Resolution No. 03/2006/NQ-HDTP dated July 08, 2006 of the Judges's Council of the Supreme People's Court guiding the application of a number of provisions of the 2005 Civil Code on extra-contractual damage compensation

RESOLUTION

GUIDING THE APPLICATION OF A NUMBER OF PROVISIONS OF THE 2005 CIVIL CODE ON EXTRA-CONTRACTUAL DAMAGE COMPENSATION

THE JUDGES' COUNCIL OF THE SUPREME PEOPLES COURT

Pursuant to the Law on Organization of the People's Courts;

Pursuant to the National Assembly's Resolution No. 45/2005/QH11 of June 14, 2005 on "the Implementation of the Civil Code";

In order to apply in a correct and uniform manner the provisions of the 2005 Civil Code to the settlement of disputes over extra-contractual damage compensation;

After obtaining the agreements of the Chairman of the Supreme People's Procuracy and the Justice Minister;

RESOLVES:

I. GENERAL PROVISIONS

1. Liability to compensate for damage

According to the provisions of Article 604 of the 2005 Civil Code on the general principles, the liability to compensate for extra-contractual damage shall arise only when all the following elements appear:

1.1. There must be damage caused.

Damage includes material and spiritual damage.

a/ Material damage covers damage caused by infringement upon property as provided for in Article 608 of the Civil Code; damage caused by infringement upon health as provided for in Clause 1, Article 609 of the Civil Code; damage caused by infringement upon life as provided for in Clause 1, Article 610 of the Civil Code; damage caused by infringement upon honor, dignity, prestige as provided for in Clause 1, Article 611 of the Civil Code.

b/ Spiritual damage of individuals shall be understood as damage caused by infringement upon health, honor, dignity and/or prestige of victims or by infringement upon life, for which the next of kin of the victims have to suffer pain, agony, sentimental loss, prestige decline or loss, distance from friends due to misunderstanding' and for which a sum of money shall be compensated to make up for the loss they have suffered.

Damage caused by mental sufferings to legal persons and subjects other than legal persons (referred collectively to as organizations) shall be understood as damage caused by infringement upon honor and/or prestige, which leads to the decrease or loss of trust, confidence in such organizations due to misunderstanding and for which a sum of money shall be compensated to make up for the losses such organizations have to suffered.

1.2. There must be illegal acts committed.

Illegal acts means specific human behaviors expressed through action or non-action contrary to the provisions of law.

1.3. There must be the cause-effect relations between damage caused and illegal acts. The damage caused must be the indispensable results of the illegal acts and vice versa the illegal acts are the cause of the damage.

1.4. There must be intentional or unintentional faults of the damage causers.

a/ Intentionally causing damage means the case where a person is fully aware that his/her act will cause damage to another person but still commits it and wishes or does not wish but let the damage happen.

b/ Unintentionally causing damage means the case where a person fails to foresee that his/her acts may cause damage though he/she should have known it or may have known in advance that damage will happen or foresees that his/her acts may cause damage but think that the damage will not happen or can be prevented.

It should be noted that for cases where the law requires compensation for damage even when the damage causers are not at fault, the damage causers' liability to compensate for damage shall comply with the provisions of such legal documents.

2. Principles for damage compensation

2.1. Upon settling disputes over compensation for extra-contractual damage, the principles for damage compensation provided for in Article 605 of the Civil Code should be strictly observed. The agreements reached between the parties on the compensation levels, forms and modes should be respected if such agreements do not run counter to law and social ethics.

2.2. In cases where the parties cannot reach any agreement, when setting disputes over compensation for extra-contractual damage, attention should be paid to the following:

a/ Damage must be fully compensated for, meaning that when there is a claim for compensation for damage caused by infringement upon property, health, life, honor, dignity and/or prestige, it should be based on the relevant provisions of the Civil Code in such specific cases that the damage covers which items and the levels of damage caused, the extent of fault of the parties in order to compel the damage causers to compensate for such corresponding damage amounts.

b/ In order to have damage compensated in time, the court shall quickly handle the claims for damage compensation within the time limit prescribed by law. In case of necessity, one or a number of provisional emergency measures can be applied under the provisions of the procedural law in order to settle urgent claims of the involved parties.

c/ The damage causers can enjoy lower compensation levels only when they fully meet the two following conditions:

The damage is caused due to their unintentional faults;

The caused damage is too great for their immediate and long-term economic capabilities, which means the caused damage for which they have to compensate but cannot pay full or large compensation for such damage due to their immediate and long-term economic circumstances.

d/ The compensation levels are no longer suitable to reality, which means that due to changes in the economic and social situation, price fluctuation, the current compensation levels are no longer suitable or due to changes in the casualty status and/or working capacity of the victims, the compensation levels are no longer suitable, or due to changes in the economic capabilities of the damage causers....

