regards Art. 6(3), the two particular issues of locating damage and damage in different countries are relevant. First, the difficult task of distinguishing direct damage from indirect damage for the purpose of determining the applicable law emerges as regards Art. 6(3)(a), which provides for the law of the country where the market is, or is likely to be, affected as regards a non-contractual obligation arising out of a restriction of competition. The issue here is whether, in cases of cartel damage suffered by a direct purchaser in one country and subsequently indirectly suffered by the consumers in another country, Art. 6(3)(a) intends to point to the country of the market directly affected or whether it is able to stipulate the law of the market indirectly affected as for the claims of the consumers. The more persuasive interpretation should be that since Art. 6 attempts to clarify Art. 4, which excludes the law of the country of indirect damage, the law of the country of the market directly affected by a restriction of competition should govern the claims by both the direct purchasers as well as the indirect ones.256 Second, the issue of multiple state damage is especially relevant for cartel damage since claims of this sort often involve many affected markets.257 In addition, the allocation of many portions of damage to different markets is even more difficult in the circumstances of economic loss like those encountered in violations of antitrust law.258 The solution provided in Art. 6(3)(b) is very special as it is not provided for elsewhere in Rome II. It gives the plaintiff the option to base his claim on the law of the country of domicile of the Hellner 2007, pp. 53–55. Explanatory Memorandum of Rome II Proposal 2003, p. 16. 255 Illmer 2010b, § 36, pp. 164, 165; Explanatory Memorandum of Rome II Proposal 2003, p. 16. 256 Illmer 2010b, §§ 99–101, pp. 192, 193: including the passing-on-defense. 257 Hellner 2007, p. 65. 258 Illmer 2010b, § 108, p. 196. 253 254

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defendant259 if the plaintiff chooses to sue over there, as long as that country is also one of the countries whose market is directly and substantially affected. The purpose of putting this option in the hands of the plaintiff is obviously to enable one law (lex fori) to be applicable to the whole claim and thus to avoid the challenge of pleading many foreign laws. The requirement that the place of domicile of the defendant has to be amongst the places of damage is supposed to limit forum shopping,260 as compared to the simple solution of allowing the plaintiff to choose the law of the domicile of the defendant regardless whether this country is one of the countries of damage or not. It is also better to the extent that it maintains the link of the applicable law to the country of damage.261 It is, however, different from the main place of damage approach in that it does not require that country to be the country of the centre of the anti-competitive effects.262 On the other hand, it designates the application of the lex fori. The crucial point is which alternative is more advantageous for the plaintiff between the two possibilities. The first one is suing at the place of domicile of the defendant (the place amongst those markets affected but not the main affected market) and having the lex fori applicable. The second one is also suing at the place of domicile of the defendant but having a foreign law applicable, that being the main place of damage. It may be that the second solution with the main place of damage facilitates the assessment of damages better than the lex fori.263 Furthermore, the main place of damage is not likely to be unascertainable. In any event, the solution given in Art. 6(3)(b) lit a appreciably addresses the issue of multi-state damage in the particular context of anti-trust violations, the situation in which the issue is most likely to emerge. Moreover, it has at the same time provided a solution to that enables the plaintiff to consolidate claims under one applicable lex fori and that maintains a connection to the place of damage principle to certain extent. Furthermore, Art. 6(3)(b) lit b is further welcomed in that it also provides a solution for multi-party constellations. Accordingly, “where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can choose to base his or her claim on the law of that

259 Which very often coincides with the country where the act giving rise to the damage occurred. 260 Plender / Wilderspin 2009, § 20-069, p. 627, Illmer 2010b, § 118, p. 201. 261 Illmer 2010b, § 112, p. 198. 262 Illmer 2010b, § 112, p. 198. 263 See Illmer 2010b, § 119, p. 201, in which he argues that the solution given in Art. 6(3)(b) lit a may not be preferable to the option of suing at many places of damage because of the advantageous assessment of damages under a specific lex causae and that “the fact that according to Art. 1(3) matters of evidence and procedure are governed by the lex fori may outweigh cost and time advantages” rendered by Art. 6(3)(b) lit a.

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court if the restriction of competition on which the claim against each of these defendants relies directly and substantially affects also the market in the Member State of that court.”

The solution enables the concentration of claims against several co-defendants according to one applicable law, provided that that country is one of the markets affected.264 It also protects interests of the co-defendants265 alongside facilitating the plaintiff. In sum, Art. 6(3)(b) lit a enables the consolidation of damages in different countries and allows them to be subject to one law, whilst Art. 6(3)(b) lit b enables the consolidation of claims against many co-defendants also under one applicable law, namely the lex fori. The third special rule is for cross-border environmental damage. Art. 7 is substantially different from other special rules in that it provides for the German ubiquity rule, which grants the person seeking compensation the right to opt for the law of the country in which the event giving rise to the damage occurred266 if he/she does not want the place of damage rule to be applied. Pursuant to Recital 25 Rome II, a special rule discriminating in favour of the person sustaining damage is justified by the objectives of “a high level of protection based on the precautionary principle and the principle that preventive action should be taken, the principle of priority for corrective action at source and the principle that the polluter pays.”267 As a result, a sole connection to the place of injury creates the worry that the operator may “establish facilities at the border so as to discharge toxic substances into a river and enjoy the benefit of the neighbouring country’s laxer rules”.268 The option in the hands of the victim to base his claim on the law of the country where the event giving rise to the damage occurred ensures the higher level of protection for him as well as the environment. Apart from the ubiquity approach, one issue that concerns cross-border environmental damage is the extent of relevance of the rules of conduct, e.g., the licence adhered to by the person liable in the country where the event giving rise to the damage occurred, while the applicable law is that of the

Illmer 2010b, § 113, p. 198. Dicey et al. 2012, § 35-061, p. 2234. 266 MüKoBGB/Junker VO (EG) 864/2007 Art. 7 para. 1; in Kadner Graziano 2007, it is pointed out that, in countries in which rules of ubiquity were in force in claims for environmental damage (Germany, for example), the courts repeatedly applied the law of the country in which the event giving rise to the damage occurred, which is more favourable to the victim. 267 According to von Hein 2011b, § 1, p. 462, in considering those substantive policies, Art. 7 deviates from the policy-neutral, jurisdiction-selection paradigm underlying the general rule in Art. 4(1). 268 Explanatory Memorandum of Rome II Proposal 2003, pp. 19–20. 264 265

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place of damage.269 The solution given in Rome II is Art. 17, which allows the courts to take account of those rules but under some limitations: only in assessing the conduct of the person liable, as a matter of fact, and in so far as is appropriate.270 The next special rule is designated for infringement of intellectual property rights. Since the general rule “is not compatible with the specific requirements in the field of intellectual property”,271 Art. 8(1) Rome II provides that “the law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed.” In this manner Rome II has opted for the lex loci protectionis rule,272 which is seen as “the universally acknowledged principle” regarding infringements of intellectual property rights.273 Nevertheless, “the country for which protection is claimed” does not mean any country for which the claimant claims protection. Rather, the “territorial principle”, which the lex loci protectionis is based on, requires that that country has to be linked to the specific country where the act of infringement took place.274 As a result, the country for which the protection is claimed comes down to being the country in which the infringement act occurred.275 One thing that Art. 8 failed to address is the scenario of multi-state infringement of intellectual property rights. In the event that the infringement took place in many countries, for example an unauthorised act of distribution via the Internet of works protected by copyright, the mosaic principle leads to the laws of many countries. Even when the mosaic application of laws is accepted, the problem is, however, how to identify those countries in the age of internet distribution. The territorial localisation of internet-based infringements of copyright is a difficult task; whether it points to the location of the server where the work is uploaded or to many places where the work can be downloaded. The preferable solution might be to refer to the assessing criteria, which means that the relevant countries are those noticeably influenced 269 Where the parties do not have an agreement on the applicable law and the victim does not opt for the law of the place where the event giving rise to the damage occurred. 270 According to Kadner Graziano 2007, p. 79, this solution is inspired by the position of the Dutch and Austrian courts as regards the effect of foreign licences. 271 Explanatory Memorandum of Rome II Proposal 2003, p. 20. 272 The inclusion of a special rule adopting the lex loci protectionis for infringement of intellectual property rights was suggested by the Hamburg Group for Private International Law 2003, p. 21. 273 Recital 26 Rome II. 274 See detailed discussion in Buchner 2011, §§ 10–12, pp. 483–484. 275 It is not necessarily the forum law, although the explanation of the EU Commission in the Memorandum that “[t]his rule, also known as the ‘territorial principle’, enables each country to apply its own law to an infringement of an intellectual property right which is in force in its territory” may give an impression that it points to the law of the court seised. See Boschiero 2007, p. 113.

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by the infringement. Those countries are ascertained on a case-by-case basis, referring to the facts of the case such as the number of assess from a country based on IP address, the language of the website, “the restrictions of the offer to specific countries, prices in a specific currency, or use of disclaimers.”276 In such a context, one might expect a rule fashioned so as to give the option to the plaintiff to base his claim on the law of the place of domicile of the defendant, as long as that country is amongst those countries whose markets are affected.277 Nevertheless, the territorial principle, which sets out the basis that intellectual property rights are dependent on the law of each country, does not allow any opt-in to one single law but not another. Similarly unworkable is the approach of subjecting the multi-state infringement of intellectual property rights to the law of the main place of infringement or the approach of resorting to the country of closest connection. The only approach worthy of consideration is inspired by the CLIP Principles278 and the ALI Principles,279 which promote the application of a reduced number of applicable laws or, better yet, one single law of closest connection to the dispute.280 In order for this solution to be compatible with the territorial principle of intellectual property rights, both principles have an additional provision281 Buchner 2011, § 16, p. 485. See Art. 6(3)(b) Rome II. 278 Principles on the Conflict of Laws in Intellectual Property, prepared by the European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP), 1 Dec. 2011. See . 279 Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes, version 2008 by The American Law Institute. See . 280 Art. 3:603(1) CLIP Principles: “In disputes concerned with infringement carried out through ubiquitous media such as the Internet, the court may apply the law of the State having the closest connection with the infringement if the infringement arguably takes place in every State in which the signals can be received”; § 321(1) ALI Principles: “When the alleged infringing activity is ubiquitous and the laws of multiple States are pleaded, the court may choose to apply to the issues of existence, validity, duration, attributes, and infringement of intellectual property rights and remedies for their infringement, the law or laws of the State or States with close connections to the dispute.” 281 Art. 3:603 CLIP Principles: [Ubiquitous infringement]: (3) “Notwithstanding the law applicable pursuant to paragraphs 1 and 2, any party may prove that the rules applying in a State or States covered by the dispute differ from the law applicable to the dispute in aspects which are essential for the decision. The court shall apply the different national laws unless this leads to inconsistent results, in which case the differences shall be taken into account in fashioning the remedy”; § 321 ALI Principles [Law or laws to be applied in cases of ubiquitous infringement]: (2) “Notwithstanding the State or States designated pursuant to subsection (1), a party may prove that, with respect to particular States covered by the action, the solution provided by any of those State’s laws differs from that obtained under the law(s) chosen to apply to the case as a whole. The court shall take into account such differences in determining the scope of liability and remedies.” 276 277

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that enables a party to plead the differences between the law of the country of closest connection and the laws of other states relevant to the infringement, which the court will take into consideration in deciding on the remedy. 282 In sum, the specific rule in Art. 8 has not addressed two difficult issues. The first is the localisation of a ubiquitous infringement, and the second is that it accepts the mosaic principle in those cases instead of developing a solution opting for the closest connection with an additional provision to enable the court to apply one law to the dispute. The final special tort rule included in Rome II is about industrial action. The connecting factor adopted by Art. 9 is the country where the action is to be, or has been, taken. As a consequence, the liability of a person in the capacity of a worker or an employer or the organisations representing their professional interest for damage caused by industrial action escapes from the effect of the place of damage rule under Art. 4(1). The main objective behind this exception is stated in Recital 27, that is, to “protect the rights and obligations of workers and employers” since the place where the industrial action was taken is usually the place of the work and labour conflict.283 In addition, in industrial actions, the remedy sought is often injunctive relief rather than the damages.284 In opting for this connecting factor, this special rule has avoided the difficulties of ascertaining the place where the damage has occurred, especially with regard, here, to pure economic loss.285 It therefore mitigates the problem of locating pure economic loss in the context of damage arising out of an industrial action.286 Nevertheless, it has not addressed the issue of multi-state torts, such as a concerted industrial action that takes place in many countries. In the silence of any additional provision, the mosaic principle is presumed to be applied, which brings about the laws of several countries.287 Since the main place of damage approach cannot work here, another solution for applying one single law to the dispute might be to employ the law of the main place of action, meaning the place of action that has the closest connection to the tort. Failing to localise this place, the court may find the country which is most closely connected to the industrial action, taking into account the entire circumstances of the case.288 See Boschiero 2007, p. 111. Palao Moreno 2007, p. 123. 284 MüKoBGB/Junker VO (EG) 864/2007 Art. 9 para. 2. 285 Plender / Wilderspin 2009, § 23-021, p. 678. 286 MüKoBGB/Junker VO (EG) 864/2007 Art. 9 para. 2. 287 MüKoBGB/Junker VO (EG) 864/2007 Art. 9 para. 29. 288 Some authors assume that the court cannot resort to the country of closest connection in cases of concerted industrial action because Art. 9 has ousted the escape clause under Art. 4(3). See Palao Moreno 2007, p. 125; Plender, Wilderspin 2009, § 23-021, p. 678. However, the justification for the general escape clause’s accommodating a solution of 282 283

