Exemption from environmental liability: A comparative analysis between Directive 2004/35/EC of the EU and the Law on Environmental Protection 2020 of Viet Nam

Abstract: This article systematically examines the mechanisms for exemption from environmental liability as stipulated by Directive 2004/35/EC (ELD) within the European Union (EU) legal framework, and by Clause 4, Article 8 and Clause 4, Article 130 of Vietnam's 2020 Law on Environmental Protection. The analysis reveals significant differences in the legal approaches of the two systems. While the EU adopts a strict liability principle coupled with limited exemption conditions, Vietnamese law establishes a broader scope of exemptions, which potentially leads to enforcement gaps. Drawing on a comparison of legal provisions and their practical application, the article highlights shortcomings in Vietnam's current policy and legal foundation. It then proposes solutions aimed at ensuring the effectiveness of environmental protection efforts and the legal accountability of responsible parties.

Keywords: Environmental liability exemptions, Directive 2004/35/EC, Law on Environmental Protection, EU, Vietnam.

1. Introduction

Environmental liability serves as an essential legal instrument to deter violations of environmental law and is widely recognized in both international and national legal systems. The issue of liability for environmental pollution has attracted significant scholarly attention worldwide, resulting in a large body of specialized research. Among these, Larsson’s study [3] holds particular importance in systematizing and developing the theoretical framework of environmental liability. The author clarifies fundamental concepts such as “environmental damage” and “environment,” extending beyond tangible losses to private property to include harm to public resources, ecosystems, and environmental services—elements that are difficult to quantify in monetary terms. Notably, Larsson emphasizes the role of the standard of liability, which may range from fault-based liability to strict liability, depending on the type of activity and the legal system in place. In addition to the legal basis of liability, Larsson also focuses on the analysis of principles such as the Polluter Pays Principle (PPP), which serves as a core principle governing environmental compensation.

The two authors, Lucas Bergkamp and Michael Faure [4], edited a foundational research work on environmental liability, structured through a multidimensional approach combining theoretical, practical, and legal-instrumental perspectives. The book provides an in-depth analysis of the role of civil liability as a tool compelling enterprises to internalize environmental costs, thereby operationalizing the Polluter Pays Principle (PPP). It also highlights the limitations in implementing both private law approaches (such as strict liability, negligence, and insurance) and public law approaches (including state liability and international commitments). Furthermore, the work emphasizes that corporate civil liability should arise only when there is a breach of a primary legal obligation as stipulated in permits, standards, or statutory provisions. In addition to civil liability, the authors underscore alternative mechanisms such as first-party insurance, compensation funds, and public law regimes, which prove to be more effective in preventing and swiftly addressing environmental damage. Moreover, Wilde [5] offers a comprehensive and insightful examination of traditional civil liability doctrines in environmental compensation from a comparative perspective between European and U.S. law, contextualized within public policy considerations and core principles such as the PPP and the precautionary principle.

In Viet Nam, the book “Environmental damage compensation law in Viet Nam: Theory and Practice” [6] by authors Lê Hồng Hạnh and Lê Đình Vinh represents a comprehensive and academically rigorous study on the subject. The authors analyze the current legal provisions in Vietnam governing environmental damage compensation by identifying types of environmental damage as well as the causal relationship between environmental harm and acts of pollution or degradation. It can be observed that the aforementioned studies provide a solid theoretical and practical foundation for issues concerning environmental liability.

Within the context of environmental law, clearly defining the scope and grounds of environmental damage compensation is crucial for both enforcement effectiveness and social equity. First, compensation for damage arising from the degradation of the environment’s functional utility reflects a modern legal approach that regards the environment not merely as a physical asset but as a system providing essential ecosystem services such as clean air, water resources, biodiversity, and landscape values. Second, civil damages resulting from environmental pollution emphasize the protection of the lawful rights and interests of individuals and organizations directly affected - for instance, health impairment, loss of income, or decline in property value. his distinction not only broadens the scope of legal protection but also addresses the shortcomings of traditional compensation mechanisms that primarily focus on private property rights. It also aligns with international trends that regard environmental compensation as both a tool of justice and a preventive and deterrent mechanism against polluting activities.

