Phan Quoc Tuan[2] and Nguyen Thi Thuy[3]
Ho Chi Minh City University of Law
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| Customers conduct transactions at Bao Viet Life’s Hai Phong branch__Photo: Tran Viet/VNA |
Introduction
Protecting consumers’ rights is a highly important function of the law. Consumers in general, and insurance consumers in particular, are entitled to fundamental rights recognised by law, among which the right to initiate legal proceedings in the most convenient manner helps balance the contractual relationship between consumers and commercial entities (insurance companies or insurers).
In Vietnam, however, insurance consumers currently face numerous procedural obstacles when suing insurers. One of the procedural difficulties they face arises from choosing the court with jurisdiction to settle insurance disputes (the choice-of-court clause) in order to protect their lawful interests.
Under Vietnam’s law, an insurance policy is categorised as a standard-form contract wherein insurers often incorporate provisions that may cause difficulties for the customer seeking to sue the insurer. Enhancing the protection of insurance consumers in Vietnam therefore requires a dual-track regulatory approach: (i) protection through mechanisms controlling contractual content and terms, and (ii) protection through regulations governing contractual performance. In this context, establishing clear, specialised provisions on court jurisdiction in settling insurance disputes is essential to ensure a balance between interests of the contracting parties during the performance of insurance contracts.
Insurance consumers and their protection before courts
Definition of insurance consumers
Clearly defining a consumer is crucial as it determines the formulation of consumer protection law. Under the laws of many countries, a consumer is precisely the ultimate user of goods and services. However, determining whether a person purchasing goods or services is a consumer is not always straightforward, as there is sometimes confusion with a customer. To distinguish between these two subjects, countries generally identify specific characteristics of consumers. The laws of the advanced jurisdictions around the world largely regard consumers as individuals rather than organisations, even though organisations may occasionally purchase goods and services for non-commercial purposes.
Vietnam’s law adopts a similar approach, emphasising that a consumer, like under foreign laws, is a person who consumes goods and services for non-commercial purposes. Normally, a consumer is treated as an individual, but in reality, a consumer can be an organisation, an individual, or a group of individuals satisfying the condition of being an ultimate service consumer. This viewpoint is reflected in both the 2010 and 2023 Laws on Protection of Consumers’ Rights of Vietnam.
In insurance relationships, the contract is entered into by the insurance company (insurer) and the policyholder. However, the policyholder is not always the only subject using the insurance service. Insurance may be purchased for the life, health, civil liability, and property of another person. For that reason, the subjects using insurance services may include not only the policyholder but also two other entities: the insured and the insurance beneficiary[4].
Based on the above analyses, insurance consumers may be understood as all parties covered by an insurance contract who are the ultimate users of the insurance service, including the policyholder, the insured, and the insurance beneficiary.
Protecting insurance consumers through provisions on court jurisdiction
Because consumers are generally regarded as the weaker party in contracts entered into with commercial entities, the laws of many countries provide for their protection in contractual relationships, especially in transactions under standard-form contracts, in order to minimise any adverse impact on consumers’ rights and interests.
One of the clauses in standard-form contracts that receives particular scrutiny is the one that determines the venue for dispute resolution when a dispute arises. This clause aims to ensure that consumers are not compelled by commercial entities (through pre-drafted contractual terms) to initiate lawsuits exclusively before courts located in places convenient only for commercial entities, such as the place where the commercial entity is headquartered. Requiring consumers to file lawsuits in a place far from their residence often creates barriers in terms of cost, time, and procedural inconvenience, discouraging them from pursuing legal remedies altogether.
The insured, consumers, and employees often benefit from a jurisdiction known as “protective jurisdiction”[5], which is of a special nature compared to general jurisdiction and aims at facilitating these subjects in initiating lawsuits.