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A final proposed special conflict rule that should be mentioned here is the rule on violations of privacy and rights relating to personality, including defamation, although such a rule has been excluded from the Rome II Regulation.289 Because of the availability of information in various countries as a result of the development of technology, the place of damage rule, which can be further localised in the place in which the publication was distributed and where the victim claims to have suffered injury to his reputation,290 will in most cases bring about the application of the laws of several countries when the plaintiff sues at the place of domicile of the defendant or the place where the event giving rise to the damage occurred (in accordance with the jurisdiction established in Brussels I). The difficulties in applying the mosaic principle, therefore, call for a single law applicable to the whole damages. One may think of the approach of identifying the main place of damage, which in this context would be the place of greatest distribution of information and the place where the reputation of the victim suffered the greatest. However, although the first place can be localised owing to the IP address, the latter place is difficult to localise in case of a celebrity, and the two places may be different,291 which renders the suggested approach unworkable. The difficult point is that an approach aiming at one single applicable law in the context of defamation claims has to satisfy the required balanced between the freedom of expression and information and the rights to privacy and reputation. Therefore, the solution of giving a choice to the plaintiff such that he can choose to subject the whole claim to the law of the place of residence of the publisher, or to the law of one place of distribution or to the law of his place of habitual residence292 is not justified since all of these laws favour only the interests of the aggrieved party over those of the tortfeasor. The habitual residence of the aggrieved party as a sole connecting factor is similarly not a suitable solution because it also favours the plaintiff to the expense of the costs of enquiry into many potential foreign laws burdened on the media.293 Moreover, the victims may have many places of habitual residence. In the meantime, the habitual residence of the publisher, although foreseeable to the tortfeasor, unreasonably neglects the interests of the victim. closest connection in cases of multi-state torts in the event that the country presumed by the main rule has not been ascertained is arguable. Therefore, the approach of resorting to the main place of action and then to the place of closest connection is a residual solution to the main rule, which can be employed in the absence of a general escape clause. 289 Art. 1(2)(g) Rome II. 290 This localisation of the place of damage rule is inspired by the ECJ case C-68/93, Fiona Shewill and Others v Presse Alliance SA, [1995] ECR I-415, concerning the interpretation of the rule on jurisdiction found in Art. 5(3) Brussels Convention. 291 See Thiede 2012/2013, p. 265. 292 Rendered by the ECJ, Case C-509/09, eDate Advertising GmbH v X. 293 See the Explanatory Memorandum to the Rome II Proposal 2003, p. 18.

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In that context, it is suggested that a proposed conflict rule should not place its main emphasis on either of the parties but on the community that is most affected by the publication. That sparks the idea of subjecting the violation of privacy claims to the law of the country of closest connection to the publication. Since this principle has long been criticised as generating legal uncertainty, it seems appropriate to develop some guidance as to how to access to the most closely connected country. It is suggested that the reference to a presumptive connecting factor, which then can be displaced by a more closely connected law, should be avoided. Rather an evaluation of the combined effects of the many factors should be taken into account by the court in each individual case.294 As can be seen, the difficulty of a special conflict rule on violations of privacy and rights relating to personality, including defamation, is that it has to cope efficiently with the requirement of balancing the conflict between media industry interests and privacy interests, whereby the law designated has to be foreseeable to the media while also fulfilling the need of compensation for the victim in connection with both the society where he has suffered the damage to his reputation as well as the country to which he has close social connection. The second problem that a special rule on defamation has to cope with is the scenario of several applicable laws because of the wide availability of information via internet and the global reputation of the persons targeted by media. All these features make any approach of fixing the whole claim to one single applicable law – either by a choice of the plaintiff or by the main place of damage – fail. Extraordinarily, a conflict rule based on the closest principle has been suggested. After such a survey of the specialties of many specific torts, it can be concluded that many particular issues regarding locating damage, damage in different countries and the requirement of foreseeability of the applicable law mean that in certain contexts and for particular types of tort, one should consider reviving the notion that other connecting factors such as the place of residence, the place of acting, or even the rule of closest connection are more appropriate than the place of damage rule. The lesson that could be drawn for Vietnam from the above survey is that the model of one conflict rule for tort conflicts is not appropriate. With only the one general rule of the place of damage, the courts will have difficulties in dealing with the varieties of tort cases. The lack of experience may lead different local courts to divergent decisions as regards complex matters.295

See, for more detailed analysis of the different approaches and of the closest connection principle as undertaken in voluminous papers, inter alia, Thiede 2012/2013, Kuipers 2011, and Heiderhoff 2007. 294

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Thespecific conflict rules for certain types of torts help to concretise the connecting factors for different specific situations of torts, thus enhancing the foreseeability of court decisions. The most suitable rule for Vietnam for each specific tort should be researched in detail. The brief analysis concerning EU law above could serve as an inspiration. In fact, the special rule regarding unfair competition was once suggested as appropriate for inclusion in the Vietnamese Competition Law 2005. 2. Common habitual residence One of the common exceptions to the lex loci delicti rule is the notion of common habitual residence, the origin of which has been relocated from the US to Germany.296 The idea of this exception is that when the parties have a common habitual residence that is different from the place of damage, the law of that common habitual residence should displace the general rule. One example of the common habitual residence rule is Art. 4(2) Rome II Regulation, which provides that “where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply”. a) Vietnamese rule of common nationality Vietnam also includes a departure from the lex loci delicti rule. Art. 773(3) VCC 2005 stipulates that “In cases where the act causing damage occurs outside the territory of the Socialist Republic of Vietnam and the person who causes the damage and the victim are both Vietnamese citizens or legal persons the law of the Socialist Republic of Vietnam shall apply.”

The first feature of this departure is that it is phrased in explicit terms and stands as the sole exception from the lex loci delicti rule.297 The second aspect 295 For example, Japan and China have special rules for certain types of torts. In the case of Japan, these are rules on product liability (Art. 18 Japanese Act 2006) and on defamation (Art. 19 Japanese Act 2006 ). See Nishitani 2007b. For China, there are special rules on product liability (Art. 45 Chinese Act 2010), on infringement of personality rights (Art. 46 Chinese Act 2010) and on infringement of IP rights (Art. 50 Chinese Act 2010). See Tu 2012/2013. 296 von Hein 2011a, § 30, p. 413: “It is not a kind of legal transplant from the United States but, in fact, it has a much older pedigree on European soil. Evidence given is a similar deviation from the lex loci delicti already introduced in a German administrative regulation in 1942”; Hay 2007, p. I-142: “In World War II, Germany promulgated an administrative regulation (Verordnung), providing for the application of German law to tort claims between Germans arising abroad. It was designated to deal with claims between German military personnel for acts committed in occupied territories.” 297 According to Symeonides 2010a, p. 207, this affiliation has two major forms: a rule (in Switzerland, for example) or an exception. As regards an exception, it is phrased either

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is that it is phrased in common nationality language,298 which is quite an oldfashion designation.299 However, the most out-dated point is that it is confined to cases in which the parties’ common nationality is the forum state (Vietnam), which means it only applies to cases where the parties are Vietnamese citizens or Vietnamese legal persons. In cases where the parties have a common nationality but not that of Vietnam, according to the wording of the provision the law of their country will not be applied.300 Therefore, the Vietnamese common nationality rule indeed manifests a forum-bias because it is applied only when the common nationality coincides with the forum,301 meaning it does not give chance for the court to apply a foreign law of the parties’ common nationality when torts have occurred in Vietnam. This is not a genuine version of the parties’ affiliation rule because in modern times this rule must be a two-pronged departure and not simply an expedient to resort to the lex fori. In fact, the common nationality rule has been the most simple and easy-toapply rule for Vietnamese courts. Thus far, there has been one case (reported) falling in the scope of this rule and the Vietnamese court seised even cited the rule in its judgment, a practice hardly seen in cases involving other conflict rules. The reference here is to Case 1164/2006/DSST 31 Oct. 2006 of Ho Chi Minh City People’s Court. In that matter, the plaintiff (Petro Vietnam Exploration Production Corporation (PVEP)) signed a contract (Contract PVEPDH-03/008/-Koastal dated 10 Feb. 2004) with Koastal Industry (a Singapore company) to buy oil wellheads and other equipment. In order to implement the contract, Koastal Industry hired the defendants (JSC Sai Gon Shipping (the carrier) and Duc Thanh Trade and Shipping Lmt (owner of the Thanh Da)) to carry those goods from Singapore to Vietnam. On 30 Mar. 2004, the explicitly in common domicile terms or in less explicit terms (such as “closest connection”, the UK for example). In turn, the explicit terms can be either a sole exception from the lex loci delicti rule (in Vietnam, for example) or be found together with, or as part of, other exceptions, such as the “closest connection” exception (in Rome II and Germany, for example). 298 See more in Symeonides 2010a, p. 207. Various codifications also differ in describing this affiliation. Most phrase it in common domicile or common habitual residence language (as in Swiss, Chinese, Japanese, German, Dutch, Hungarian and Tunisian codifications and in the European Union’s Rome II Regulation) while others stay with common nationality language (as in the Portuguese, Polish and Italian codes) or even both (Chinese General Principles of Civil Law, Russia). 299 Hay 2007, p. I-142. Of the three variations, the earliest departures from the lex loci were those of the parties’ common nationality; later, common domicile became the substitute for common nationality and nowadays the common habitual residence has been adopted in most of the codifications. 300 Hay 2007, p. I-142. This express forum favour used to be the earliest version of the common affiliation rule in Germany some 70 years ago and was “later extended to apply to parties with any common nationality”. 301 Walker 2000, p. 341.

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Thanh Da capsized while moored at Judong (Singapore) Port with the goods belonging to PVEP. The plaintiff therefore sued the defendants for compensation for the goods lost. In this case, the loci delicti was in Singapore. The main rule in Art. 773(1) VCC 2005 and Art. 3(3) VMC 2005 pointed to Singapore law. However, the court seised reasoned that since the parties who caused the damage and the victim were Vietnamese, Vietnamese law was to be applied according to Art. 773(3) VCC 2005. b) Proposed common habitual residence rule for Vietnam One advantage of the application of the law of the common habitual residence of the parties is that the compensation level granted by this law corresponds to the insurance coverage found in an insurance contract, which in most cases is signed in the country of the common habitual residence and structured according to the standards in that country.302 In cases of road traffic accidents, for example, the insurer of the vehicle is usually resident at that place, which facilitates the settlement of the claim.303 Another advantage is that since the plaintiffs will usually sue at home,304 the law of the country of common habitual residence is also the lex fori,305 the application of which avoids the difficulties of applying foreign law.306 In the meantime, the common habitual residence rule also meets with certain criticisms. First, it is criticised that the solution is unjustified when the parties are completely unknown to each other. In a scenario where two residents of a country happen to collide with each other in another country, it can hardly be said that they expect the law of their residence to apply.307 Especially in cases of a hired vehicle, the law of the common residence no longer fits with the insurance coverage.308 Nevertheless, it is responded that in case of two strangers in hired cars, the escape clause provides a means of correction to lead back to the lex loci damni.309 Second, there is a concern that the rule has different roles in different torts. A review of specific tort rules and rules for other non-contractual obligations reveals that some of them have a common habitual residence rule while others exclude it or have the rule in a subsidiary role. Those specific rules conNishitani 2007b, p. 182; von Hein 2011a, § 26, p. 411. MüKoBGB/Junker VO (EG) 864/2007 Art. 4 paras. 37, 95. 304 von Hein 2011a, § 26, p. 411. 305 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 37; Fröhlich 2008, p. 55; Bach 2010, § 65, p. 93. 306 Hay 2007, p. I-143. 307 Bach 2010, § 64, p. 92; Garcimartín 2007, p. I-83. 308 Bach 2010, § 64, p. 92. 309 von Hein 2011a, § 36, p. 416. 302 303

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taining the common habitual residence exception are Art. 5(1) on product liability, Art. 9 on industrial action and Art. 6(2) on unfair competition, through their reference to Art. 4. For other specific torts, namely unfair competition in general (Art. 6(1)), antitrust violations (Art. 6(3)), environmental damage (Art. 7) and infringement of IP rights (Art. 8), the exception is not envisaged.310 The different roles played by the common habitual residence exception in the Rome II Regulation are accused of creating inconsistency.311 In fact, the reason why the common habitual residence departure is missing in the second class of torts above is that the connecting factors provided for in those types of torts aim at important objectives that do not allow the intervention of a common habitual residence rule. Those objectives regarding marketrelated acts of unfair competition and antitrust relate to the market protection function.312 For environmental damage, it is the right of the victim to choose the law favourable to him or her which deprives the common habitual residence of any grounds to interfere.313 In IP rights, the territorial limitation, which is characteristic for this type of tort, excludes a departure to the common habitual residence.314 Accordingly, the use of the common habitual residence solution in the Rome II Regulation is flexible. It has been excluded wherever inappropriate, and this different treatment of the common habitual residence exception as regards different special torts, which is accompanied by a certain inconsistency between the articles, does not appear as a defect but as a necessarily divergent utilisation of the rule in different case situations. Another criticism on the common habitual residence rule is that it is itself restricted to cases where the parties have the same common habitual residence. There has been a suggestion to extend the application of the common habitual residence rule to the scenario of where the parties are habitually resident in different countries but the laws of those countries are identical to each other,315 and further to situations of different laws producing the same outcome.316 310 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 39; von Hein 2011a, § 29, p. 412; Fallon 2008, p. 279. 311 Garcimartín 2007, p. I-83. 312 Illmer 2010b, § 36, p. 165. 313 Garcimartín 2007, p. I-87. 314 Gottschalk 2007, p. 197. 315 Symeonides 2008, p. 195. An example of this rule can be found in the Louisiana Civil Code, Art. 3544(1): “Persons domiciled in states whose law on the particular issue is substantially identical shall be treated as if domiciled in the same state.” 316 Symeonides 2010a, p. 216. The reference for this suggestion is the Oregon Act (2009 Or. Laws Ch. 451 (S.B. 561), Art. 875 subsection (2) (b): “For the purpose of this section (2), persons domiciled in different states shall be treated as if domiciled in the same state to the extent that laws of those states on the disputed issues would produce the same outcome.”

