Shipping 2022 Comparisons

Last Updated February 25, 2022

Contributed By ANHISA

Law and Practice

Authors



ANHISA is a leading law firm in the field of aviation, shipping, insurance and international commercial dispute resolution after acquiring Mr Dang Viet Anh and his team, with eight lawyers. His team has frequently represented sellers and buyers, as well as their banks, which have acted as mortgagees in sale and purchase deals and have often praised its diligence, including describing the team as “quick, efficient and proactive”. The team has an established track record of acting for foreign ship-owners, international banks, leading shipping law firms outside Vietnam and international P&I clubs and H&M underwriters. Furthermore, it has handled all kinds of ship finance, including ship-building, sale and purchase, management agreements, charterparties, bills of lading and disputes arising therefrom.

Under Vietnamese laws, the domestic court system is organised according to the Law on Organisation of People’s Courts. The jurisdiction of the courts in the territory of Vietnam is detailed in the Civil Procedure Code.

There is no specialised court to settle maritime disputes. Therefore, maritime disputes can be resolved at a commercial or civil court, or even at a labour court based on the assignment of the chief justice.

Parties are usually insurers, domestic or foreign shipping lines, freight forwarders, shippers, cargo owners, bareboat charterers, or crew members. Disputes often relate to cargo claims, loss and damage resulting from a collision/allision, crew claims, and maritime insurance.

Vietnam's seaport area is managed by 25 local maritime administrations, which are supervised by the Vietnam Maritime Administration, of the Ministry of Transportation. Some of the main duties of the Vietnam Maritime Administration are granting licences, monitoring ships' arrival and/or departure, operating at seaports and management areas, implementing decisions on ship arrest by competent state agencies, and temporarily impounding ships according to regulations.

In certain cases, such as grounding and pollution, the Vietnam Maritime Administration has a prominent role relating to the investigation of maritime incidents, implementation of a decision on ship arrest of the competent court, mobilising the necessary personnel and means to carry out a rescue, or handling environmental pollution incidents, and so on.

The provisions on ship registration are expressed in the Decree on registration, deregistration, purchase, ship sale and building, which was promulgated by the government of Vietnam and came into effect on 1 July 2017. The Vietnam Maritime Administration performs the functions of the Vietnam Registrar of Ships. In addition, some maritime administrations conduct ship registration; eg, the maritime administrations of Da Nang and Hai Phong.

According to statistics from the United Nations Conference on Trade and Development (UNCTAD), Vietnam's fleet ranks fourth in the Association of Southeast Asian Nations (ASEAN) after Singapore, Indonesia and Malaysia, and ranks 30th in the world. The registration policy of the state on allowing registration on such state-flagged ships plays an important role, which promotes the prestige of the fleet for the carriage of commercial goods.

For the registration of ships in Vietnam, there are requirements relating to proof of ownership, the submission of technical documents granted for ships, and the ship’s name. Furthermore, it is compulsory to prove that a ship does not fly any foreign flag at the time of registration. A ship owned by foreign owners can be registered in Vietnam and the owners are required to have their commercial presence in Vietnam. Domestic law sets forth the detailed requirements concerning the registration of ships under construction.

An application for a provisional ship registration can be made as per the law of Vietnam. A temporary certificate is valid for 180 days from the date of issuance. An extension may be granted in particular cases.

All forms of ship registration in Vietnam require the provision of a ship deregistration certificate for ships already registered abroad or a certificate of suspension of ship registration in the case of provisional registration. In other words, dual registration is yet to be permitted in Vietnam.

The Registrar of Ships is also responsible for the registration of mortgages. Under Vietnamese laws, besides an original application form for registration, a contract for a seagoing ship mortgage is also required for mortgage registration. The competent authority may require the applicant to submit additional documents for verification. In Vietnam, a ship is a type of property with separate regulations on mortgages, which are different from those concerning the registration of other common kinds of properties.

Public information is available regarding ship ownership, but not through the mortgages registry. According to Vietnamese law, with regard to secured transactions, a ship is one of the special subject matters. Regarding ship searches, in order to help the e-government (the use of ICT to help in the provision of public services) to manage administrative procedures in Vietnam, ownership information accompanied by the particulars of Vietnamese-flagged vessels will be recorded via the national portal of the Vietnam Maritime Administration. Viewers are charged no fee for ship searches via such portal.