Vietnam’s law currently views insurance contracts as having the same legal nature as ordinary civil and commercial contracts. Consequently, insurance participants in Vietnam are not recognised as subjects eligible for special protection. In practice, this creates difficulties for those seeking to bring claims against insurance companies. To align with international legal standards and strengthen consumer protection, Vietnam should introduce specific provisions on the jurisdiction of people’s courts to protect insurance participants more effectively.
Current Vietnam’s law on court jurisdiction and its practical application
As discussed above, Vietnam’s law classifies insurance contracts as civil and commercial contracts. So, when an insurance consumer files a claim against an insurer, the law on contracts and general procedural law will apply in the same manner as for other contract disputes.
In practice, however, most lawsuits over insurance contracts are initiated by consumers against insurers, while counterclaims or lawsuits brought by insurers against policyholders are extremely rare. Applying the jurisdiction of people’s courts provided in the current Civil Procedure Code to insurance disputes therefore creates difficulties for both insurance consumers and courts.
Unfair choice of court clauses
Insurance contracts drafted by insurance companies commonly contain a pre-formulated clause on choice of court in the locality where the defendant has its headquarters or residence to resolve disputes over the insurance contract. In other words, insurance consumers who wish to sue insurers are not protected by a specific provision on court jurisdiction (which would be more procedurally favourable to insurance consumers) but have to apply the general provisions applicable to all types of contracts[6].
Meanwhile, insurers understand that they possess the right to refuse compensation or insurance payment, the right to cancel the contract, and the right to unilaterally terminate the performance of the contract if the customer breaches their obligations. Given these rights, insurers rarely need to initiate lawsuits against customers.
Difficulties in determining the “place where the contract is performed”
Even where the contracting parties have agreed on a court with jurisdiction to resolve a dispute arising from the contract, the insurance consumer always seeks to file a lawsuit against the insurer in the venue most convenient for him, usually his place of residence. This preference is based on the provision “if the dispute arises from a contractual relationship, the plaintiff may request the court of the place where the contract is performed to resolve it.”[7]
Under civil procedure law, the plaintiff may choose the court of “the place where the contract is performed” to initiate a lawsuit, and his place of residence is precisely where a part of the contract is performed. However, Vietnam’s law does not provide a definition for “the place where the contract is performed”, and insurance contracts do not manifest the content of “the place where the contract is performed” either. Consequently, whether to accept and settle the case depends entirely on the discretion of the court or judge.
In practice, two principal approaches have emerged. The first approach argues that the performance of an insurance contract is the fact that parties perform their obligations under the contract, and to determine the place of obligation performance, insurance consumers will rely on the “place for obligation performance” provision of Article 277 of the 2015 Civil Code. This article stipulates that, in the absence of an agreement on the place of obligation performance, such place shall be determined as “the place of residence or headquarters of the obligee, if the subject matter of the obligation is not real estate”. In this case, the plaintiff is the obligee (with the right to claim the insurance sum), and the subject matter of the obligation is not real estate, so the plaintiff’s decision to initiate the lawsuit before the court in their place of residence is correct.
The second approach holds that because the contract does not clearly state “the place where the contract is performed”, the plaintiff does not satisfy the condition for exercising the right to choose the court. In practice, the courts adopting this view seem to be influenced by the guidance of the Council of Judges of the Supreme People’s Court in Resolution 03/2012/NQ-HDTP. This Resolution states: “if the law allows the plaintiff to choose the court subject to a specified condition, a court may only accept the case when that condition is met.” Specifically, in this case, the contract must clearly state “the place where the contract is performed” for the court of that place to accept and settle the dispute. Since the insurance contract does not expressly state this content, the court of the place where the plaintiff resides will refuse to accept the case and settle the dispute.
Due to these two different approaches, it is difficult for insurance consumers to know whether their claims will be accepted. In reality, many insurance consumers file their lawsuits before the court of their residence, believing it to be “the place where the contract is performed”, only to receive notices of rejection of jurisdiction after substantial delays.