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These suggestions are supported by the argument that a broadened application of the common habitual residence rule in those situations is very useful when dealing with multiparty cases like mass accidents. That means more resort would be had to the common habitual residence rule as between different pairs of parties,317 and this broader deviation helps to mitigate the different treatment between parties with common habitual residence and those without it who nevertheless have the same law or the same outcome of the laws. However, we should not forget the arguments against those suggestions, which focus on the difficulties in determining whether the two laws are identical or whether they produce the same result.318 Besides, the EU parliament was unsuccessful in its attempt to extend the application of the common habitual residence principle to cases where the laws of different countries of habitual residence have the same content.319 For Vietnam, the difficulties of analysing the two laws might be beyond the immediate capacity of the courts; therefore, it should not be included in a proposed rule. A further criticism on the common habitual residence rule is that one of its deficiencies is revealed in cases of multiple claimants and/or defendants. Accordingly, the exception will be applied to pairs of claimants and defendants that share a common habitual residence, leaving other pairs subject to the place of damage. This pair-dividing treatment serves to prevent the parties from expediently joining the claims with the purpose of availing or evading the application of the law of common habitual residence.320 However, the court considering individually different pairs of parties in one claim arising from one cause of action would lead to a fragmentation of the claim as well as of the laws applicable to it. Besides, can it be deemed reasonable that different parties are treated discriminately just because they share or do not share a common habitual residence while they are engaged in the same liability issue? Furthermore, in fact, in cases of vicarious liability the question that usually comes up is just how to calculate joint responsibility and contribution according to the different laws designated.321 The resolution for this perplexity is to put the escape clause to use so as to fall back on the place of damage as applicable to the whole claim and all parties.322 Vietnam, in its current stage of legislation, Art. 773 VCC 2005, is without an escape clause. The suggestion has to be either to employ one or, in the temporary lack of it, to phrase or interpret the common habitual residence Symeonides 2010a, p. 216. Fröhlich 2008, p. 56. 319 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 43. 320 Dicey et al. 2012, § 35-030, p. 2213. Reference is made to the lis alibi pendens rules in Case C-406/92 The Tatry [1994] ECR I-5439, [29]–[36] (Brussels Convention). 321 Dickinson 2008, § 4.83, p. 337. 322 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 42; Clarkson et al. 2006, p. 384, Plender / Wilderspin 2009, § 18-098, p. 535. 317 318

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rule as to be confined to a situation of a single tortfeasor and victim,323 which means that it would not apply to multiple-party situations. Furthermore, doubt has been raised as to the differences in dealing with a common habitual residence and pre-existing relationships. More specifically, a common habitual residence is given the privilege of being considered autonomously to appoint the applicable law and the sole fact of it can override the lex loci damni. Meanwhile, pre-existing relationships such as a concurrent contract have to be measured as a factor together with others in order to cumulate the most closely connected law within the compass of an escape clause.324 Authors have been recommending a better relocation of the common habitual residence rule such that it should recede to become a significant factor that will work in the mechanism of the escape clause.325 Reference can be made to the European Parliament Position 2005,326 where a common habitual residence is listed as a factor along with others amounting to an escape from the main rule. 327 It is important for the supporters of this proposition to point out that such a discretional reference within an escape clause could produce a different result than that netted by a rigid common residence exception with a high threshold escape clause. In the latter model, the connection to other law may hardly be manifestly strong enough to displace the common habitual residence law. Meanwhile, when the common habitual residence is phrased within the escape clause, it ensures that the common habitual residence law only replaces the main rule when it is strong enough, and it eliminates cases of a rigid reference to a weak common residence connection where the escape clause nevertheless fails to correct the results because of its threshold. This explains why in England, under the law existing prior to Rome II Regulation, where “factors relating to the parties” are considered within the escape stage, there is a record of cases in which the court held that the common habitual residence in England was not enough to designate a substantially more closely connected law.328 If the facts of such cases had been judged under Rome II, the court would have been burdened to a greater degree by the common residence rule. 323 Reference could be made to the Oregon Act (2009 Or. Laws Ch. 451 (S.B. 561), Art. 875: “Subsection 2 (a) is confined to claims between the ‘injured person’ and the ‘person whose conduct caused the injury’ and does not extend to claims by or against third parties, such as joint-tortfeasors.” See more in Symeonides 2010b, p. 33. 324 Garcimartín 2007, p. I-83; Dickinson 2008, § 4.82, p. 336. 325 Dickinson 2008, § 4.82, p. 336. 326 Art. 4(3). 327 von Hein 2011a, § 31, p. 413. 328 Fawcett et al. 2008, p. 799. Footnote 268 gives one illustrative case: Regina CAL – Tedda v Secretary of State for Defence [2006] EWCA Civ 327, [2007] QB 621.

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This rearrangement of the common habitual residence rule can be seen in Art. 20 Japanese Act of 2006,329 where a common habitual residence is envisaged as an important factor leading to a variation from the main rule based on the entire circumstances of the case.330 A further suggestion could even be to reduce the strength of the common habitual residence reference further by not phrasing it in clear wording within the escape clause but letting it hide behind the mechanism of the passage, i.e., no clear indication of the common habitual residence would be expressed and its operation would be implicit. For this extreme position, citation can be made to Art. 34 the 2007 Turkish Code in Private International Law and International Civil Procedure.331 The present writer is of the opinion that the commonalty of the parties’ habitual residence, with its prevailing significance and influence, should be connoted at least as an express indicative factor within the escape clause.332 This seems to be the most appropriate solution for EU law or elsewhere. Accordingly, the common habitual residence can retain its importance but at the same time avoid a rigid appointment of its law whatever the circumstances of the cases might be. For Vietnam, I would suggest the model of Art. 20 Japanese Act 2006 for the common habitual residence consideration. Accordingly, it should constitute a significant factor which triggers the escape clause if it is supported by the entire facts of the case. The model can eliminate the question of whether the escape clause can surpass the common residence exception to redirect to the country of damage, which is addressed above for the Art. 4 Rome II structure. Moreover, the model can resolve most of the criticism directed at the Rome II’s common habitual residence exception analysed above as most of the responses to them is to resort to an escape clause. 3. Escape clause Vietnam belongs to the group of countries whose legislation does not provide for an escape clause of a closer connection to the tort333 where needed to reach

329 Art. 20 Japanese Act 2006: “[…] the formation and effect of claims arising from tort shall be governed by the law of the place with which they are clearly more closely connected in the light of the circumstances such as where at the time of tort both the parties had their habitual residence in a place under the same law, or where the tort occurred by breaching obligations in a contract between the parties.” 330 Kono 2008, p. 235. 331 See, for more on Article 34, Tekinalp 2007, p. 336. An English translation of the 2007 Code is found ibidem at pp. 583–604. 332 Therefore, the Turkish option should be excluded. 333 According to Symeonides 2010a, p. 208, this group includes Belarus, China, Hungary, Italy, Kyrgyzstan, Lithuania, Macau, Poland, Portugal, Quebec, Russia and Tunisia. Venezuela also belongs to this group: see Art. 32 Venezuelan Act on Private International

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a balance between legal certainty and justice in individual cases.334 Many other countries have an escape clause in a number of variations. The first one is a general (simple/pure) clause, which can be called the “closer connection” escape clause. In this manner of stipulating an escape clause, the principle of closer connection is envisaged without giving further guidance regarding any pre-existing relationship.335 The second type of escape clause is a “pre-existing relationship escape”, where resort is had directly to the pre-existing relationship without mentioning the general method of closer connection. Representative here are Korea336 and Switzerland.337 The nature of this type of escape clause is that it refers to a preexisting relationship but does not further indicate which one, for example contractual or factual. Moreover, this kind of escape is more restrictive than the general one as it solely works when there is a pre-existing relationship. When there is no indication as such, one cannot displace the presumptively applicable law by another law that is more closely connected to the tort. The third type of escape clause is a combined clause incorporating the closer connection principle and the significant pre-existing relationship. Germany, in its Art. 41 (namely, “Substantially closer connection”) has a first paragraph stating the principle of closer connection and the second paragraph listing certain relationships that a substantially closer connection can be based on. 338 Art. 20 of the Japanese Act 2006 gives another instance. The most influential example might be the Rome II Regulation’s escape clause for tort conflict in Art. 4(3), which reads as follows: Law (Unofficial English Translation), in: Yearbook of Private International Law 1 (1999), pp. 341–352. Australia is a fascinating case where renvoi is used as an indirect tool of creating an exception to the lex loci delicti regime in choice of tort law; see Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331. In Europe, this device has been expressly abandoned in Art. 24 of the Rome II Regulation. See Mortensen, p. 221. 334 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 46. 335 An example can be found in the 2007 Turkish Code on Private International Law and International Civil Procedure. Art. 32(3) states: “Where the obligational relationship arising from the tort is more closely connected with another country, the law of that country shall apply.” 336 Law Amending the Conflict of Laws Act of the Republic of Korea (Law no. 6465, Promulgated on 7 April 2001, effective as of 1 July 2001), in: Yearbook of Private International Law 5 (2003), pp. 315–336. Art. 32(3) stipulates: “Notwithstanding the provisions of paragraphs (1) to (2), if the tort violates an existing legal relationship between the tortfeasor and the injured party, the tort shall be governed by the law applicable to the legal relationship.” 337 Art. 133(3) Swiss Private International Law Code 1987: “Notwithstanding the preceding paragraphs, if a tort violates an existing legal relationship between the tortfeasor and the injured party, claims founded in tort shall be governed by the law applicable to that legal relationship.” 338 Art. 41 German Introductory Act 2011.

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“When it is clear from the circumstances that the tort/delict is manifestly more closely connected with a country other than indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as contract, that is closely connected with the tort/delict in question.”

a) Accessory connection: pre-existing relationship As one can see in Art. 4(3) Sent. 2 Rome II, a pre-existing relationship is the only factor that is provided in the express wording. The requirement for the pre-existing relationship is that it has to be closely connected to the tort/delict in question. It should be noted that this close connection is different from the geographical close connection between a tort and a state in the meaning of the first sentence of Art. 4(3). It is in fact the substantively close connection between the pre-existing relationship and the tort.339 A contract between the parties may be the most important example of a pre-existing relationship. That is why Art. 4 Rome II Regulation refers expressly to a contract relationship in its escapes clause’s wording. One can imagine a claim where, based on the same set of facts, the court of country A may classify the matter as a contractual claim and apply the law of country A while the court of country B may see it as a tortious claim and therefore subject it to the law of country B. Hence, a claim based on the same facts may be governed by two different laws depending on whether it is seen as contractual or tortious matter. Moreover, the law of country A may, for example, prescribe a two-year limitation period for a contractual claim while the law of country B may prescribe one-year limitation period for a tortious claim. As a result, a claim filed after one and a half years may be outside of the prescription period depending on to which court it is submitted and the law governing. The accessory connection, which subjects the tortious claim to the law governing the closely connected pre-existing contract, e.g., a contract of carriage or a contract of employment, therefore facilitates a uniform assessment of the claims according to one law.340 The second advantage that is generated when a tort is subject to the law applicable to the closely connected contractual relationship is that it is very convenient when multiple parties to the tort are related through the same contract. That means only one law will be applicable to the overall tort involving several parties not sharing a habitual residence.341 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 56. MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 51; Hamburg Group for Private International Law 2003, p. 13; Fawcett et al. 2008, p. 803; Kadner Graziano 2009, p. 125; von Hein 2009a, p. 168; Plender / Wilderspin 2009, § 18-106, p. 539. 341 Okoli / Arishe 2012, p. 538; von Hein 2011a, § 59, p. 425; von Hein 2009a, p. 168: The example given is the claims of all passengers in a travelling motorbus against the operator of the coach. 339 340

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The most frequent example of a pre-existing relationship is a contract of carriage, which is relevant to a traffic accident. Besides a carriage contract, a social contract signed between members of a travelling or driving community may be considered as a closely connected pre-existing relationship, whose governing law will be applied to the tortious claims arising between them as well.342 The question usually asked is whether “the pre-existing relationship” as stated in Art. 4(3) Rome II or elsewhere includes, besides contract, other kinds of relationships as well. The Explanatory Memorandum of the Proposal of Rome II Regulation 2003 has mentioned that “the text is flexible enough to allow the court to take account of a contractual relationship that is still only contemplated, as in the case of breakdown of negotiations or of annulment of a contract, or of a family relationship.”343 Meanwhile, at page 21, it also mentions that “the pre-existing relationship” applies particularly to pre-contractual relationships and to void contracts”. 344 The answer about the pre-contractual relationships seems unnecessary because there is Art. 12 Rome II (culpa in contrahendo), which regulates precontractual liability.345 Accordingly, “the law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract […] shall be the law that applies to the contract […]”.346 For void contracts, a reference to Art. 10(1)(e) of the Rome Convention and Art. 12(1)(e) of the Rome I Regulation347 will produce the result that the law that governs the consequences of the nullity of a contract is the law applicable to the contract. Because of such an association, a void contract should have the same position as a valid contract when being considered as an accessory connection.348 Alternatively, a void contract can be considered under the position of a factual relationship. Family relationships should not be counted as pre-existing relationship in the context of traffic accidents because they do not fulfil the requirement of having a close connection with the tort. Normally, when a traffic accident occurs there is no family obligation violated.349 Moreover, family members share the same habitual residence in most cases anyway, which triggers the

342 343 344 345

p. 428.

MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 52. COM(2003) 427 final, p. 13. COM(2003) 427 final, p. 21. Dickinson 2008, § 4.94, p. 346; Fawcett et al. 2008, p. 801; von Hein 2011a, § 67,

Art. 12 Rome II Regulation. Art. 12(1) Rome I Regulation: “The law applicable to a contract by virtue of this Regulation shall govern in particular: (e) the consequences of nullity of the contract.” 348 von Hein 2011a, § 68, p. 428. 349 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 53. 346 347

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application of Art. 4(2) instead.350 Even when the family members do not share a common habitual residence, making reference to Art. 40(1) German Introductory Act 2011,351 it is suggested that the use of a kinship relationship as an accessory connection should be restricted in the context of traffic accidents.352 As for merely factual relationships, once taken up in the Report of European Parliament 27 June 2005 on the Proposal for Rome II Regulation,353 the supporters of “merely factual relationships” rely on a certain reasoning. First, it should be observed that Germany is considered one of the origins of the “pre-existing relationship connection”, with Art. 40(2)(1) German Introductory Act 2011354 giving attention to de facto relationships. Second, more justification can be found in the Amended Proposal of European Commission in 2006355, which although rejecting the express wording favourable to de facto relationships of the Parliament’s Draft 2005, acknowledges the significance of some of the factors, in particular as regards “a pre-existing de facto or de jure relationship”.356 Third, one can take notice of the expression “in particular” in the text of the escape clause of the Rome II Regulation when pointing to “a contract” as a pre-existing relationship, allowing the argument that the court’s discretion in this respect might not necessarily be restricted solely to legal relationships. The better position is that the pre-existing relationship should encompass those of a factual nature as well.357 Although there may not be many of them MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 53. English translation, on behalf of the German “Bundesministerium der Justiz und für Verbraucherschutz”, available at . 352 von Hein 2009a, p. 169; von Hein 2011a, § 63, p. 427: when the tortfeasor and victim are in kinship but do not share a habitual residence (such as would allow the application of Art. 4(2)), “it would not make much sense to apply the law that governs the parental relationship to a non-contractual claim of a son against his father for negligent driving. The standards of care that are required from a car driver are of a general nature and should not be varied according to the family relationship between tortfeasor and victim”; Kropholler 2006, p. 530. 353 Report of European Parliament 27 June 2005 on the Proposal for Rome II Regulation, Art. 4(3)b: “a pre-existing legal or de facto relationship between the parties, such as, for example, a contract, that is closely connected with the non-contractual obligation in question”. 354 Art. 41(2)(1) German Introductory Act 2011: “A substantially closer connection may be based in particular on a special legal or factual relationship between the persons involved in connection with the obligation.” 355 Amended proposal for a European Parliament and Council Regulation on the law applicable to non-contractual obligations (“ROME II”) Brussels, 21 Feb. 2006 COM(2006) 83 final 2003/0168 (COD), hereafter “Amended Proposal of European Commission in 2006”. 356 Amended Proposal of European Commission in 2006, p. 4. 357 Bach 2010, § 90, p. 104 is of another opinion: a merely factual relationship, although not considered in the sense of a pre-existing relationship, can be taken into account as circumstances supporting a closer connection to another law under Art. 4(3) Sent. 1. 350 351

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which are significant,358 there might be some of them with varying potential influence depending on the circumstances of the case, including instances such as “common departure and return of a trip”,359 “employment with the same employer”360 or “joining a maritime venture”.361 Therefore, the door should not be blocked although their significance in triggering the escape may not be the same as relationships of a legal nature.362 One hypothetical example may help to illustrate this view. A, from Hamburg, and B, from Amsterdam, book an all-inclusive tour to Vietnam with a tour operator from Switzerland. While in Vietnam, B is seriously injured by a negligent act of A. B sues A in Hamburg for damages. Art. 4(1) refers to the law of Vietnam. Art. 4(2) is not applicable. Is Vietnamese law the appropriate applicable law where a Swiss company has organised the tour and has subject both travel contracts to Swiss law. A and B are not linked by a contract; nevertheless, the factual relationship of the whole company with Swiss law appears to be closer than the place of harm. There is another unclear issue concerning the role of a pre-existing relationship in Art. 4(3) Rome II Regulation: how decisive is a pre-existing relationship in generating the application of Art. 4(3)? Or, to put it another way, is the existence of a pre-existing relationship enough for the escape clause to apply, or does it have to be considered together with other factors of the cases in order to confirm the closer connection? There have been two trends of interpretation. An argument supporting the decisive role of the pre-existing relationship can be based on the large role of the pre-existing relationship in prescribing a more closely connected law in some countries’ codifications, (e.g., Art. 5 Dutch Act Regarding Conflict of Laws in Torts of 11 April 2001 (Staatsblad, 2001, 190) and Art. 133(3) Swiss Private International Law Code 1987) where the accessory connection makes up an independent exception.363 The second argument is inspired by the comparison to the English statutory tort rule. The text of s. 12 English PILA 1995 means to list the pre-existing relationship in the same position with other factors. Meanwhile, the way Art. 4(3) Rome II is phrased indicates that it gives more significance to this factor because it is the only factor that is expressly mentioned, and it is mentioned in a dominant way. That creates an

Kramer 2008, p. 14: “most of these situations will already be caught by either the exception of Art. 4(2) or Art. 12 on culpa in contrahendo.” 359 The example discussed in von Hein 2011a, § 65, p. 427. 360 Plender / Wilderspin 2009, § 18-107, p. 539. 361 Basedow 2010b, p. 133. Prof. Basedow suggests that a pre-existing relationship can include a maritime venture between affiliated users of maritime resources. 362 Kramer 2008, p. 14. 363 Kramer 2008, p. 14. 358

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impression that the pre-existing relationship is enough for the escape clause to apply.364 However, the opposing interpretation is apt to argue that the pre-existing relationship (of course closely connected with the tort) is not alone automatically decisive. The reason is that it lies in the text of Art. 4(3), which is subject to the operational structure of Art. 4 (with two main rules (not presumptions) and a discretional escape clause), and is, therefore, “not to be employed as a rule”.365 That is to say that the pre-existing relationship by itself is not sufficient to trigger the displacement. Second, the second sentence of Art. 4(3) provides that “a manifestly connection to another country might be based in particular on a pre-existing relationship […]”. The word “might” implies a degree of leeway for the courts to decide the significance of the preexisting relationship.366 In fact, the Explanatory Memorandum of the Proposal of Rome II Regulation 2003 has asserted that “the law applicable to the pre-existing relationship does not apply automatically and the court enjoys a degree of discretion to decide whether there is a significant connection between the non-contractual obligations and the law applicable to the pre-existing relationship.”367

This is the discretion which serves, for example, cases where the pre-existing relationship is a contract (closely connected with the tort) but is governed by a law that has little connection with the tort.368 Additionally, the discretion is also needed for cases of multiple applicable laws existing for a pre-existing contrac364 Fawcett et al. 2008, p. 800; see also MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 55. 365 Kramer 2008, p. 14. 366 Fawcett et al. 2008, p. 803; Okoli / Arishe 2012, p. 538. 367 COM(2003) 427 final, p 12. 368 For example, a contract where the parties choose a neutral law to govern it. See Schoeman 2011, p. 387, who gives the example that the parties in the Australian case of Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54 had expressly chosen English law. Or in the case of Innovia Films Limited v Frito-Lay North America Inc [2012] EWHC 790 [105]–[111], where the discretion enabled the court to reject Delaware law (chosen by the parties to the contract) as the law applicable to the tort, with the submission by Arnold J that “the claimant did not allege any breach of the Confidentiality and Non-Disclosure Agreement for the Mutual Disclosure of Information (‘the NDA’) contract; furthermore, that the facts relied in support its claim for breach of confidence go beyond the NDA contract.” [105]. See Okoli / Arishe 2012, p. 539, according to this author, the reasoning of the court in this respect is unjustified. The discretion is also consistent with the approach of the English courts under English statutory law. See cases Trafigura Beheer BV v Kookmin Bank Co (Preliminary Issue) [2006] EWHC 1450 (Comm), Fiona Trust & Holding Corp v Skarga [2013] EWCA Civ 275, or VTB Capital plc v Nutritek International Corp [2012] WL 2191317, where the law of the pre-existing contractual relationship was considered, but it was noted that not in all cases can it trigger the escape.

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tual relationship369 or cases of multiple parties whose contractual relations are governed by different laws.370 The discretion allows the courts to decide whether to pick one law or to not use the accessory connection mechanism to avoid dépeçage.371 Another issue that needs to be settled is the relation of the accessory connection with party autonomy. Since the reference to the pre-existing relationship (contractual relationship) is usually to the law governing it, and that law could be the law chosen by the parties for their contractual relation, a very complicated issue emerges. Since Art. 14(1)(b) Rome II Regulation372 requires that a choice of law for non-contractual obligations between parties not pursuing commercial activity (such as consumer or employment contracts) can be made only after the event giving rise to damage occurs, does this limit have an effect on the application of the accessory connection of Art. 4(3) Rome II? There are competing propositions as regards this question. One claims that “this requirement cannot be read into Art. 4(3) Rome II”,373 which means that “the application of the accessory connection mechanism is independent of the limits on party autonomy in the field of tort”.374 The opposite view is that the limit in Art. 14(1)(b) should be observed when applying Art. 4(3).375

Mills 2009, p. 149. Okoli / Arishe 2012, p. 538. For example the case Alfa Laval Tumba AB & Alfa Laval Krakow v Separator Spares International Ltd [2012] EWHC 1155 [21]–[24]. 371 MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 47: Art. 4(3) Rome II Regulation does not allow a partial displacement. 372 Art. 14(1)(b) Rome II Regulation: “Where all parties are pursuing a commercial activity, also by an agreement freely negotiated before the event giving rise to the damage occurred.” 373 Dickinson 2008, § 4.93, p. 345; de Boer 2007, p. 27 considers that in most cases, the parties choose ex ante the law applicable to any dispute that may arise as a result of their relationship, regardless whether the action sounds in contract or tort. While Okoli /  Arishe 2012, p. 540 advocates the reversed approach, he mentions in footnote 155 that the scope of the pre-existing relationship includes annulled contracts. This may provide another justification for the first approach. 374 “This answer is interpreted with regard to the Rome II Regulation’s origin and following the examples in the national PIL laws of Switzerland and Germany where the accessory connection mechanism is used even though a direct ex ante choice of law is ruled out in tort.” See Kadner Graziano 2009, p. 126. 375 “This view is reasoned basing on the Regulation (Rome II)’s Objective and Scheme, that with Art. 14(1)(b) the European legislators would like to protect the consumers and the employees from an ex ante choice of law in tort because ‘they may not fully appreciate its consequences’. By allowing an ex ante indirect choice of law for tort through the accessory connection of Art. 4(3), their purpose would be harmed.” See Kadner Graziano 2007, p. 126: this author follows this approach. See also Hamburg Group for Private International Law 2003, p. 36, 39. 369 370

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There is another uncertain issue in the context of the EU framework for contract and tort conflict under the Rome I and Rome II Regulations. That is whether the accessory connection could still work in cases of consumer or employment contracts where the parties are entitled to choose the applicable law, but, at the same time, there is the requirement that the chosen law may not deprive the consumers or the employees of the protection of the law of their habitual residence.376 The answer given by the Explanatory Memorandum of the Proposal of Rome II Regulation 2003 and impliedly by Art. 14(2) Rome II is that “the secondary connection mechanism cannot have the effect of depriving the weaker parties of the protection of the law otherwise applicable”.377 However, how does the Commission ensure this care when there is no express rule to this effect? Also in this Explanatory Memorandum of the Proposal of Rome II Regulation 2003, the Commission responds that “the solution is already implicit in the protective rules” of the Rome Convention (corresponding Rome I Regulation), and that those protective rules “would be deflected from their objective if the secondary connection validated the choice of the parties as regards non-contractual obligations but their choice was at least partly invalid as regards their contract”.378 This response is criticised as being inadequate and there has been the suggestion to incorporate this restriction of the secondary connection rule expressly in the wording of the escape clause of the Rome II Regulation.379 Moreover, it seems that the guidance of the Commission given above is not clear enough to answer the question of whether it means to refuse any accessory connection regarding consumer or employment contracts. It could be argued that it appears unreasonable to completely refuse a choice of the parties when that choice is still valid for some parts of the contract. Therefore, a comparison should be carried out. If the chosen law provides greater protection than the law of the habitual residence of the weaker party, that law should be applied to the non-contractual claim that is closely connected to that contract under the accessory connection reference.380 Another suggested situation where the chosen law should not be excluded is when it leads to “the application of a law that is closer for the consumer” than the law that would 376 Arts. 5 and 6 Rome Convention 1980, corresponding to Arts. 6 and 8 Rome I Regulation. For example, for a contract falling within the scope of Art. 6(1) Rome I Regulation, it is a requirement that the parties’ choice of applicable law may not deprive the consumer of the protection of the law of the country of his habitual residence. 377 COM(2003) 427 final, p. 13; Fawcett et al. 2008, p. 801. 378 COM(2003) 427 final, p. 13. 379 Fawcett et al. 2008, p. 801; Okoli / Arishe 2012, p. 541. 380 von Hein 2011a, § 69, p. 429: “This allows customers to participate in the advantages of the accessory connection without losing the protection afforded to them under Rome I.”