Up to now, Vietnam has been a party to the Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage of 29 November 1969 and the International Convention on Civil Liability for Bunker Oil Pollution Damage. Vietnam has not acceded to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992. This causes difficulties in claiming full or proportional compensation for damage, especially in accidents that cause serious pollution damage.

Vietnam does not have a specific law to regulate the liability of owners and interested parties in the event of pollution and wreck removal. The provisions related to liability and compensation for pollution damage are scattered in different legal documents. For example, the principle that the polluter must compensate for damage and address the consequences is recognised by the Vietnam Constitution and the Law on environmental protection. As a specialised act, the Vietnam Maritime Code, of 2015 (the "Maritime Code"), regulates matters regarding maritime activities, including the limitation of civil liability for maritime claims, compensation funds and other activities, and the obligation of the owners concerning wreck removal. For damage to life, property, rights and other legitimate interests as a result of pollution and wreck removal, the Civil Code provides for the liability to compensate for non-contractual damage.

Vietnam acceded to the Convention on the International Regulations for Preventing Collisions at Sea, 1972 on 18 December 1990.

Following that, Circular No 19/2013/TT-BGTVT, dated 6 August 2013, was promulgated, which stipulates the application of international regulations for preventing collisions at sea. The content of the Circular includes regulations on rules of navigation and the manoeuvring of ships in all visibility conditions, the use of lights and flags or sound, and light signals for warning.

The Maritime Code also contains two chapters concerning collision and salvage. The chapters regulate liability and the obligation of owners and interested parties in the event of a collision and salvage, and set forth the rules for the determination of fault and compensation for any loss arising out of a collision, etc.

Vietnam is not a member of the Convention on Limitation of Liability for Maritime Claims (LLMC) that was adopted in 1976. In Vietnam, the limitation of liability for maritime claims is regulated by the Maritime Code, which is quite different from the LLMC.

Limitation funds are regulated in the Maritime Code. The person entitled to limit liability may constitute a limitation fund for claims subject to limitation. The fund shall be constituted in the sum of each of the limit amounts, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund.

The fund may be constituted, by depositing the sum or by providing other forms of security, by the ship-owner. After the limitation fund has been constituted, any person shall be barred from infringing any other rights and assets of a person liable. Any property of a person liable who has been arrested or any security given by such person may be released by order of the court.

Vietnam is not a member of any international convention concerning bills of lading; eg, the Hague–Visby Rules, the Hamburg Rules or the Rotterdam Rules. However, in respect of the expansion of international trade worldwide in recent years, Vietnam is now considering becoming a member of the said conventions.

Despite not being a member of any international convention covering carriage by sea, Vietnam has referred to many international conventions related to carriage by sea and bills of lading, and internalised those into legal documents, including the Maritime Code and the domestic laws of Vietnam have inherited the spirit of these international conventions. In particular, in Chapter VII of the Maritime Code, many regulations have been absorbed from the Hague–Visby Rules, such as the regulation on limitation liability of the carrier.

Under Vietnamese law, a bill of lading is determined as proof of possession of the goods used for disposition and receipt, and as evidence of a contract for the carriage of goods by sea. Therefore, the lawful holder of the bill of lading shall have the title to sue the carrier under the bill of lading. However, the Maritime Code does not provide explicit guidance on this issue.

Under Vietnamese law, the limitation regime applies to cargo (limitation for carriers) and tonnage (limitation for the ship-owner). Accordingly, the limitation of liability of ship-owners for cargo damages is specified as follows:

(a) 83,000 units of account for a ship with a maximum tonnage of 300;

(b) 167,000 units of account for a ship with a gross tonnage ranging from 300 to 500; and

(c) in respect of a ship with a tonnage in excess thereof, the following amount, in addition to that mentioned in (b): for each ton from 501 to 30,000 tons, 167 units of account; for each ton from 30,001 to 70,000 tons, 125 units of account; and for each ton in excess of 70,001 tons, 83 units of account.

The shipper, whether knowingly or unknowingly, shall be liable to the carrier, passengers, crew and other shippers for losses arising from incorrect or untruthful declaration of goods, if the carrier can prove that the shipper was at fault for the loss. However, there has been no case law on such claim of the carrier against the shipper in Vietnam. The approach to the above issues depends on the judges handling the particular cases.