This mechanism plays a pivotal role in controlling pollution and environmental degradation, while simultaneously fulfilling a dual objective: preventive in nature, yet ensuring the remediation of damage and the restoration of affected ecosystems. However, defining the scope and conditions for legal exemptions - particularly exemptions from environmental damage compensation liability - poses significant theoretical and practical challenges. On the one hand, the law must uphold the principle of sustainable development, ensuring that exemption provisions do not undermine the effectiveness of preventive, deterrent, and remedial mechanisms in environmental protection. On the other hand, the design of exceptions or exemptions - such as for authorized activities, force majeure events, or actions consistent with the state of scientific and technical knowledge at the time of conduct - must be reasonably and clearly circumscribed to avoid creating “legal loopholes” that could weaken the liability of polluters and adversely affect environmental justice as well as community interests. Therefore, it is essential to establish a robust legal framework that ensures transparency and fairness in determining environmental compensation liability, while strictly limiting unreasonable exemptions, thereby promoting sustainable development and comprehensive, effective environmental protection.

In the context of globalization and deep international integration, the study and adoption of advanced legislative models - particularly the European Union’s Directive 2004/35/EC on Environmental Liability (ELD), which is widely regarded as a comprehensive and highly effective legal framework [7] - has become an essential requirement for countries such as Vietnam that are in the process of refining their legal systems in the field of environmental damage compensation. In particular, the ELD’s approach to implementing the PPP[8] has proven effective in internalizing environmental costs into production activities, thereby fostering the development of cleaner technologies and enhancing the overall efficiency of environmental protection within the European Union member states.

In Viet Nam, Article 130 of the Law on Environmental Protection 2020 stipulates the cases in which exemption from liability for environmental damage compensation is granted [9]. However, the current provision raises several issues that require further clarification: TFirst, the scope of exemption is relatively broad compared to that in many developed jurisdictions, raising the question of whether such a design may result in a “market failure” when environmental costs are not fully internalized in business and production activities. Second, the current exemption policy risks creating competitive inequality, as enterprises adopting cleaner technologies bear higher operational costs than those benefiting from exemption mechanisms. Third, what lessons can be drawn from the EU’s Environmental Liability Directive (ELD) model regarding the dual impact of exemption policies - serving both as a mechanism to support businesses and, at the same time, as a potential barrier to sustainable technological innovation?

In addition to shortcomings in legislative technique, the mechanism for exemption from liability for environmental damage compensation, if not carefully designed, poses significant socio-economic risks. First, establishing an overly broad and weakly controlled scope of exemption may lead to a “moral hazard” or “incentivization of unsustainable behavior”, as business entities lose motivation to invest in advanced waste treatment technologies once they are exempted from compensation obligations. As a consequence, the Polluter Pays Principle (PPP) [10] is effectively nullified in practice, undermining the regulatory role of law in promoting a transition toward a green development model. Second, the current exemption mechanism may generate competitive inequality, as large enterprises - with greater financial capacity and easier access to favorable legal conditions - are more likely to obtain formalistic exemptions, while small and medium-sized enterprises (SMEs) face considerable obstacles in accessing technology and meeting technical standards. This disparity not only distorts fair competition but also creates a “reverse selection” phenomenon [11] in the environmental market, thereby negatively affecting the overall sustainability of the economy.

2. Exemption mechanisms under Directive 2004/35/EC of the European Union

Directive 2004/35/EC, adopted on 21 April 2004 and officially entering into force on 30 April 2007, marked a significant milestone in institutionalizing legal principles of environmental protection at the Union level. In its legal essence, the Environmental Liability Directive (ELD) operationalizes the Polluter Pays Principle (PPP) - a fundamental legal norm enshrined in Article 191(2) of the Treaty on the Functioning of the European Union (TFEU) [12] - while reflecting the broader trend toward harmonization of environmental law within the common European legal space [13]. From a policy perspective, the ELD was designed to achieve three strategic objectives: (1) to establish a unified legal framework of liability for serious cross-border environmental damage; (2) to optimize environmental risk prevention through the application of a strict liability regime; (3) to create a legal incentive mechanism encouraging business entities to proactively comply with EU environmental standards. Notably, the ELD was conceived as a complementary instrument to the existing EU environmental management system, focusing on remedying market failures by internalizing environmental externalities [14].