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apply to the tort by virtue of the main rule of lex damni.381 A more striking suggestion is that, in those cases, the accessory connection should not be totally excluded, but, instead, that it should operate in a way to lead to the application of the law of the place of the habitual residence of the consumer to the claim in tort.382 It is not the chosen law by the parties that is accessorily connected to the tort but the law applicable to the consumer contract in the absence of choice, which is also the law that provides the consumer with nonderogated protection.383 The rationale for these three suggestions must be that these manners of operation of the accessory connection do not harm the Regulation’s requirement of protection for a party having a weaker bargaining position.384 The better solution among them is the first one, which is to apply the law chosen by the parties for their consumer or employment contract if only that law properly protects the weaker parties.385 It is optimal because this solution satisfies the aim of applying the same law to the contract and tort claims, as well as protecting the weaker parties, and it furthers the synergy of the rules of the Rome I and Rome II Regulations. When putting together the two questions, one may argue that the answer to the first – whether Art. 14(1)(b) limits the application of the accessory connection in Art. 4(3) – should be no. This is because, if the answer were yes, in most cases of consumer contracts (or employment contracts) the accessory connection would be excluded and there would be no need for the Commission to respond regarding its application in the cases falling within the protection regime of Art. 6(1) and (2).386 To put it in another way, if the law chosen ex ante by the parties to the consumer contract were excluded for application by way of accessory connection to tort claims, there would be no need to consider if there were any deprivation of the weaker party’s protection when this law is applied to the tort relation. The fact that the Commission has given Kadner Graziano 2009, p. 127. Kadner Graziano 2009, p. 127. 383 For employment contracts, it is the law of the country in or from which the employee habitually carries out his work in performance of contract (Art. 8(2)), or the law more closely connected (Art. 8(3)). 384 A distinct suggestion is of Plender / Wilderspin 2009, § 18-106, p. 538, at fn. 223. They suggest (with some doubt) allowing a dépeçage treatment in reference to a consumer or employment contract as a pre-existing relationship. 385 According to Okoli / Arishe 2012, p. 540, at fn. 154, this approach was favoured by the English High Court in Hillside (New Media) Limited v Biarte Baasland, at [42], but not in Sapporo Breweries Ltd v Lupofresh Ltd [2012] EWHC 2013 (QB), at [41], [46]. 386 Art. 6(2) Rome I Regulation: “Notwithstanding paragraph 1, the parties may choose the law applicable to a contract which fulfils the requirements of paragraph 1, in accordance with Article 3. Such a choice may not, however, have the result of depriving the consumer of the protection afforded to him by provisions that cannot be derogated from by agreement by virtue of the law, which in the absence of choice, would have been applicable on the basis of paragraph 1.” 381 382

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guidance for the latter scenario could be reasoned to mean that the limit in Art. 14(1)(b) does not affect the application of Art. 4(3). The present writer supports the view that Art. 14(1)(b) should not affect the application of Art. 4(3). This is because the chosen law for the contract, in order to be applicable to the tort claim, will later be checked – on a case-bycase basis – under the criteria that it does not deprive the weaker party of protection given by the law of his habitual residence if that contract falls within the scope of Art. 6(1) and (2). Supposing that the purpose of the limit in Art. 14(1)(b) and the criteria given by the Commission are somehow the same, namely the protection of the weaker party, this requirement should therefore work only once. If it works at the beginning to exclude the accessory connection for all contracts involving parties not pursuing commercial activities, it means that for consumer contracts (or employment contracts) falling outside the protective scope of Art. 6(1) Rome I Regulation, such a limitation also has the effect of excluding an accessory connection which is not really a necessary effect. In conclusion, Art. 14(1)(b) Rome II Regulation should not be read to block the application of the law chosen by the parties to consumer contracts in respect of relevant tort claims. If the contract is one where the weaker party needs to be protected under the rules of the place of his habitual residence, then the court should examine whether the chosen law deprives the weaker party of such protection and accordingly decide whether or not to apply that law to the tort claim by way of the escape clause in connection with the accessory connection. b) Suggestion for Vietnam Based on the analysis above, it appears that the suitable model for an escape clause for Vietnam should be a combined clause embodying the closer connection principle and the significant pre-existing relationship. This model helps to indicate that beside a pre-existing relationship such as a contract, a closer connection to another law can also be assumed based on the entire facts of the case. For example, the facts that the relevant vehicles are registered and/or insured in another country may be supported by the entire circumstances of the case so as to trigger a displacement in favour of that country.387 As for the details of the escape clause, the first thing to note is that the wording should convey the requirement that the pre-existing relationship has to have a close connection with the tort. This close connection is a substantive relation, to be distinguished from the geographical connection between a tort and a state.

387

MüKoBGB/Junker VO (EG) 864/2007 Art. 4 para. 57.

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Second, the wording of the escape clause should indicate that the most important example of a pre-existing relationship is a contract. In practice, that could frequently be a contract of carriage (in the context of a traffic accident) or an employment contract. Additionally, although not being mentioned expressly in the wording, it should be noticed that pre-existing relationships do not cover family relationships due to, for example, the lack of a close connection between kinship and a tort arising out of an traffic accident. Nevertheless, the pre-existing relationship should include factual relationships such as the parties sharing the same departure and return of a trip, joining a maritime venture or contracting with the same tour operator where the identical law governs those contracts. Third, in considering how rigidly a closely connected pre-existing relationship will trigger the escape clause, the proper interpretation is that a preexisting relationship, especially a contract, may be highly significant but is not automatically determinative. The entire circumstances of the case should also be considered so as to either support or decrease its impact. The fourth issue needing to be addressed is the relation of the accessory connection with the principle of party autonomy. Vietnam is different from the EU in that Vietnamese legislation has not allowed the parties to choose the law applicable to a tort, either before or after occurrence of the event giving rise to the damage. Moreover, unlike the Rome I Regulation, Vietnam has not yet included protective rules for consumer or employment contracts to the effect that the law chosen by the parties cannot deprive the consumers or the employees of the protection of the law of their habitual residence. Hence, the suggestion for Vietnam should be to state in the proposed escape clause that the law chosen by the parties for a consumer or employment contract will be applied to the tort conflict as long as that law does not deprive the weaker party of the protection of the law of his habitual residence. In the future, when such limitations on the choice of law for tort conflict are formulated and when protective rules for consumer or employment contracts are cognised in Vietnam, the combined (and preferred) solution for protecting weaker parties is not to subject the accessory connection to the limitation on the choice of law for tort conflict, but instead to let the chosen law for a closely connected consumer or employment contract be examined as to whether it deprives the weaker party of the protection of the law of his habitual residence and to accordingly decide whether to give effect to that law. Furthermore, the temporary unavailability of a choice of law by the parties for tort conflict may lead to suggesting that a proposed escape clause for Vietnam should include the consideration of the “legitimate expectations of the parties”. In fact, this factor was once included in the wording of the escape clause of the Amended Proposal of the European Commission in 2006. 388 However, Art. 4(3) Rome II rejected that factor due to worries that it may yield uncertainty, which is contrary to the uniformity objective of an instrument

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applying to a democratic European Community.389 Moreover, such uncertainty goes hand in hand with the risk of forum shopping,390 which might result from the likelihood that this factor will be taken as an expedient to apply the lex fori.391 Nevertheless, the most persuasive argument against the inclusion of the parties’ legitimate expectations as an express influencing factor is that specific instances of such expectations (parties’ common habitual residence and preexisting relationship) have already been highlighted for the operation of exceptions, which makes a further general reference to the parties’ legitimate expectations unnecessary and a source of legal uncertainty. 392 Vietnam has favoured certainty; at the same time, the country is not bound by the purpose of uniformity as heavily as are the member states of the EU. Moreover, for the time being, the country has not had a rule allowing the parties to choose the applicable law for a tort relationship; consequently, the factor of “legitimate expectations of the parties” should be taken into consideration in the scope of the escape clause. In doing so, at least some space is granted for the subjective wishes of the parties (besides the common nationality exception in Art. 773(3) VCC 2005). In the future, when such oparty autonomy for tort will be acknowledged in Vietnam, might a different answer be given to the question of whether to incorporate “legitimate expectations of the parties” int the escape clause? Due to the very practical worry that it would be used as an expedient to unreasonably arrive at the lex fori and, therefore, degrade the case, the tentative suggestion might be to prefer its exclusion.

VI. Concluding Remarks VI. Concluding Remarks

Art. 773 VCC 2005 contains the conflict rule for tort. Under Art. 773(1) the principle of lex loci delicti is applied, which is supported by Vietnamese scholars. The ubiquity principle is envisaged when the place where the tortious act takes place and the place where the damage arises are in different countries. 388 Amended proposal for a European Parliament and Council Regulation on the law applicable to non-contractual obligations (“ROME II”) Brussels, 21 Feb. 2006 COM(2006) 83 final 2003/0168 (COD), p. 4: “But the Commission does acknowledge the significance of some factors listed in paragraph 3, in particular as regards the parties’ shared habitual residence, a pre-existing de facto or de jure relationship or the legitimate expectations of the parties. As the first two of these are already mentioned expressly in paragraph 2 and 3 of the initial proposal, Art. 5(3) of the Amended Proposal now contains an express reference to the legitimate expectations of the parties.” 389 Okoli / Arishe 2012, p. 537. 390 Okoli / Arishe 2012, p. 537. 391 Kramer 2008, p. 16. 392 Fentiman 2009, p. 103.

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The article, regrettably does not say who is entitled to choose between the two laws, the plaintiff or the court. No stance has been taken by scholars, and judicial practice cannot give guidance as Vietnamese courts have been applying Vietnamese law to cross-border tort cases without explaining why. Art. 773(3) provides for a common nationality exception to the lex loci delicti, regulating that Vietnamese law is to apply to cases where the act causing damage occurs outside the territory of Vietnam but the person who causes the damage and the victim are both either Vietnamese citizens or legal persons. Meanwhile, there are more clarified conflict rules in the field of maritime tort, which are contained in Art. 773(2) VCC 2005 and Art. 3 VMC 2005. As regards specific torts, Vietnamese scholars have suggested having a special rule for non-contractual obligations arising out of an act of unfair competition, which can be inserted into the specialised Law on Competition. Apart from that, there has been no further elaboration on other specialised torts, e.g., product liability, environmental damages or infringement of intellectual property rights. To propose a suitable rule for tort conflict for Vietnam, many approaches have been examined. The double actionability rule and policy analysis should be excluded. While the former rule gives too many advantages to the defendant, the latter approach favours flexibility at the expense of predictability of court decisions. Since most Vietnamese judges are inexperienced with international tort cases, the Vietnamese would rather approach tort conflicts with a presumptive rule, which can be displaced by the rebuttal of closer connection. Simultaneously, the place of residence of the victim is similarly not a suitable connecting factor for the general tort conflict rule due to the social and legal environment of Vietnam – which has a high number of traffic accidents and uninsured vehicles – and the financial burden it places on the wrongdoer. Among the three varieties of the lex loci delicti, the most appropriate solution for Vietnam is the place of harm. This rule strikes a reasonable balance between the interests of both the tortfeasor and the victim. The criticisms of this rule, observing that the place of damage in another state is sometimes unforeseeable to the defendant or that the place of damage is difficult to locate in cases of non-physical injuries, have been solved by specific rules for certain specific torts where such problems are most likely to arise. Besides, the place of damage rule is also a good solution from the perspective of jurisdiction of Vietnamese courts. Since the international tort jurisdiction of Vietnamese courts is mainly premised on the place of residence of the defendant and the place of tortious act, the place of damage rule for the applicable law provides a balanced position, which brings about a reasonable chance of adopting something other than a ready-made application of the lex fori. The proposed rule employing the place of damage as the connecting factor for the general conflict rule on tort should specify that it is the place of direct damage and that the place of any indirect or consequential damages must be

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treated as irrelevant for the determination of the applicable law. The law designated for the direct damage will be applied also to these consequential damages. While it seems to be uncontroversial that the treatment of financial damage sustained elsewhere by the first or second victim is irrelevant, the same treatment for a deterioration of the physical condition of the person or property of the first victim or for consequential material damage sustained by a second victim in another country is less obvious. Nevertheless, the quest for certainty and a foreseeability of the applicable law suggests that the courts should treat as irrelevant those consequential financial or material damages sustained elsewhere by the first or second victim. No less difficult is the task of locating (direct) damage in a country. Despite these difficulties in many cases, especially with economic loss, a judge should, out of a respect for the systematisation of the general rule, refrain from bypassing this step and resorting directly to the escape clause. In order to ascertain the most appropriate country where the damage occurred in hard cases of personal injury and damage to property, a court should identify, in a chain of facts, the objective ascertainable factor which is most closely connected to the damage. With regard to economic loss, a court has to identify the crucial point of from where the loss results. The suggested technique is to apply an “irreversibility test”, which means to detect the point when the loss suffered by the victim is no longer revocable. Additionally, it should be borne in mind that these techniques may produce unjustified results in certain cases due to the diversity of facts, which renders considerable the chances for an application of the escape clause. Vietnamese legislation has paid considerable attention to maritime torts. According to Art. 3(1) VMC 2005, internal torts which occur when the vessel is sailing on the high seas are to be governed by the law of the flag state. With regard to internal torts happening in the territorial waters, Art. 3 VMC 2005 does not provide a direct answer. The suggested solution for the Rome II Regulation as well as for Vietnam for this category of torts is the law of the flag state, so that internal torts, whether occurring when the vessel is shipping on the high seas or in the territorial waters, will be governed by the law of the flag state. Nevertheless, under the Rome II Regulation, internal torts are likely to be subject to the law governing the maritime venture as a pre-existing relationship under Art. 4(3) Rome II. Presently, this manner of treatment is not yet available in Vietnam due to the lack of such an escape clause. For external torts happening in the territorial waters of a country, the law of the littoral state is applicable under Art. 3(3) VMC 2005. What should be suggested further for Vietnam is that the law of the coastal state should govern external torts occurring on the continental shelf and in the economic zone involving activities such as the exploration and exploitation of natural resources above and on the sea-bed and in the subsoil. Pollution caused by vessels or fish farms in the waters above the continental shelf or in the eco-