3. Liability capacity to compensate for damage

3.1. When implementing the provisions of Article 606 of the Civil Code on liability capacity to compensate for damage, attention should be paid to correctly determining the capacity of the involved parties in each case, concretely as follows:

- For the case specified in Clause 1, Article 606 of the Civil Code, the damage causers are civil respondents unless they have lost their civil act capacity;

- For the case specified in Paragraph 1, Clause 2, Article 606 of the Civil Code, the fathers, mothers of the damage causers are civil respondents;

- For the case specified in Paragraph 2, Clause 2, Article 606 of the Civil Code, the damage causers are civil respondents and their fathers, mothers are persons with related interests and obligations;

- For the case specified in Clause 3, Article 606 of the Civil Code, their guardians being organizations or individuals are civil respondents.

3.2. The decision on compensation (with property) must be specific and compliant with the provisions of Article 606 of the Civil Code.

4. Reasonable expenses

Reasonable expenses specified at Points a and c, Clause 1, Article 609, Points b and c, Clause 1 of Article 610, and Point a, Clause 1 of Article 611 of the Civil Code mean necessary actual expenses suitable to the nature and extent of damage, and the average prices in each locality at the time of paying the expenses.

5. The involved parties' obligation to prove

a/ The victims claiming damage compensation shall clearly state every actual damage caused, the compensation level demanded and produce valid vouchers or receipts on reasonable expenses and their incomes.

b/ The damage causers requesting reduction of damages shall produce documents and vouchers showing that their immediate and long-term economic capabilities are not enough for full or large compensations for the damage caused.

c/ The victims or damage causers requesting change of compensation level must file their applications therefor. Enclosed with the applications are documents and evidences serving as bases for the application for change of compensation levels.

d/ The testimony for being not at fault falls under the obligation of the persons responsible for damage compensation.

6. On the statute of limitations for initiating lawsuits to claim damage compensation

The statute of limitations for initiating lawsuits to claim damage compensation shall be determinal as follows:

a/ For cases of extra-contractual damage compensation, which have arisen as from January 1, 2005 (the date the Civil Procedure Code took effect), the statute of limitations for initiating lawsuits to claim damage compensation shall be two years counting from the date the legitimate rights and interests of individuals, legal persons or other subjects are infringed upon.

b/ For cases of extra-contractual damage compensation, which had arisen before January 1, 2005, the statute of limitations for initiating lawsuits to claim damage compensation shall be two years counting from January 1, 2005.

II. DETERMINATION OF DAMAGE

1. Damage caused by infringement upon health

Damage caused by infringement upon health shall cover:

1.1. Reasonable expenses for treatment, nursing and the rehabilitation of health and/or lost or impaired functions of the victims, including money paid for rental of vehicles to carry the victims for emergency treatment at medical establishments; medicines and purchased medical instruments, costs of X-ray, scanner, ultrasonic checks, tests, surgery, blood transfusion, physio-therapy' under doctor prescriptions; hospital charges; money paid for the purchase of tonic medicines, protein fluid transfusion, for rehabilitation of health of the victims under doctor prescriptions; other actual and necessary expenses for the victims (if any) and expenses for artificial legs, arms, spurious eyes, wheelchairs, crutches and aesthetic rehabilitation' to support or replace the impaired or lost body functions of the victims (if any).

1.2. The lost or reduction of the victims' actual incomes. If before their health is infringed upon, the victims have actual incomes but later due to infringement upon their health, they are hospitalized and their actual incomes are lost or reduced, they shall be compensated for such actual lost or reduced income amounts.

a/ The victims' actual incomes shall be determined as follows:

- If before their health is infringed upon, the victims have stable incomes from payroll salaries or contractual remunerations, their actual incomes shall be determined, based on the salary or remuneration amount of the preceeding month before their health is infringed upon multiplied by the hospitalization duration.