Vietnamese laws, specifically the Maritime Code, only regulate that the time bar for a party to file claims for damaged or lost cargo to the court is one year since the date of cargo receipt or the date on which the cargo should have been delivered. Vietnamese law does not clearly stipulate whether or not the time bar for cargo claims can be extended or sustained. In addition, the time bar for cargo claims under Vietnamese law is quite complicated because there can be many different time bars that apply, depending on specific cases.

Vietnam is not a contracting party to the International Convention Relating to the Arrest of Sea-Going Ships, 1952 or the International Convention on Arrest of Ships, 1999 (“Geneva 1999”). However, Vietnamese lawmakers have incorporated parts of these conventions into domestic laws.

In Vietnam, ship arrest is regulated and governed by the Maritime Code, the 2008 Ordinance on procedures for the arrest of sea-going vessels, and some guidelines from the government and the Supreme Court.

Vietnam is not a state party to the International Convention on Maritime Liens and Mortgages, 1993. However, some regulations of the Convention regarding the definitions, types and priorities of maritime liens have been incorporated in domestic legislation, with some minor amendments.

Besides the five types of maritime liens, the Maritime Code provides a list of 15 types of maritime claims that are similar to those provided in Clauses 1(d) to 1(v) of Article 1 of Geneva 1999.

Similar to what is set forth in Geneva 1999, Vietnamese laws also regulate the power to exercise the right to arrest seagoing vessels to secure for maritime claims. Specifically, when applying for the actions in persona, the applicants must prove the liability of the owner or demise charters of the arrested ships.

Regarding maritime liens, Vietnamese laws also regulate that the lien shall follow the vessel, notwithstanding any change of ownership or registration of flag. In other words, arresting a ship to secure a maritime lien regulated under Vietnamese laws is permissible regardless of its owner's or demise charterer’s liability.

Claims for unpaid bunkers are identified as maritime claims under the laws of Vietnam. Such claims grant the bunker suppliers the right to apply for a ship arrest to secure their maritime claims. As when applying for the arrest, applicants must prove this unpaid bunker claim and the relationship between the supplier and the owner or demise charterer of the ship to be arrested. Normally, proving a contractual relation is easier than proving the applicant is the actual supplier via a broker.

In Vietnam, a claim holder or lien holder could apply for an action in rem or in personam to arrest a vessel, depending on the merits of the case.

To arrest a vessel, an arresting party must submit an arrest application to a local court enclosed with a power of attorney and all supporting documents to prove the title of the arresting party, the maritime claim or maritime lien to be secured, the current position of the vessel, etc.

All documents submitted to the handling courts must be original or legalised copies and translated into Vietnamese.

Before an arrest order is issued, the arresting party must provide a counter-security, the quantum and form of which will be decided by the handling judge.

Arresting bunkers and freight are not workable in Vietnam. In ASEAN countries, there is another jurisdiction with a comprehensive regime and legislation to arrest bunker and freight; ie, in Singapore. However, in Vietnam, a legal regime concerning such arrests is not available.

Arresting sister-ships is permissible in Vietnam. The regulations on the power to exercise an arrest against sister-ships in Vietnam law are similar to those set forth in Geneva 1999. Specifically, any other ship or ships under the ownership of the person who is responsible for the maritime claim and who was the owner of the ship in respect of which the maritime claim arose or was the demise/time or voyage charterer of that ship when the claim arose could be arrested.

However, despite the current legislation and legal regime provided by law, the court practice in handling cases on applying for the arrest of sister-ships shall vary case by case, especially when there is no "divine" maritime court. Each handling judge, with their background of general commercial or civil law, could have a different opinion about this matter.

Besides ship arrests, under Vietnamese regulation, the competent courts/arbitration can issue interim measures at the request of a litigant during the case in order to obtain security for the requesting party; such possibilities include:

  • distraining the disputed properties;
  • prohibiting the transfer of a property right over the disputed properties;
  • freezing accounts at banks or other credit institutions, or the State Treasury;
  • freezing properties at the places of their deposit; and
  • freezing properties of the obligor.

Similar to Geneva 1999, ship interests can release the arrested vessel upon the provision of sufficient security. Normally, neither a club’s letter of undertaking (LOU) nor a foreign bank guarantee is accepted by local courts as sufficient security to release the vessel.