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nomic zone should be governed by the law of the coastal state as well. Collisions on the high seas are subject to the law of the lex fori, in accordance with Art. 3(3) VMC 2005, which is a suitable solution. Apart from that, Art. 3(3) VMC 2005 also stipulates the law of the common flag state of the seagoing vessels for collisions occurring on the high seas or on the territorial waters or territorial sea. The issue of greatest concern for Vietnam is in fact the lack of an escape clause which can, for instance, refer to the law governing the maritime venture or can correct inappropriate results in individual cases. The suggested approach for Vietnam in ascertaining the applicable law when damages are spread in different countries is to find the main place of damage. The approach needs an anchor in a paragraph of the article on the law applicable in the absence of choice. The most appropriate solution is to convey it in a sub-rule accompanying the main rule, i.e., the place of damage. Along with the general rule for tort conflict, Rome II contains a number of specific rules for specific torts, which are designated for the particular characters of those torts. Those specific rules relate to product liability, unfair competition and acts of restricting free competition, environmental damage, infringement of intellectual property rights, industrial action, and violations of privacy and rights relating to personality, including defamation (excluded from the Rome II Regulation). The survey of the specialities of those specific torts suggests that many particular issues – as concerns locating damage, damage in different countries, the requirement of the applicable law’s foreseeability, and whether other connecting factors such as the place of residence, the place of acting, or even the rule of closest connection are more appropriate than the place of damage rule – should be addressed in the particular types of tort where such problems are most likely to arise. The lesson to be drawn for Vietnam is that the model of one general rule for the variety of specific torts is no longer appropriate. The specific conflict rules for certain types of torts help to concretise the connecting factors for different specific situations of torts, thus enhancing the foreseeability of court decisions. The most suitable rule for Vietnam for each specific tort should be researched in detail, a process for which analysis of EU law could be an inspiration. Under the current Vietnamese law, the only departure from the lex loci delicti rule is the common nationality rule of Art. 773(3), which manifests forum-bias as it applies solely when the common nationality of the parties is of Vietnam. In proposing an exception from the main rule based on the common habitual residence of the parties, the present writer supports the solution of Art. 20 Japanese Act 2006. Accordingly, the common habitual residence should be designated expressly as a significant factor that can trigger the escape clause if it is supported by the entire circumstances of the case. This model can resolve most of the criticism asserted against Rome II’s common habitual residence rule as most of the responses to them is to have resort to an escape clause.

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Nevertheless, Vietnamese legislation currently does not provide for an escape clause of closer connection to the tort. The suitable model for an escape clause for Vietnam is a combined clause embodying the closer connection principle and the principle of a significant pre-existing relationship. The wording of the escape clause has to convey the requirement that the preexisting relationship must have a close substantive, rather than geographical, connection with the tort. The wording should indicate that a contract is the most important example of a pre-existing relationship. A pre-existing relationship, such as a contract, may be highly significant, but not automatically decisive in triggering the escape clause. It has to be supported by the entire circumstances of the case. The more complicated issue is the relation of the accessory connection with the principle of party autonomy in tort conflict. Vietnamese legislation has not allowed the parties to choose the law applicable to a tort, either before or after the event giving rise to the damage occurred. Moreover, unlike the Rome I Regulation, Vietnam has not yet included protective rules for consumer or employment contracts to the effect that the law chosen by the parties may not deprive the consumers or the employees of the protection of the law of their habitual residence. Hence, the suggestion for Vietnam should be to formulate in the proposed escape clause that the law chosen by the parties for a consumer or employment contract shall be applied for the tort conflict as long as that law does not deprive the weaker party of the protection of the law of his habitual residence. In the future, when such limitations on the choice of law for tort conflict and the protective rules for consumer or employment contracts are cognised in Vietnam, the combined (and preferable) solution for protecting the weaker parties is not to subject the accessory connection to the limitation on the choice of law for tort conflict but to let the law chosen for a closely connected consumer or employment contract be examined as to whether it deprives the weaker party of the protection of the law of his habitual residence and to accordingly decide whether to give effect to that law. Furthermore, the temporary unavailability of a choice of law by the parties for tort conflict suggests that the factor “legitimate expectations of the parties” should be taken into consideration in the scope of the escape clause. In the future, when such party autonomy will be cognised in Vietnam, this factor should be excluded due to the concern that it could be used as an expedient to apply the lex fori.

General Conclusion General Conclusion

General Conclusion

Despite certain development in recent years, Vietnamese private international law needs reform in many respects. The first suggestion for Vietnam is to promote research into the history of Vietnamese private international law as the relevant material is sketchy, which prevents a relatively complete overview of the discipline. Additionally, research into the global history of private international law should be promoted as well. Most Vietnamese readers have access to neither the various schools, e.g., the statutists, the American Choice-of-Law Revolution, nor the outstanding commentators of private international law, e.g., Savigny, Mancini, or Currie. In a context where the quality of many provisions is undeserved, many relations are lacking regulation and provisions are scattered in many legal documents. The theme of a comprehensive statute on private international law was discussed when the VCC 1995 was passed. Regrettably, the legislature decided to regulate certain matters of private international law in Part VII of the VCC 1995 instead. The VCC 2005 did not bring any change to the situation. In order to overcome the incompleteness of the provisions, it is hoped that a modern statute on Vietnamese private international law will soon appear on the agenda. Besides the deficiencies of statutory provisions, the need for reform is apparent in judicial practice. There are abundant cases where the courts neglect the private international law perspective. The courts merely resolve the case without any reasoning on the applicable law as if they are dealing simply with a domestic case. It is regrettable that a comparison between judicial practice in Vietnam before 1975 and nowadays reveals that the private international law aspects of cases were better acknowledged in the former period. The courts in that time had reasoned over the private international law facts of the case and had expressly indicated the law applicable. Meanwhile, most recent cases omit such a duty. Such a decrease poses a concern for the current stage of research and the teaching of private international law in Vietnam. There has not been qualified and systematic research on the provisions of Vietnamese private international law. The unavailability of published cases is another reason leading to the undeserved quality of Vietnamese academics and practitioners. Some people also blame the inappropriate curriculum of law schools. In the meantime, the demand for application of private international law rules in Vietnam is increasing, which raises the need for dramatic reform.

Annex

Translation of Relevant Provisions Vietnamese Civil Code 2005∗

Annex – Translation of Relevant Provisions Vietnamese Civil Code 2005

The National Assembly No: 33/2005/QH11 Socialist Republic of Vietnam Independence – Freedom – Happiness Ha Noi, day 14 month 06 year 2005

Civil Code Part Three: Civil obligations and civil contracts Chapter XVII: General provisions Article 395 – Offer modification proposed by the offeree When the offeree accepts to enter into a contract but states the conditions therefore or modifies the offer, he/she/it shall be considered having made a new offer. Article 396 – Acceptance of offers to enter into contracts The acceptance of an offer to enter into a contract is the offeree’s reply to the offeror on the acceptance of the whole contents of the offer

Part Seven: Civil relations involving foreign elements Article 758 – Civil relations involving foreign elements Civil relations involving foreign elements mean civil relations in which at least one party is a foreign agency, organization or individual or overseas Vietnamese or civil relations between the parties being Vietnamese citizens, organizations but the bases for establishing, altering or terminating those relations are foreign laws, arise overseas or assets related to such relations are located overseas.

Source: Legal normative documents – Website of the Vietnamese Ministry of Justice, available at . Link to VCC 2005: . ∗

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Article 759 – Application of civil law of the Socialist Republic of Vietnam, treaties, foreign laws and international practices 1. The provisions of the civil law of the Socialist Republic of Vietnam shall apply to civil relations involving foreign elements, unless otherwise provided for by this Code. 2. In cases where a treaty to which the Socialist Republic of Vietnam has signed or acceded contains provisions different from the provisions of this Code, the provisions of such treaty shall apply. 3. In cases where the application of foreign laws is referred to by this Code and other legal documents of the Socialist Republic of Vietnam or by the treaties to which the Socialist Republic of Vietnam is a contracting party, such foreign laws shall apply, provided that such application or the consequence thereof is not contrary to the basic principles of the law of the Socialist Republic of Vietnam; in cases where such foreign laws refer back to the law of the Socialist Republic of Vietnam, then the law of the Socialist Republic of Vietnam shall apply. Foreign laws shall also apply in cases where the parties have so agreed upon in contracts, if such agreement is not contrary to the provisions of this Code and other legal documents of the Socialist Republic of Vietnam. 4. In cases where the civil relations involving foreign elements are not governed by this Code and other legal documents of the Socialist Republic of Vietnam, the treaties to which the Socialist Republic of Vietnam is a contracting party or civil contracts between the parties, the international practices shall apply, provided that such application or the consequence thereof is not contrary to the basic principles of the law of the Socialist Republic of Vietnam. Article 760 – Bases for the application of laws to stateless persons or foreigners with two or more foreign nationalities 1. In cases where this Code or other legal documents of the Socialist Republic of Vietnam refer to the application of the laws of foreign countries of which the foreigners are citizens, the laws applicable to stateless persons shall be the laws of the countries where such persons permanently reside; if such persons have no permanent residences, the law of the Socialist Republic of Vietnam shall apply. 2. In cases where this Code or other legal documents of the Socialist Republic of Vietnam refer to the application of laws of countries of which the foreigners are citizens, the laws applicable to foreigners with two or more nationalities shall be the laws of the countries of which such persons bear the nationalities and where they reside at the time when the civil relations arise; if such persons do not reside in one of the countries of which they bear the nationalities, the laws of the countries of which such persons bear their respective nationalities and have the closest relations regarding the civil rights and duties shall apply. Article 761 – Civil legal capacity of foreigners 1. The civil legal capacity of a foreigner shall be determined according to the law of the country of which he/she bears the nationality. 2. Foreigners shall have the civil legal capacity in Vietnam as Vietnamese citizens, except in cases where the law of the Socialist Republic of Vietnam otherwise provides for.

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Article 762 – Civil act capacity of foreigners 1. The civil act capacity of a foreigner shall be determined according to the law of the country where he/she is a citizen, except in cases where the law of the Socialist Republic of Vietnam otherwise provides for. 2. In cases where a foreigner establishes and/or performs civil transactions in Vietnam, his/her civil act capacity shall be determined according to the law of the Socialist Republic of Vietnam. Article 763 – Determination of persons as having no, having lost or having been restricted in, civil act capacity 1. The determination of persons as having no, having lost or having been restricted in, civil act capacity must comply with the laws of the countries of which such persons bear the nationalities. 2. In cases where foreigners reside in Vietnam, the determination of such persons as having no, having lost or having been restricted in, civil act capacity must comply with the law of the Socialist Republic of Vietnam. Article 764 – Determination of persons as missing or dead 1. The determination of a person as missing or dead must comply with the law of the country of which such person bears the nationality at the time before acquiring the last information on his/her missing or death. 2. In cases where a foreigner resides in Vietnam, the determination of such person as missing or dead must comply with the law of the Socialist Republic of Vietnam. Article 765 – Civil legal capacity of foreign legal persons 1. The civil legal capacity of a foreign legal person shall be determined according to the law of the country where such foreign legal person has been established, except for the case specified in Clause 2 of this Article. 2. In cases where a foreign legal person establishes and/or performs civil transactions in Vietnam, the civil legal capacity of such foreign legal person shall be determined in accordance with the law of the Socialist Republic of Vietnam. Article 766 – Property ownership rights 1. The establishment, implementation, alteration and termination of property ownership rights and the contents of such rights shall be determined according to the law of the country where such property is located, except for the cases specified in Clauses 2 and 4 of this Article. 2. The ownership rights to movable property on the way of transportation shall be determined according to the law of the country of destination, unless otherwise agreed upon. 3. The differentiation between movable and immovable property shall be deter-mined in accordance with the law of the country where such property is located. 4. The determination of the ownership rights to civil aircraft and sea-going vessels in Vietnam must comply with the law on civil aviation and the maritime law of the Socialist Republic of Vietnam.

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Article 767 – At-law inheritance involving foreign elements 1. The inheritance at law must comply with the laws of the countries of which the estate leavers bear the nationalities before their death. 2. The inheritance rights to immovables must comply with the laws of the countries where such immovables are located. 3. Heirless estates being immovables shall belong to the States of the countries where such immovables are located. 4. Heirless estates being movables shall belong to the States of the countries of which the estate leavers bear the nationalities. Article 768 – Testamentary inheritance 1. The capacity to make, change and cancel testaments must comply with the laws of the countries where the testators are citizens. 2. Forms of testament must comply with the laws of the countries where the testaments are made. Article 769 – Civil contracts 1. The rights and obligations of the parties to a civil contract shall be determined in accordance with the law of the country where the contract is performed, unless otherwise agreed upon. A civil contract entered into and performed entirely in Vietnam must comply with the law of the Socialist Republic of Vietnam. In cases where a civil contract does not specify the place of performance, the determination of the place of performance of the contract must comply with the law of the Socialist Republic of Vietnam. 2. Civil contracts relating to immovables in Vietnam must comply with the law of the Socialist Republic of Vietnam. Article 770 – Forms of civil contract 1. Forms of a contract must comply with the law of the country where the contract is entered into. Where a contract is entered into in a foreign country, which violates the regulations on contractual forms under the law of that country but is not contrary to the contractual form provided for by the law of the Socialist Republic of Vietnam, the form of the contract entered into in the foreign country shall still be recognized in Vietnam. 2. The forms of contracts related to the construction of works or transfer of ownership rights to works, houses and other immovables in the Vietnamese territory must comply with the law of the Socialist Republic of Vietnam. Article 771 – Civil contracts entered in absentia In cases where a contract is entered in absentia, the determination of the place where the contract is entered into must comply with the law of the country where the individual resides or where the legal person is headquartered, that has proposed the entry into the contract. The time for entry into a contract in absentia shall be determined in accordance with the law of the party proposing the entry into the contract if this party receives the reply of acceptance from the party to which the entry is proposed.