- If before their health is infringed upon, the victims work and earn actual monthly incomes which vary from month to month, their actual incomes shall be determined by multiplying the average incomes of six consecutive months (or all the months if it is under full six months) before their health is infringed upon by the hospitalization duration.

- If before their health is infringed upon, the victims' actual incomes are not stable and cannot be determined, their actual incomes shall be determined by multiplying the average incomes of laborers of the same kind by the hospitalization duration.

- If before their health is infringed upon, the victims do not work and have no actual incomes, they shall not be compensated as provided for at Point b, Clause 1, Article 609 of the Civil Code.

b/ Victims' lost or reduced actual incomes shall be determined as follows:

Step one: Determining whether the victims have actual incomes during their hospitalization. If they have, what their total incomes are.

Step two: Comparing the victims' actual incomes in the hospitalization duration with the corresponding actual incomes determined under the guidance at Point a of this Item 1.2. If they do not have any actual incomes in the hospitalization duration, their actual incomes are lost; if it is lower, the differences shall be their reduced actual incomes; if it is equal, the victims' actual incomes are not lost.

Example 1: A has worked as a self-employed motorbike repairer. His actual income before his health is infringed upon is stable with an average of one VND million per month. Due to the infringement upon his health, he has to be hospitalized, thus having no income. In this case, A's actual income is lost.

Example 2: B has worked for a limited liability company. His actual income before his health is infringed upon is stable with an average of VND 600,000 per month. Due to the infringement upon his health, B has to be hospitalized and during the time of treatment, he is paid 50% of his salary, with VND 300,000 per month. In this case, B's actual income is reduced by VND 300,000 per month.

Example 3: C is a public servant having a stable monthly income of VND 500,000. Due to infringement upon his health, C has to be hospitalized and during the time of treatment, he is fully paid by his agency. In this case, C's actual income is not lost.

1.3. Reasonable expenses and lost actual incomes of the persons who take care of the victims during the time of treatment

a/ Reasonable expenses for the persons who take care of the victims during the time of treatment shall cover travel fares, house rents at average local prices for one of the persons taking care of the victims during the time of treatment as necessary or at the request of the medical establishments.

b/ Lost actual incomes of the persons taking care of the victims during the time of treatment shall be determined as follows:

- If the persons taking care of the victims have stable actual incomes from payroll salaries or contractual remunerations, their lost actual incomes shall be determined by multiplying their salary or remuneration of the preceeding month before such persons have to go for taking care of the victims by the duration of taking care of the victims.

- If the persons taking care of the victims work and earn stable monthly incomes which, however, vary from month to month, their lost actual incomes shall be determined by multiplying the average incomes of six consecutive months (or all the months if it is less than six months) before such persons have to go taking care of the victims by the duration of taking care of the victims.

- If the persons taking care of the victims do not work or have irregular work, thus having no stable incomes, they shall enjoy remuneration equal to the average remuneration paid for a person taking care of a disabled person in the localities where the victims reside.

- If in the duration of taking care of the victims, the persons taking care of the victims are still paid with salaries, remunerations and social insurance under the labor law by their agencies or employers, their actual incomes are not lost, and hence they shall not be compensated.

1.4. Where after the treatment, the victims lose their working capacity and need regular caretakers (due to myeloplegia, total blindness, paraplegia, serious mental illness and other cases of permanent working capacity reduction of 81% or more as provided for by competent state bodies, compensation for reasonable expenses for taking care of the victims must be paid.

a/ Reasonable expenses for taking care of the victims cover monthly expenses for nurturing and treatment of the victims and expenses for regular caretakers of the victims.

b/ Reasonable expenses for regular caretakers of the victims shall be calculated as equal to the average remunerations paid to regular caretakers of the disabled people in the localities where the victims reside. In principle, damage compensation shall be paid to only one caretaker of a victim losing his/her working capacity.

