VIETNAM Law and Practice Contributed by: Chuyen Hong Huu Le, Tan Nhat Truong Phan and Tu Anh Tran, Tilleke & Gibbins
2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies All insurances should generally be placed with domes - tic insurance companies. However, the lessee may also place part of the insurances (for risks relating to international commercial aviation with the insurances covering any or all of the following: the goods being transported; the vehicle transporting the goods; and any liability arising therefrom) with international insur - ance companies on a cross-border basis. 2.5.2 Mandatory Insurance Coverage Requirements A domestic lessee as an aircraft operator has to main - tain compulsory civil liability insurance for: • passengers; • baggage and cargo; and • third parties on the ground. For flight crew members who are on duty, the lessee (acting as their employer under Vietnamese labour law) has to purchase accident insurance for them. 2.5.3 Placement of Insurance Outside of Jurisdiction Vietnamese law does not specify a specific thresh - old for reinsurances placed outside of the jurisdic - tion. This means 100% coverage will be feasible. The exception to this is reinsurances made under the insured’s instructions. In this case the coverage can only be up to 90%. 2.5.4 Enforceability of “Cut-Through” Clauses Vietnamese law does not explicitly prohibit the inclu - sion of “cut-through” clauses in insurance or reinsur - ance documents. However, ”cut-through” clauses must comply with the contractual rights of third par - ties in order to be valid and enforceable. 2.5.5 Assignment of Insurance/Reinsurance Vietnamese law permits the assignment of insur - ances/reinsurances. Unless the assignments are in line with the terms in the insurance policy/agreement or international customs, the written consent of the insurer must be obtained first.
2.4.2 Effects of Leasing on the Residence of a Foreign Lessor If a foreign lessor does not have a permanent estab - lishment in Vietnam (leasing an aircraft to a domestic airline does not itself create a Vietnamese permanent establishment) before it enters into a lease, the lessor will not be considered resident, domiciled or carrying on business in Vietnam by reason only of its execution or enforcement of an aircraft lease. 2.4.3 Engine Maintenance and Operations Under a wet lease arrangement (where the foreign lessor provides the aircraft and the crew), the foreign lessor must ensure compliance with safety standards for the aircraft and engine maintenance and operation. Meanwhile, the liabilities in respect of the aircraft or engine maintenance and operations will be imposed on the domestic lessee under a dry lease arrangement (where the foreign lessor only provides the aircraft). 2.4.4 Damage or Loss Caused by an Asset Subject to the terms of the lease and other relevant facts or circumstances, it is unlikely that a foreign air - craft or engine owner, lessor or financier, could be liable under the doctrine of strict liability. While the doctrine of strict liability is technically a common law principle, from a Vietnamese law perspective, the air - craft operator will be held accountable for damage or loss caused by the asset. 2.4.5 Attachment by Creditors Subject to the terms of the lease and other relevant facts or circumstances, it is unlikely that creditors of a domestic lessee could attach an aircraft leased to it but owned by a different entity. 2.4.6 Priority of Third Parties’ Rights Vietnamese law generally recognises third parties’ rights that will take priority over a lessor’s rights under an aircraft or engine lease, provided that the rights are duly registered (See 3.2.14 Perfection of Domes- tic Law Mortgages ). However, even with a registered mortgage, enforcement concerning spare engines may be complicated if they are subsequently installed on an airframe and the lessee does not co-operate with their removal.
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