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Article 772 – Unilateral civil transactions In unilateral civil transactions, the rights and obligations of the party that voluntarily performs the unilateral civil transactions shall be determined in accordance with the law of the country where such party resides or conducts principal operations. Article 773 – Compensation for damage outside contract 1. Compensation for damage outside contract shall be determined in accordance with the law of the country where the act causing such damage takes place or where the actual consequences of such act arise. 2. Compensation for damage caused by an aircraft flying in international airspace or by a sea-going ship sailing in international waters shall be determined in accordance with the law of the country of which such aircraft or ship bears the nationality, unless otherwise provided for by the maritime or aviation law of the Socialist Republic of Vietnam. 3. In cases where the act causing damage occurs outside the territory of the Socialist Republic of Vietnam and the person who causes the damage and the victim are both Vietnamese citizens or legal persons, the law of the Socialist Republic of Vietnam shall apply. Article 774 – Copyright involving foreign elements The copyright of foreign individuals and/or legal persons over the work that is publicized and disseminated for the first time in Vietnam, or created and performed in a certain form in Vietnam, shall be protected under the provisions of the law of the Socialist Republic of Vietnam and treaties to which the Socialist Republic of Vietnam is a contracting party. Article 775 – Industrial property rights and the rights to plant varieties, which involve foreign elements Industrial property rights or the rights to plant varieties of foreign individuals or legal persons to the objects of industrial property rights or objects of the rights to plant varieties that have been granted protection titles or recognized by the Vietnamese State shall be protected under the provisions of the law of the Socialist Republic of Vietnam and treaties to which the Socialist Republic of Vietnam is a contracting party. Article 776 – Technology transfer involving foreign elements Technology transfer between Vietnamese individuals or legal persons and foreign individuals or legal persons, and technology transfer from any foreign country into Vietnam and from Vietnam to any foreign country, must comply with the provisions of this Code and other legal documents of Vietnam on techno-logy transfer and with treaties to which Vietnam is a contracting party or the laws of the foreign countries, if the application or the consequence thereof is not contrary to the basic principles of the law of the Socialist Republic of Vietnam. Article 777 – Statute of limitations for lawsuits The statute of limitations for lawsuits regarding civil relations involving foreign elements shall be determined in accordance with the laws of the countries which are applied to the corresponding civil relations involving foreign elements.

Vietnamese Civil Procedure Code 2004∗ Vietnamese Civil Procedure Code 2004 The National Assembly No: 24/2004/qh11 Socialist Republic of Vietnam Independence – Freedom – Happiness Ha noi, day 15 month 06 year 2004

Civil Procedure Code Part One: General Provisions Chapter I: Task and effect of the Civil Procedure Code Article 2 – Effect of the Civil Procedure Code […] 3. The Civil Procedure Code shall apply to the settlement of civil cases and matters involving foreign element(s); where international treaties which Vietnam has signed or acceded to provide otherwise, the provisions of such international treaties shall apply.

Chapter III: Court’s jurisdiction Article 35 – Territorial jurisdiction of courts 1. Territorial jurisdiction of courts to settle civil cases shall be determined as follows: a) The courts of the localities where the defendants reside, work, if the defendants are individuals, or where the defendants are headquartered, if the defendants are agencies or organizations, shall have the jurisdiction to settle according to first-instance procedures civil, marriage- and family-related, business, trade or labor disputes prescribed in Articles 25, 27, 29 and 31 of this Code; b) The involved parties shall have the right to agree with each other in writing to request the courts of the localities where the plaintiffs reside or work, if the plaintiffs are individuals, or where the plaintiffs are headquartered, if they are agencies or organizations, to settle civil, marriage and family-related, business, trade or labor disputes prescribed in Articles 25, 27, 29 and 31 of this Code; c) The courts of the areas where exists immoveables shall have the jurisdiction to settle disputes over such immoveables. 2. Territorial jurisdiction of courts to settle civil matters shall be determined as follows:

∗

Link to VCPC 2004: .

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a) The requested courts of the areas where persons are to be declared losing their civil act capacity or having restricted civil act capacity reside or work shall have the jurisdiction to resolve such requests; b) The requested courts of the areas where persons absent from their residential place are to be announced for search or to be declared missing or dead reside for the last time, shall have the jurisdiction to settle requests for announcement of the search for persons absent from their residential places and management of such persons’ properties or requests for declaring a person missing or dead; c) The courts which have issued decisions to declare persons missing or dead shall have the jurisdiction to resolve requests to revoke their decisions; d) The courts of the areas where the persons who are obliged to execute foreign courts civil, marriage and family, business, trade, or labor judgments or decisions reside, work, if judgment debtors are individuals or where the judgment debtors are headquartered, if they are agencies or organizations, or where exists the property relating to the enforcement of such judgments or decisions of foreign courts, shall have the jurisdiction to resolve requests to recognize and enforce foreign courts’ civil, marriage and family, business, trade or labor judgments or decisions in Vietnam; e) The courts of the areas where the request senders reside or work, if they are individuals, or where the request senders are headquartered, if they are agencies or organizations, shall have the jurisdiction to settle requests not to recognize foreign courts’ civil, marriage and family, business, trade or labor judgments or decisions, which are not required to be enforced in Vietnam; f) The courts of the areas where the persons who are obliged to execute awards of foreign arbitrators reside or work, if the judgment debtors are individuals or where the judgment debtors are headquartered, if they are agencies or organizations or where exists the property relating to the enforcement of foreign arbitrators’ awards, shall have the jurisdiction to resolve requests to recognize and enforce in Vietnam awards of foreign arbitrators; g) The courts of the areas where illegal marriages are registered shall have the jurisdiction to resolve requests to revoke such illegal marriages; h) The court of the area where one of the parties to a voluntary divorce, child custody or property division resides or works shall have the jurisdiction to resolve the request to recognize the voluntary divorce, child custody, property division upon divorce; i) The court of the area where one of the parties that requests the court to recognize their agreement on change of post-divorce child custodian resides or works shall have the jurisdiction to resolve that request; j) The court of the area where one parent of a minor child resides or works shall have the jurisdiction to resolve a request to restrict rights of the father or mother towards the minor child or his/her right to see the child after the divorce; k) The court of the area where an adoptive parent or adopted child resides or works shall have the jurisdiction to resolve a request to terminate the child adoption; l) The courts’ territorial jurisdiction to resolve requests relating to the settlement of disputes by the Vietnamese commercial arbitrators shall comply with law provisions on commercial arbitration. Article 36 – Jurisdiction of courts selected by plaintiffs or requesters 1. The plaintiffs shall have the right to select courts for resolution of civil, marriage and family-related, business, trade or labor disputes in the following cases: a) If the plaintiffs do not know where the defendants reside or work or where their head-offices are located, they may ask the courts of the areas where the defendants last

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reside or work or where the head-offices of the defendants are last located or where the defendants’ properties are located to settle cases; b) If disputes arise from the operations of a branch of an organization, the plaintiff may ask the court of the area where the organization’s head-office is located or where its branch is located to settle them; c) If defendants do not have residence places, work places or head-offices in Vietnam or the cases related to disputes over alimonies, the plaintiffs may ask the courts of the areas where they reside or work to settle the cases; d) If disputes are over compensation for non-contractual damage, the plaintiffs may ask the courts of the areas where they reside, work or are headquartered or where the damage is caused to settle them; e) If disputes are over compensation for damage or allowance upon termination of labor contracts, over social insurance, the rights and/or interests in relation to job, wages, income and other working conditions, for the laborers, the plaintiffs being laborers may ask the courts of the areas where they reside or work to settle them; f) If disputes arise from the employment of labor by sub-contractors or mediators, the plaintiffs may ask the courts of the areas where their actual employers reside, work or are headquartered or where the sub-contractors or the mediators reside or work to settle them; g) If disputes arise from contractual relations, the plaintiffs may ask the courts of the areas where the contracts are performed to settle them; h) If the defendants reside, work or are headquartered in different places, the plaintiffs may ask the court of the area where one of the defendants resides or works or is headquartered to settle them; i) If disputes are over immoveables which exist in different localities, the plaintiffs may request the court of the area where one of such immoveables exist to settle them. 2. The requesters may select courts to settle their marriage and family-related requests in the following cases: a) For civil requests prescribed in Clauses 1, 2, 3 and 4 of Article 26 of this Code, the requesters may ask the courts of the areas where they reside, work or are headquartered to resolve them; b) For requests to revoke illegal marriages as provided in Clause 1, Article 28 of this Code, the requesters may ask the courts of the areas where the illegal marriages are registered to resolve them; c) For requests to restrict rights of fathers or mothers towards their minor children or their right to visit the children after the divorces, the requesters may ask the courts of the areas where the children reside to resolve them. […]

Part Five: Procedures for resolution of civil matters Chapter XX: General provisions on procedures for resolution of civil matters Article 283 – Grounds for protest according to cassation procedures Legally effective judgments or decisions of courts shall be protested against according to cassation procedures when there is one of the following grounds: 1. Conclusions in the judgments or decisions are incompatible with the objective details of the cases; 2. Serious violations are committed in legal proceedings; 3. Serious errors are made in the application of laws.

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Chapter XIX: Reopening procedures Article 305 – Grounds for protest according to reopening procedures Legally effective judgments or decisions shall be protested against according to reopening procedures when there is one of the following grounds: 1. Important details of the case were newly discovered which the involved parties could not have known in the course of resolving the case; 2. There are grounds to prove that the conclusions of the expert witnesses and translations of interpreters were untruthful or evidences were falsified; 3. Judges, people's jurors or procurators intentionally diverted the case files or deliberately made unlawful conclusions; 4. The criminal, administrative, civil, marriage and family, business, commercial or labor decisions of courts or decisions of State agencies on which the courts based themselves to resolve the cases had already been annulled.

Part Six: Procedures for recognition and enforcement in Vietnam of civil judgments or decisions of foreign courts and/or foreign arbitral awards Chapter XXVII: Procedures for consideration of petitions for recognition and enforcement in Vietnam of civil judgments or decisions of foreign courts Article 356 – Foreign courts’ civil judgments or decisions which shall not be recognized and enforced in Vietnam: 1. The civil judgments or decisions which have not yet taken legal effect under the provisions of law of the countries where the courts have rendered such judgments or decisions. 2. The judgment debtors or their lawful representatives were absent from court sessions of foreign courts because they had not been duly summoned. 3. The cases fall under the exclusive jurisdiction of the Vietnamese court. 4. There has been a legally effective civil judgment or decision on the same case, that has been made by the Vietnamese court or by the foreign court but has been recognized and permitted by the Vietnamese court for enforcement in Vietnam or the Vietnamese court has accepted and been settling the case before it is accepted by a foreign court. 5. The statutes of limitation for judgment execution have expired under the law of the countries where the courts rendered such civil judgments or decisions or under Vietnamese law. 6. The recognition and enforcement in Vietnam of the judgments or decisions of foreign courts are contrary to fundamental principles of the Vietnamese law.

Part Nine: Procedures for resolving civil cases and matters involving foreign elements and judicial assistance in civil procedures Chapter XXXIV: General provisions on procedures for resolution of civil cases and matters involving foreign elements Article 407 – Civil procedure-legal capacity and civil procedural act capacity of foreign citizens and stateless people 1. The civil procedure-legal capacity and civil procedural act capacity of foreign citizens or stateless people shall be determined as follows:

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a) Pursuant to the laws of the countries of which the citizens bear the nationality; pursuant to Vietnamese law if citizens bear the Vietnamese nationality and a foreign nationality; pursuant to the laws of the countries where the citizens reside, if they each bears several foreign nationalities, except otherwise provided for by Vietnamese law; b) Pursuant to Vietnamese law if the citizens permanently reside, work or live in Vietnam; c) Pursuant to the laws of the countries where the stateless people permanently reside, work or live; d) Pursuant to Vietnamese law if the civil procedural acts are performed in the Vietnamese territory. 2. Foreign citizens or stateless people can be recognized as having civil procedural act capacity in the Vietnamese territory, if they have no civil procedural act capacity under foreign laws but have the civil procedural act capacity under Vietnamese law.