1.5. Compensation for mental sufferings caused by infringement upon health

a/ The sum of money as compensation for mental sufferings caused by infringement upon health shall be paid to the very victims.

b/ In all circumstances, when their health is infringed upon, the victims shall be paid a sum of money as compensation for their mental sufferings. The guidance at Point b, Item 1.1, Section I of this Resolution should be based to determine the extent of victims' mental sufferings. The determination of the extent of mental suffering should be based on their impacts on profession, aesthetics, social relations, family life and individuals'.

c/ The level of compensation for mental sufferings of the victims shall be agreed upon by the parties first. If no agreement is reached, it shall be based on the extent of mental sufferings, which, however, shall not exceed 30 months' minimum salary set by the State at the time of compensation.

2. Damage caused by infringement upon life

2.1. Reasonable expenses for the treatment, nursing and taking care of the victims before they die shall cover: expenses guided in Items 1.1 and 1.4 and lost actual incomes of the victims in the treatment duration as guided in Item 1.2, Section 1, this Part II.

2.2. Reasonable expenses for funeral shall cover the sums of money for purchase of coffins, essential articles for shrouding, mourning head-bands, incense sticks, candles, flowers, hearse and other expenses in service of the burial or cremation of the victims according to common practices. No compensation shall be paid for expenses for worshiping rituals, offerings, food and drinks, construction of tombs, exhumation and reburial, etc.

2.3. Support allowances for persons whom the victims have the obligation to support until they die

a/ Support allowances shall be considered and paid only to persons whom the victims have the obligation to support if before their lives are infringed upon, the victims have actually performed their support obligation. The persons being provided with support allowances by the victims shall be compensated with corresponding amounts. Persons who are being provided with support allowances by the victims shall, after the victims' lives are infringed upon, be compensated with reasonable support allowances suitable to the income and actual capabilities of the compensation payers and the essential needs of the compensated persons.

The time to provide support allowances shall start from the time life is infringed upon.

b/ Subjects entitled to support allowances

- Wives or husbands who have lost their working capacity, have no property to live on and are being nurtured by their husbands or wives who are victims;

- Minor children or adult children who have lost their working capacity, have no property to live on and are being nurtured by their fathers, mothers who are victims.

- Fathers and mothers who have lost their working capacity, have no property to live on and are provided with support allowances by their children who are victims;

- Wives or husbands after their divorces, who are provided with support allowances by the other partner (husbands or wives before their divorce) who are victims.

- Minor children or adult children who have lost their working capacity, have no property to live on and are being nurtured directly by their fathers or mothers who are victims;

- Minor siblings who have no property to live on or adult siblings who have lost their working capacity, have no property to live on, in cases where their parents have died or lost their working capacity, have no property to support their children, and who are being provided with support allowances by their adult brothers or sisters who live separately and are victims;

- Brothers and sisters who have lost their working capacity, have no property to live on and are being provided with support allowances by their younger brothers and/or sisters who live separately and are victims.

- Minor grandchildren or adult grandchildren who have lost their working capacity, have no property to live on and have no one to provide support allowances and are being provided with support allowances by their paternal grandparents or maternal grandparents, who live separately and are victims.

- Paternal grandparents and maternal grandparents who have lost their working capacity, have no property to live on and have no one to provide support allowance but are being provided with support allowances by their adult grandchildren who live separately and are victims.

2.4. Sums paid as compensation for mental sufferings due to infringement upon life

a/ Persons enjoying sums of compensation for mental sufferings in this case shall be the victims' relatives of first-rank inheritance, including wives, husbands, natural fathers, natural mothers, adoptive fathers, adoptive mothers, offsprings, adopted children.

b/ Where there are no persons defined at Point a, Item 2.4 of this Section 2, the persons whom the victims have directly nurtured and the persons who have directly nurtured the victims shall enjoy such sums of compensation for mental sufferings.

c/ In all circumstances, when the victims' lives are infringed upon, their relatives of the first-rank inheritance or the persons whom the victims have directly nurtured and the persons who have directly nurtured the victims (hereinafter referred collectively to as relatives of the victims) shall enjoy the sums of compensation for mental sufferings. It is necessary to base on the guidance at Point b, Item 1.1, Section 1, Part I of this Resolution to determine the extent of mental sufferings of the victims' relatives. The determination of the extent of mental sufferings must be based on the victims' positions in their families, the life relations between the victims and their relatives.

d/ The general level of compensation for mental sufferings shall be agreed upon by the parties. If no agreement is reached, the level of compensation for mental sufferings for all relatives of the victims shall be based on the extent of mental sufferings, the number of their relatives, which, however, shall not exceed 60 months' minimum salary set by the State at the time of compensation."

