Product safety and liabilitySafety and environmental
What are the most relevant automotive-related product compliance safety and environmental regulations, and how are they enforced? Are there specific rules for product recalls?
The most relevant automotive-related product compliance safety and environmental regulations are set out in:
- Circular No. 30/2011/TT-BGTVT, amended by Circular No. 54/2014/TT-BGTVT and Circular 26/2020/TT-BGTVT, of the Ministry of Transport (governing the production of completely knocked down (CKD) vehicles);
- Circular No. 31/2011/TT-BGTVT, amended by Circular No. 55/2014/TT-BGTVT and Circular No. 42/2018/TT-BGTVT, of the Ministry of Transport (governing the import of completely built up vehicles);
- Circular No. 70/2015/TT-BGTVT dated 9 November 2015 (setting out duties applicable to car owners); and
- Circular No. 25/2019/TT-BGTVT (governing the manufacture and assembly of CKD and semi knocked-down vehicles that have some domestically produced parts).
Non-compliance with these regulations can result in administrative penalties including monetary fines or revocation of relevant licences and certificates. The Vietnam Register also has the power to inspect the quality and standards of domestic automobile manufacturers on a regular or irregular basis to ensure compliance with relevant regulations.
Specific rules apply to product recalls in the automotive industry. According to Circular No. 30/2011/TT-BGTVT, amended by Circular No. 54/2014/TT-BGTVT and Circular 26/2020/TT-BGTVT, an automobile manufacturer must recall its products if they fail to comply with any applicable technical standards or cause (or may cause) danger to humans or property as a result of technical errors. The manufacturer must recall its products within five days of discovering the technical error and must notify the Vietnam Register in writing to propose a recall plan. Within five days of the date of receipt of the notification, the Vietnam Register must approve the plan (or suggest changes to it) and the manufacturer must recall its products in accordance with the approved plan. The manufacturer must also report the results of the recall plan to the Vietnam Register. Failure to comply with the regulations on product recalls may result in the manufacturer’s certificate of quality technical safety and environmental protection for the affected class of automobile to be suspended or withdrawn.
Decision No. 49/2011/QD-TTg of the Prime Minister raised exhaust emission standards for newly manufactured/assembled or imported cars from a Euro 2 standard to Euro 4 from 1 January 2017, with a further increase to Euro 5 from 1 January 2022. Cars already in use and imported used cars are covered by Decision No. 16/2019/QD-TTg of the Prime Minister, which raised emission standards to Euro 4 for imported used cars from 15 May 2019. Cars manufactured prior to 1999 and still in use remain subject to the lower Euro 1 standard. From 1 January 2020, cars manufactured between 1999 and 2008 are subject to Euro 2, and from 1 January 2021, cars manufactured after 2008 are subject to Euro 2.
The concept of Extended Producer Responsibility was introduced in the new Law on Environmental Protection and its implementing decree, Decree No. 08/2022/ND-CP, which came into effect from January 2022 and primarily focuses on recycling and waste treatment contribution requirements for certain types of products. For the automotive industry, starting from 1 January 2027, manufacturers and importers of automobiles to be sold in Vietnam will have an Extended Producer Responsibility to recycle 0.5 per cent out of the total annual production and import of automobiles according to the mandatory recycling standards, which will be increased every three years. Manufacturers and importers can choose to self-recycle automobiles subject to annual recycling plans registered with the Ministry of Natural Resources and Environment and must report results. Alternatively, they can opt for making monetary contributions to the Vietnam Environmental Protection Fund to support recycling activities following the prescribed timeline under law. There is a formula to calculate contribution amounts in this case, and such amounts must be declared to the Ministry of Natural Resources and Environment on an annual basis.Product liability and recall
Describe the significance of product liability law, and any key issues specifically relevant to the automotive industry. How relevant are class actions or other consumer litigation in product liability, product recall cases, or other contexts relating to the automotive industry?
The Civil Code of Vietnam and the Law on Protection of Consumers’ Rights both provide a basis for liability for damage caused by manufactured or imported products, including automobiles and automobile parts. The Civil Code sets out the broad principle that individuals or legal entities engaged in production or other business activities are liable for damage caused to consumers as a result of such individual or legal entity’s failure to ensure the quality of goods they manufacture or pass on to consumers. The Law on Protection of Consumers’ Rights addresses product liability more specifically and provides that manufacturers and importers (including organisations or individuals who affix a commercial name on the goods or use a trademark or commercial indication identifying such organisation or individual as the manufacturer or importer of the goods) shall be liable for any damage caused by defective products manufactured or imported by them. In addition, where the manufacturer or importer of a defective product is unable to be identified, the direct supplier of the defective goods shall be liable for damage suffered by consumers as a result of the defect.
Notwithstanding this basis for liability set out in the law, it has not yet been a common practice in Vietnam for consumers to bring claims for compensation (either individually or as a class) against manufacturers or importers of automobiles, automobile parts or other products for damages caused by defective products. One reason for this is the relatively poor reputation of Vietnam’s legal system, and in particular its courts, which are more often than not seen as time-consuming, costly, unpredictable and arbitrary in both proceedings and results.