Chapter XXXV: Jurisdiction of Vietnamese courts to settle civil cases and/or matters involving foreign elements Article 410 – General provisions on the Vietnamese courts’ jurisdiction to resolve civil cases and/or matters involving foreign elements 1. The Vietnamese courts’ jurisdiction to resolve civil cases and/or matters involving foreign elements shall be determined under the provisions of Chapter III of this Code, except where this Chapter contains different provisions. 2. Vietnamese courts shall settle civil cases and/or matters involving foreign elements in the following cases: a) The defendant is a foreign agency or organization, which is headquartered in Vietnam or the defendant has a managing agency, branch or representative office in Vietnam; b) The defendant is a foreign national or stateless person who permanently resides, works or lives in Vietnam or has assets in the Vietnamese territory; c) The plaintiff is a foreign national or stateless person who permanently resides, works or lives in Vietnam, for civil cases or matters claiming alimonies or parent identification; d) Civil cases or matters related to civil relations which are established, changed or terminated on the grounds prescribed by Vietnamese law, or which happen in the Vietnamese territory but involve at least one party being foreign individual, agency or organization; e) Civil cases or matters related to civil relations which are established, changed or terminated on the grounds prescribed by foreign laws or which happen in foreign countries, but involve all parties being Vietnamese citizens, agencies or organizations and either the plaintiff or the defendant resides in Vietnam; f) The disputes arise out of a contract with the partial or full performance thereof taking place in the Vietnamese territory; g) The divorce cases with the plaintiffs or the defendants being Vietnamese citizens. Article 411 – Exclusive jurisdiction of Vietnamese courts 1. The following civil cases involving foreign elements shall fall under the exclusive jurisdiction of Vietnamese courts: a) Civil cases involving rights to properties being immoveables in the Vietnamese territory; b) Disputes arising out of transportation contracts where the carriers have their headoffices or branches in Vietnam;

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c) The divorce case between a Vietnamese citizen and a foreign citizen or a stateless person if both spouses reside, work or live in Vietnam; 2. The following civil matters involving foreign elements shall fall under the exclusive jurisdiction of Vietnamese courts: a) Determining a legal event, if this event occurs in the Vietnamese territory; b) Declaring that a foreign national or a stateless person has lost his/her civil act capacity or has had restricted civil act capacity if he/she resides, works or lives in Vietnam and such declaration relates to the establishment of his/her rights and obligations in Vietnam; c) Declaring that a foreign national or a stateless person is missing or dead, if he/she is present in Vietnam at the time of occurrence of events which constitute grounds for declaring a person missing or dead, and such declaration relates to the establishment of his/her rights and obligations in Vietnam; d) Requesting by a foreigner a Vietnamese court to declare that a Vietnamese citizen is missing or dead if such a declaration relates to the establishment of rights and obligations of that foreigner in Vietnam; e) Recognizing that an asset in the Vietnamese territory is derelict or recognizing the current manager’s ownership over derelict immovables in the Vietnamese territory.

Vietnamese Law on Marriage and Family 2000∗ Vietnamese Law on Marriage and Family 2000 The National Assembly No: 22/2000/QH10 Socialist Republic of Vietnam Independence – Freedom – Happiness Ha Noi, day 09 month 06 year 2000

The Marriage and Family Law Chapter II: Getting married Article 9 – Conditions for getting married A man and a woman wishing to marry each other must satisfy the following conditions: 1. The man has reached the age of twenty or over, the woman has reached the age of eighteen or over; 2. The marriage is voluntarily decided by the man and the woman; neither partner is allowed to force or deceive the other; nobody is allowed to force or obstruct their marriage; 3. The marriage does not fall into one of the circumstances where marriage is forbidden as prescribed in Article 10 of this Law. Article 10 – Circumstances where marriage is forbidden Marriage is forbidden in the following circumstances: 1. Married people; 2. People who have lost their civil act capacity; 3. Between people of the same direct blood line; between relatives within three generations; 4. Between adoptive parents and adopted children; between former adoptive parents and former adopted children; between fathers-in-law and daughters-in-law, mothers-in-law and sons-in-law, stepfathers and stepchildren, stepmothers and stepchildren; 5. Between people of the same sex. Article 11 – Marriage registration 1. Marriage must be registered with the competent State bodies (hereinafter called marriage registration offices) according to the proceedings prescribed in Article 14 of this Law. Any marriage proceedings at variance with the provisions in Article 14 of this Law shall not be legally valid. Man and woman who fail to register their marriage but live together as husband and wife shall not be recognized by law as husband and wife.

∗

Link to VMFL 2000: .

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Divorced husband and wife wishing to remarry each other must also register their remarriage. 2. The Government shall stipulate the marriage registration in remote and deep-lying areas.

Chapter XI: Marriage and family relations involving foreign elements Article 100 – Protection of the legitimate rights and interests of the parties to the marriage and family relations involving foreign elements 1. In the Socialist Republic of Vietnam, the marriage and family relations involving foreign elements are respected and protected in accordance with the provisions of the Vietnamese law and international agreements which the Socialist Republic of Vietnam has signed or acceded to. 2. In their marriage and family relations with Vietnamese citizens, foreigners in Vietnam enjoy the same rights and obligations like Vietnamese citizens, except otherwise provided for by the Vietnamese law. 3. The Socialist Republic of Vietnam State protects the legitimate rights and interests of Vietnamese citizens abroad in their marriage and family relations in accordance with the Vietnamese law, the host country’s law and international laws and practices. 4. The provisions in this Chapter shall also apply to the marriage and family relations between Vietnamese citizens where one or both parties reside abroad. Article 101 – Application of foreign laws to the marriage and family relations involving foreign elements Where this Law and other legal documents of Vietnam prescribe or the international agreements which the Socialist Republic of Vietnam has signed or acceded to invoke, the invoked foreign law shall apply, if such application does not contravene the principles laid down in this Law. Where a foreign law refers back to the Vietnamese law, Vietnam’s marriage and family legislation shall apply. Article 102 – Competence to settle matters related to the marriage and family relations involving foreign elements 1. The People’s Committees of the provinces and centrally-run cities effect the marriage registration, child adoption and guardianship involving foreign elements in accordance with the provisions of this Law and other Vietnamese law provisions. The marriage registration, child adoption and guardianship between Vietnamese citizens residing in border areas and citizens of neighboring countries living in the areas bordering on Vietnam shall be stipulated by the Government. 2. The Vietnamese overseas diplomatic missions and consulates effect the marriage registration and settle matters related to child adoption and guardianship involving foreign elements in accordance with the provisions of this Law and other Vietnamese relevant law provisions and international agreements which the Socialist Republic of Vietnam has signed or acceded to, if such registration or settlement does not contravene the host country’s law; have the responsibility to protect the legitimate rights and interests of Vietnamese citizens in the marriage and family relations involving foreign elements. 3. The People’s Courts of the provinces and centrally-run cities annul illegal marriages, settle divorce cases, disputes over the rights and obligations of husband and wife, parents

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and children, recognition of fathers, mothers or or children, child adoption and guardianship, which involve foreign elements, consider the recognition or non-recognition of marriage and family-related judgments and decisions of the Court or other competent bodies of foreign countries in accordance with the provisions of this Law and other Vietnamese law provisions. The People’s Courts of rural districts, urban districts, provincial towns or cities where Vietnamese citizens reside annul illegal marriages, settle divorce cases, disputes over the rights and obligations of husband and wife, parents and children, recognition of parents, children, child adoption and guardianship between Vietnamese citizens residing in the border areas with citizens of neighboring countries living in the areas bordering on Vietnam according to the provisions of this Law and other Vietnamese law provisions. Article 103 – Marriage involving foreign elements 1. For marriages between Vietnamese citizens and foreigners, each party must abide by his/her country’s legislation on the marriage conditions; if their marriage is effected at a Vietnamese competent State agency, the foreigner must also abide by the provisions of this Law on the marriage conditions. The marriages between foreigners in Vietnam before the Vietnamese competent agencies must comply with the provisions of this Law on the marriage conditions. 2. It is strictly forbidden to take advantage of the marriages involving foreign elements to traffick in, sexually abuse against women or for other self-seeking purposes. Article 104 – Divorce involving foreign elements 1. Divorce between a Vietnamese citizen and a foreigner or between two foreigners permanently residing in Vietnam is settled according to the provisions of this Law. 2. Where a partner being a Vietnamese citizen does not reside in Vietnam at the time of requesting the divorce, the divorce shall be settled according to the law of the country where husband and wife permanently co-reside; if they do not have a permanent coresidence place, the Vietnamese law shall apply. 3. The settlement of a divorced couple’s property being an immovable in a foreign country shall comply with the legislation of the country where such immovable is located. 4. Divorce judgements or decisions of foreign Courts or other foreign competent bodies shall be recognized in Vietnam according to the provisions of the Vietnamese law. Article 105 – Child adoption involving foreign elements 1. Foreigners apply to adopt Vietnamese children or foreign children permanently residing in Vietnam must abide by the provisions of this Law and of the law of the country where such foreigners are citizens regarding the conditions for child adoption. Adoption of foreign children by Vietnamese citizens, which has been already registered at foreign competent bodies shall be recognized in Vietnam. It is strictly forbidden to take advantage of child adoption to exploit the labor power of, sexually abuse against or traffick in, children, or for other self-seeking purposes. 2. Where a child adoption involving foreign elements is effected in Vietnam, the rights and obligations of the adoptive parents and the adopted children and the termination of the adoption shall comply with the provisions of this Law. Where a child adoption is effected between Vietnamese citizens and foreigners in foreign countries, the rights and obligations of the adoptive parents and the adopted children

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and the termination of adoption shall comply with the law provisions of the country of residence of the adopted children. Article 106 – Guardianship in the marriage and family relations involving foreign elements 1. Guardianship in the marriage and family relations involving foreign elements effected in Vietnam, guardianship already registered at overseas Vietnamese diplomatic missions or consulates must comply with the provisions of this Law and other Vietnamese law provisions. 2. Where the guardianship in the marriage and family relations between Vietnamese citizens and foreigners is effected in foreign countries, the rights and obligations of the guardian and ward shall comply with the law of the country of residence of the guardian.

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Index ALI Principles 199 annotation procedure 29, 30 ASEAN 2, 15, 65, 106, 113 basic principles of the law 18, 60, 61, 63, 64, 66 battle of forms 96 Bộ Hoàng Việt Trung kỳ Hộ Luật 5 Bộ Luật Dân sự Giản yếu 5 cassation procedure 54 centralising approach 191, 192 characteristic performance 119, 122, 123, 125, 128, 129, 130, 131, 132, 133, 134, 135, 136, 138, 139, 143, 145, 146, 150, 151, 152 choice of court 83, 84, 93, 110, 124 Circulars 17, 19 CLIP Principles 199 closest connection 38, 40, 57, 70, 79, 88, 89, 118, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 143, 144, 146, 148, 150, 151, 152, 199, 200, 202, 204, 224 co-defendants 197 collisions 157, 186, 187, 188, 224 Constitution 64 consumer contracts 2, 97, 107, 109, 116, 117, 132, 218, 219 content of the contract 74, 76, 136, 147 continental shelf 187, 223 contract entered in absentia 73 Council of Judges 3, 18, 20, 21, 49 de facto case law 19 defamation 165, 168, 188, 190, 201, 202, 203, 224 dépeçage 89, 90, 118, 126, 188, 216, 218

economic zone 187, 223 employment contracts 2, 107, 109, 115, 116, 132, 157, 216, 217, 218, 219, 220, 225 environmental damages 153, 157, 171, 222 evasion of law 108, 113 expert witnesses 51 external torts 186, 223 flexibility 46, 137, 138, 139, 152, 158, 170, 222 floating choice of law 93 foreseeability 132, 164, 177, 178, 181, 183, 194, 195, 202, 203, 223, 224 forum shopping 94, 186, 196, 221 freedom of contract 82, 92, 97, 114 functional approach 24, 48 Gia Long Code 5 Hague Adoption Convention 16 Hague Conference 2, 11, 13, 14, 15, 55, 74 high seas 157, 179, 185, 186, 187, 188, 223, 224 homeward trend 54, 69, 87, 127, 150 ICC 85 Incoterms 18, 102 industrial action 161, 165, 200, 206, 224 infringement of intellectual property rights 158, 198, 199, 222, 224 insurance premiums 167, 168, 171 internal torts 185, 186, 223 internationality 112, 149 irreversibility test 184, 223 iura novit curia 50 judicial practice 19, 94, 222, 227

264 jurisdiction of Vietnamese courts 68, 71, 120, 121, 172, 175, 193, 222 legal assistance treaties 2, 6, 14 lex causae 22, 23, 24, 25, 26, 28, 30, 31, 32, 69, 70, 96, 101, 117, 149, 150, 196 lex fori 22, 23, 24, 25, 26, 27, 30, 31, 32, 34, 53, 62, 64, 65, 66, 69, 70, 72, 78, 80, 87, 94, 122, 127, 140, 148, 150, 158, 159, 174, 175, 187, 190, 196, 197, 204, 205, 221, 222, 224, 225 lex loci damni 3, 163, 165, 169, 174, 175, 178, 190, 191, 205, 208 lex loci protectionis 198 lex mercatoria 97, 98, 105 mandatory rules 61, 62, 69, 72, 101, 102, 108, 114, 117, 149, 150 mass accidents 207 merely factual relationships 213 mixed approach 51, 71 mosaic principle 188, 189, 190, 191, 193, 198, 200, 201 most significant relationship 123, 127, 158, 168, 169, 170 multiple proceedings 189 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 16 non-physical injuries 222 objective ascertainable factor 179, 184, 223 PECL 98, 103, 104, 105, 106 place of contracting 81, 97, 110, 118, 123, 124, 131, 138, 146, 183 place of delivery 122

Index place of performance 57, 73, 74, 77, 79, 81, 86, 88, 89, 110, 118, 119, 120, 121, 122, 123, 124, 125, 127, 128, 129, 130, 131, 132, 133, 135, 138, 139, 140, 141, 143, 147, 148, 150, 151, 152, 183 predictability 126, 128, 139, 142, 164, 169, 170, 171, 222 preferential treatment 30, 70 private international law statutes 1 product liability 157, 161, 164, 165, 193, 194, 203, 206, 222, 224 public law on residency 42, 45, 46 publication of cases 21 sale of goods 68, 111, 112, 130 secondary victims 166 severability 89, 91, 95 special jurisdiction 68, 188, 192 subsequent conduct of the parties 86, 87, 148 territorial waters 185, 186, 188, 223 traffic accidents 154, 165, 166, 167, 168, 171, 173, 205, 212, 222 UCP 500 18, 90, 102 Uncitral Model Law 99 unfair competition 157, 165, 194, 195, 203, 206, 222, 224 Unidroit Principles 18, 25, 103, 104, 105, 106, 113, 119, 120 unilateral conflict rules 69 via media approach 24 Vietnamese Government 1, 14, 35 Vietnamese marriage registration authority 29 Vietnamese recognition rules 28