3. Damage caused by infringement upon honor, dignity or prestige

Damage cased by infringement upon honor, dignity or prestige shall cover the damage caused by infringement upon honor, dignity or prestige of individuals; and damage caused by infringement upon honor or prestige of organizations.

3.1. Reasonable expenses for limiting and/or remedying the damage shall cover necessary expenses for withdrawal of publications infringing upon the honor, dignity or prestige of the victims; expenses for gathering of materials and evidences to prove that the honor, dignity or prestige is infringed upon; travel fares, accommodation rents (if any) at the average prices in the localities where the expenses are paid in order to request the functional agencies to verify matters, make corrections on the mass media; expenses for organization of public apology and correction at the residence or workplaces of the victims and other actual and necessary expenses to limit and redress the damage (if any).

3.2. Actual incomes lost or reduced

a/ If before their honor, dignity or prestige is infringed upon, the victims had actual incomes which have been lost or reduced due to the fact that the victims had to perform jobs to limit or redress the damage, they shall be compensated for such lost or reduced actual income amounts.

b/ Actual incomes of the victims and their lost or reduced actual incomes shall be determined under the guidance at Item 1.2, Section 1, this Part II.

3.3. Sums of compensation for mental sufferings caused by infringement upon honor, dignity or prestige

a/ Sums of compensation for mental sufferings caused by infringement upon honor, dignity or prestige shall be paid to the very victims.

b/ In all cases where their honor, dignity or prestige is infringed upon, the victims shall each be paid a sum of compensation for mental sufferings. The extent of mental sufferings of the victims shall be determined under the guidance at Point b, Item 1.1, Section 1, Part I of this Resolution. The determination of the extent of mental sufferings must be based on the forms of infringement (by words or by writings on printed or visual newspapers '), acts of infringement, the spread of infringing information,'

c/ The level of compensation for mental sufferings of the victims shall be agreed upon by the parties first. If no agreement is reached, the level of compensation for mental sufferings must be based on the extent of mental sufferings, which, however, shall not exceed 10 months' minimum salary set by the State at the time of compensation."

4. Duration for enjoyment of compensation for damage caused by infringement upon health or life (Article 612 of the Civil Code)

a/ In cases where the victims have totally lost their working capacity, they shall be entitled to enjoy the compensation amount guided at Point a, Item 1.4, Section 1 of this Part II until they die.

b/ Support allowances guided in Item 2.3, Section 2 of this Part II shall terminate in one of the cases provided for in Article 61 of the Law on Marriage and Family.

III. COMPENSATION FOR DAMAGE CAUSED BY SOURCES OF EXTREME DANGER (ARTICLE 623 OF THE CIVIL CODE)

1. Determination of sources of extreme danger

a/ When means of transport, works, objects, substances or animals of any kind cause damage, in order to have grounds for the application of Clauses 2, 3 and 4 of Article 623 of the Civil Code to determine the liability to compensate for damage, the sources of causing harms must be identified to see if they are of extreme danger or not.

b/ The determination of sources of extreme danger should be based on Clause 1, Article 623 of the Civil Code and other relevant legal documents or regulations of competent state bodies in such specific domain. For example: In order to identify motorized means of land transport, the Law on Road Traffic must be based on. According to provisions of Point 13, Article 3 of the Law on Road Traffic, motorized means of land transport shall include automobiles, tractors, motorized two-wheelers, motorized three-wheelers, mopeds and the like, including motorized vehicles for disabled people.

2. Determination of liability to compensate for damage caused by sources of extreme danger

a/ The owners of sources of extreme danger who are possessing or using sources of extreme danger must compensate for damage caused by their sources of extreme danger. Owners who are possessing, using sources of extreme danger are those who are performing every act at their own will to seize, manage the sources of extreme danger but must not run counter to law and social ethics; exploit their utility, enjoy yields and profits from such sources of extreme danger.

b/ Persons who are assigned by owners of sources of extreme danger to possess, use the sources of extreme danger according to the provisions of law must compensate for damage caused by such sources of extreme danger, unless otherwise agreed upon by the owners, possessors or users and their agreements are not contrary to law and social ethics or do not aim to shirk the compensation.