Choice of courts for initiating lawsuits
Another provision of Article 40 of the 2015 Civil Procedure Code allows plaintiffs to initiate lawsuits before courts of the places where branches of the sued organisation are located, provided that the dispute arises from the activities of such branches. Although insurance companies maintain branches or business offices in multiple places, these branches and business offices are not authorised to pay compensation or insurance sums. The payment of compensation and insurance sums is entirely carried out by the company’s headquarters.
In insurance disputes, the majority of insurance participants initiate lawsuits against insurers when they are refused compensation or payment of insurance sums, or when their claims for insurance sums are not settled satisfactorily. Such a dispute does not arise from branch operations, so insurance participants cannot initiate lawsuits in the place where they transacted, but instead must do so before the courts of the place where the insurers (defendants) are headquartered.
The above analysis demonstrates that because Vietnam’s law continues to view insurance contract disputes as ordinary civil and commercial disputes, insurance consumers benefit only from general provisions on court jurisdiction like subjects in other types of contracts. This causes substantial difficulties for insurance consumers seeking judicial remedies.
Recommendations
To enable insurance consumers in Vietnam to exercise their right to initiate lawsuits in the most convenient manner, the Civil Procedure Code needs to be revised in the following directions:
Firstly, it should add provisions on the protective jurisdiction of people’s courts dedicated to insurance consumers, following the approach adopted by countries with advanced consumer protection laws. Insurance consumers should be granted the right to file lawsuits before courts in localities either where they reside or where insurers are headquartered. Conversely, insurers should only be permitted to initiate legal actions against insurance consumers before courts in the consumers’ place of residence.
Secondly, the law should provide a clear definition of “the place where the contract is performed” to avoid cases of conflicting judicial interpretations that undermine the right to initiate a lawsuit in a convenient venue of insurance consumers and other relevant subjects.
Thirdly, the Civil Procedure Code should remove the restrictive requirement that disputes must arise specifically from branch operations for plaintiffs to file lawsuits in the place where a branch is located. It should only be required that the commercial entity maintains a branch or a presence in that location for the plaintiff to file lawsuits before the court of such place.
Conclusion
Protecting the rights of insurance consumers is a central concern for countries with advanced legal systems. These countries achieve this through the systematic integration of substantive and procedural laws to best protect these rights. Vietnam’s 2022 Law on Insurance Business, 2023 Law on Protection of Consumers’ Rights, and relevant decrees and circulars all have provisions controlling contractual content. Nevertheless, to improve the legal mechanism for better protecting insurance consumers, specific procedural law provisions need to be promulgated, especially given that Vietnam is promoting the development of the insurance market under its development strategy through 2030.-
[1] The Vietnamese version of this article was published on the Vietnamese Journal of Legal Sciences, No. 09(193)/2025.
[2] University of Law, Hue University, email: tuanphan1206@gmail.com
[3] Ho Chi Minh City University of Law, email: ntthuy@hcmulaw.edu.vn
[4] As per Vietnam’s law, these subjects are defined as follows: “a/ Policyholder means an organisation or individual that enters into an insurance contract with an insurance company and pays insurance premiums; b/ Insured means an organisation or individual that has property, civil liability, health, life, obligations or economic interests insured under the insurance contract; c/ Beneficiary means an organisation or individual designated by the policyholder or the insured to receive insurance money under the agreement in the insurance contract.”
[5] Protective jurisdiction applies when disputes arise from three types of contracts: insurance contracts, consumer contracts, and individual employment contracts. The jurisdiction applicable to these three types of contracts is applied differently from general jurisdiction.
[6] This is consistent with the court jurisdiction provision of Article 39 of the Civil Procedure Code, which states: “The court of the place where the defendant resides or works, if the defendant is an individual, or where the defendant has its headquarters, if the defendant is an agency or organisation, has the jurisdiction to resolve according to first-instance procedures disputes over civil, marriage and family, business, commercial, and labor matters.”
[7] Article 40 of the 2015 Civil Procedure Code.