In most ship arrest cases, the local handling judges require a cash deposit. Some local judges may accept an LOU issued by certain local underwriters or local bank guarantees. The practice varies from court to court.

The judicial sale of arrested seagoing ships shall be conducted under the competent court’s judgments. Afterwards, the enforcement agency will issue the judgment enforcement decision for the judicial sale of the arrested ship. Then the judicial sale of the arrested ship will be conducted by a property auction organisation. The order and procedures for judicial sales of arrested seagoing ships shall comply with the law on property auction publicly. The bidders must pay the entrance fees. The ship-owner and/or the captain of the arrested ship shall be liable for maintaining the vessel from its arrest until another decision from the competent court.

Creditors with a maritime lien take precedence over creditors with a mortgage. Other types of claims will be considered inferior to a mortgage.

Vietnam does not have a specific maritime court. Insolvency cases of owners or ship-yards involving the sale of ships are handled by local courts depending on the place of business of the owners or ship-yards. The competent court handling the insolvency proceedings shall decide the handling of assets. There is an asset management officer who is an individual specialised in the management and liquidation of the assets of an insolvent entity during a bankruptcy settlement.

Upon the consideration of wrongful arrest, the handling judge shall request the applicant of the ship arrest to pay for the damage to the arrested party from their counter-security. Such counter-security is the precondition before issuing the arrest order.

Under Vietnamese laws – in particular, the Maritime Code – the time limit for filing claims related to maritime passengers is two years. However, if a passenger is injured in the course of transportation, resulting in their death after leaving the ship, it shall be counted from the date of their death, but within three years from the date of disembarkation. Therefore, depending on the type of the passenger’s claim, the time limit for filing such a claim must not exceed three years from the date the passenger disembarks the ship or the date the passenger should have left the ship, whichever is later.

The limitation on liabilities in respect of a passenger’s claim is specified under the Maritime Code as follows. The liability of the carrier for the circumstance of a passenger’s death, injury or other health-related damage shall not exceed 46,666 units of account per a contract of passenger and baggage carriage, whereby the total compensation amount is not allowed to exceed 25 million units of account. In respect of circumstances under which the court has judged that payment of such compensation is made on a periodic basis, this total compensation amount cannot exceed the limits referred to in this paragraph.

A bill of lading is deemed as a contract under the Maritime Code. As such, apart from some limited circumstances under which the parties are not permitted to freely make an agreement on the applicable law and jurisdiction, like most contracts, the parties of a bill of lading are able to agree on relevant matters to be prescribed in the bill of lading, including the law and jurisdiction clauses.

Pursuant to the Maritime Code, if there is a foreign party engaging in the bill of lading, the parties may even agree on a foreign jurisdiction or a foreign court. Under the Vietnamese Civil Procedure Code, the local court may recognise and enforce a law and jurisdiction clause stated in the bill of lading unless the case is one of the circumstances in which the parties are not allowed to agree on the applicable law or it falls into the exclusive jurisdiction of Vietnamese courts. 

In theory, the parties may agree on a law and arbitration clause, which can be set forth in the bill of lading or a relevant charterparty. The law and arbitration clause states the charterparty might be incorporated into the bill of lading. However, in practice, it may be difficult for the parties to persuade the judge to admit such agreement or the said incorporation, especially when there is no court specialised in maritime disputes and the requirements for formality of evidence are taken strictly.

The 1958 New York Convention is applicable in Vietnam as Vietnam is a contracting state of such convention. The regulations of the Convention have also been adopted into two notable laws: the Vietnamese Law on Commercial Arbitration and the Vietnamese Civil Procedure Code. The Law on Commercial Arbitration comprises regulations on arbitration, such as the basic concepts regarding arbitration in light of Vietnamese legislation. Meanwhile, the Civil Procedure Code prescribes the legal procedure at court in respect of arbitration, including the legal proceeding for the recognition and enforcement of foreign arbitral awards.

Vietnamese laws set forth provisions on ship arrest under an in rem or in personam action. Regarding an action in rem, although Vietnam has not been a member of the International Convention on Arrest of Ships, 1999, many regulations thereof have been adopted into Vietnamese law. Therefore, the local court may order an arrest of a vessel under an in rem action regardless of the law and jurisdiction clause in the relevant contract or the bill of lading or charterparty.