Example: The following agreements shall not be contrary to law and social ethics or do not aim to shirk the compensation:

- The agreement to jointly bear responsibility for damage compensation;

- The agreement that the owners shall pay the damage compensation first, then the possessors or users shall refund the compensation sums to the owners;

- The agreement that those who are in better economic situation shall pay the damage compensation first.

Where owners of sources of extreme danger assign other persons to possess and/or use the sources of extreme danger in contravention of the provisions of law, thus causing damage, the owners shall have to compensate for damage.

Example: If an owner knows that a person has no driving license but still delegates the latter the right to possess and use the vehicle, thus causing damage, then the owner shall have to pay compensation for the damage.

c/ On the principle of co-owners, persons who are assigned to lawfully possess and use the sources of extreme danger shall have to compensate for damage caused by such sources of extreme danger even when they are not at fault, except for the following cases:

- The damage is caused totally by the intentional fault of the victims;

Example: A car is joining in traffic strictly in accordance with the provisions of law but suddenly a person plunges into the car to commit suicide and consequently such person is seriously injured or died. In this case, the owner and the person assigned by the owner to possess and use the car lawfully shall not have to compensate for the damage caused by the source of extreme danger (the car).

- The damage occurs in force majeure cases or emergency circumstances, except otherwise provided for by law. It should be noted that in cases where the law otherwise provides for the liability to compensate for damage caused by sources of extreme danger in force majeure cases or emergency circumstances, the liability to compensate for damage shall comply with the provisions of such legal documents.

d/ The persons unlawfully possessing and using sources of extreme danger shall compensate for damage caused by such sources of extreme danger if the owners and the persons assigned by the owners to lawfully possess and use such sources are not at fault in the damage caused by the unlawfully possessed and used sources of extreme danger (who have strictly observed the regulations on preservation, storage, transportation, use of sources of extreme danger in strict accordance with the provisions of law).

If the owners or the persons assigned by the owners to possess and use the sources of extreme danger let such sources of extreme danger be unlawfully possessed and used (non-compliance or improper compliance with regulations on preservation, storage, transportation and use of sources of extreme danger in accordance with the provisions of law), they shall join the unlawful possessors and users in compensating for damage caused by the sources of extreme danger.

e/ If owners of sources of extreme danger have assigned their sources of extreme danger to other persons and damage is caused, it is a must in such specific case to determine whether or not the persons assigned the sources of extreme danger are the possessors and users of such sources of extreme danger in order to determine who shall be liable to compensate for the damage.

Example: A is the owner of a car and assigns such car to B. B drives the car and has caused an accident, thus causing damage. In this case, it is necessary to distinguish:

- If B is hired by A only to drive the car and gets paid, this means that B is not the possessor and user of such car but A; hence, A must compensate for damage.

- If B is assigned the car by A through a contract on property rental. This means that A no longer possesses and uses such car and B is the lawful possessor and user; hence, B must compensate for the damage. If in this case, with A's consent, B assigns the car to C through a contract on sublease of property, C shall be the lawful possessor and user of such car; hence, C shall have to compensate for the damage.

IV. IMPLEMENTATION EFFECT

1. This Resolution was passed by the Judges' Council of the Supreme People's Court on July 8, 2006, and takes effect 15 days after its publication in "CONG BAO."

This Resolution shall replace Resolution No. 01/2004/NQ-HDTP of April 28, 2004, of the Judges' Council of the Supreme People's Court.

2. For cases where specific legal documents provide for compensation for extra-contractual damage, the handling thereof shall comply with such legal documents.

3. For cases of compensation for extra-contractual damage which had arisen before January 1, 2006 (the effective date of the 2005 Civil Code), the provisions of the 1995 Civil Code, the legal documents guiding the application of the 1995 Civil Code and the guidance of Resolution No. 01/2004/NQ-HDTP of April 28, 2004, of the Judges' Council of the Supreme People's Court, shall apply.

4. For court judgments and decisions which have come into force before this Resolution takes effect and ruled on the compensation for extra-contractual damage under the guidance in this Resolution, this Resolution shall not apply to the protest according to cassation or reopening procedures, unless the judgments or decisions are protested on other grounds.