No domestic arbitration institutes have specialised in maritime claims. However, during an arbitration, the parties may appoint (an) arbitrator(s) who is an expert in this area to hear the dispute.

Subject to the particular facts of the case, the defendant may request the court/tribunal to reject or dismiss the claim. For example, the respondent/defendant may, based on the arbitration agreement, request the local court to return the statement of claim/the petition or dismiss the case if the claim has been enrolled.

In general, there is no exemption or tax relief on the income of a company just because the company is a ship-owner. There is neither tonnage tax nor a more advantageous accelerated depreciation for a ship-owner’s company. The income tax regime and the accelerated depreciation system applied for the ship-owner’s company are similar to those applied for other companies. Nevertheless, due to difficulties caused by the COVID-19 pandemic, the local government has recently applied a 30% tax cut on the VAT on the hire of some domestic time or voyage charterparties.

Since the outbreak of COVID-19, the competent authorities in Vietnam have imposed limitations on, and requirements for, maritime activities. These requirements have changed constantly subject to the pandemic situation and government policy, which will be different in each port. Most recently, the Ministry of Transport issued a decision on the promulgation of interim guidance on transport activities in five sectors, including maritime, for the COVID-19 period, including the following.

  • For crews – if the vessels operate on domestic routes within 14 days and operate in high-risk areas (level 3 or 4), the captain shall declare the health status of the crew on board within 14 days and any crew change (if any) in the previous 14 days. They shall provide them for the Centers for Disease Control and Prevention (CDC) or the local health authority to assess the risks and adopt pandemic control measures before the ship is allowed to enter a port for cargo handling.
  • For vessels – before entering a port, vessels must enter the location designated by the relevant port authority to carry out quarantine procedures. Vessels are only allowed to load and discharge cargo after completing the quarantine procedures and receiving the approval of the CDC. The port authority shall grant permission for vessels to enter ports for cargo handling after they are approved by the Quarantine Agency and the CDC if they meet all the safety conditions for the prevention and control of the COVID-19 pandemic.

Force Majeure and Frustration in Relation to COVID-19

Vietnamese law does recognise the concept of force majeure. An event might be considered as a force majeure if it occurs in an objective manner that is not able to be foreseen and not able to be remedied by all possible necessary and admissible measures being taken.

Although COVID-19 is assessed as a pandemic by the World Health Organization, it is not clear whether this pandemic should be considered as a force majeure in Vietnam. In fact, the mere fact that a disease is a pandemic does not directly lead to the recognition of it as a force majeure in Vietnam.

Until now, there is no case law on the recognition of COVID-19 as a force majeure or a contractual relief. The decision will much depend on the handling judges, which varies on a case-by-case basis.

No information is available in this jurisdiction.

No information is available in this jurisdiction.

No information is available in this jurisdiction.

In Vietnam, there is no maritime court. Maritime disputes are usually handled by a civil court or an economic court. Unfortunately, not all judges at these courts are familiar with maritime law and practice. Therefore, there are some difficulties when pursuing a lawsuit of a maritime nature at a Vietnamese court.

Among the many courts in Vietnam, four courts usually deal with maritime disputes: those of Ho Chi Minh City, Ba Ria- Vung Tau, Hai Phong and Quang Ninh. These are four major ports in Vietnam. The arrest orders are usually granted by these courts.

ANHISA

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Petroland Tower
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Tan Phu Ward, District 7
Ho Chi Minh City
Vietnam

+84 2854 165873

+84 2854 165874

anh@anhisa.com https://anhisa.com/
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Law and Practice in Vietnam

Authors



ANHISA is a leading law firm in the field of aviation, shipping, insurance and international commercial dispute resolution after acquiring Mr Dang Viet Anh and his team, with eight lawyers. His team has frequently represented sellers and buyers, as well as their banks, which have acted as mortgagees in sale and purchase deals and have often praised its diligence, including describing the team as “quick, efficient and proactive”. The team has an established track record of acting for foreign ship-owners, international banks, leading shipping law firms outside Vietnam and international P&I clubs and H&M underwriters. Furthermore, it has handled all kinds of ship finance, including ship-building, sale and purchase, management agreements, charterparties, bills of lading and disputes arising therefrom.