2.1. The tiered liability scheme

The Environmental Liability Directive (ELD) establishes a tiered liability scheme based on the hazardous nature of activities and the level of environmental risk involved.

Directive 2004/35/EC of the European Union provides a comprehensive legal framework on environmental liability, under which a strict liability regime applies to activities identified as posing a high environmental risk, as specified in Annex III. These activities include, but are not limited to: (i) industrial operations falling within the scope of Directive 96/61/EC on Integrated Pollution Prevention and Control (IPPC Directive); (ii) the transport of hazardous waste; (iii) offshore oil and gas exploration and production; (iv) the operation of industrial installations with a risk of major accidents under the Seveso II Directive; and (v) discharges into water bodies governed by Directive 2000/60/EC (Water Framework Directive) [15].

Under the strict liability regime, legal liability arises without requiring proof of fault on the part of the operator causing the damage. Instead, liability is established solely on the basis of demonstrating a causal link between the high-risk activity and the actual environmental harm. This approach clearly reflects the precautionary principle - one of the fundamental pillars of the EU’s environmental policy - designed to minimize risks, prevent pollution, and promote compliance by allocating potential financial responsibility explicitly to operators engaged in hazardous activities.

Accordingly, Directive 2004/35/EC establishes a clear distinction between two liability regimes: strict liability(applicable to hazardous activities) and fault-based liability. For activities listed in Annex III, the imposition of liability requires only proof of damage and a causal link between the activity and the environmental harm, without the need to demonstrate any unlawful conduct or negligence on the part of the operator. In contrast, for activities not included in Annex III, if they cause damage to protected species and natural habitatscovered by the Birds Directive 79/409/EEC and the Habitats Directive 92/43/EEC, the ELD applies a fault-based liability regime. In such cases, liability arises only where there is evidence of a breach of a specific legal obligation or a failure to exercise due diligence in accordance with industry standards. This differentiation not only ensures reasonableness and proportionality in the EU’s legislative policy but also helps balance the objectives of environmental protection with the actual risk level associated with each type of activity.

2.2. Exemptions from liability: Lagal analysis and practical application

2.2.1. The Third Party Defence

Under Article 4(3) of the Environmental Liability Directive (ELD), an operator may be exempted from liability if three cumulative conditions are satisfied: (i) the damage was entirely caused by a third party; (ii) there was no contractual or legal relationship between the operator and the third party; (iii) the operator had taken all reasonable precautions in accordance with industry standards. Within the framework of the Directive, the exemption from environmental liability is further elaborated in Article 8(3), which provides that an operator may be relieved from responsibility if it can be demonstrated that the damage resulted solely from the act of a third party, and that the operator had exercised all reasonable preventive measures. However, in Case C-378/08, the Court of Justice of the European Union (CJEU) emphasized that this exemption must be interpreted strictly [16]. This ruling establishes a stringent evidentiary threshold, reflecting the EU’s strong policy preference for maximum environmental protection, consistent with the polluter pays principle (PPP) enshrined in Article 174(2) of the EC Treaty. The judgment in C-378/08 demonstrates that even in cases involving historical contamination or complex pollution scenarios, the attribution of liability requires a thorough analysis of the causal nexus between the activity and the resulting damage. Where the causal link remains uncertain or indeterminate, strict liability shall prevail, and exemption can only be granted upon the presentation of clear, credible, and convincing evidence. Therefore, the third party defence cannot be regarded as a mechanism to evade restoration duties, but rather as a narrowly construed exception intended to safeguard fairness without undermining the overall effectiveness of the EU’s environmental liability regime.

2.2.2. Compliance with Public Authority Requirement

Article 8(4)(a) of the Environmental Liability Directive (ELD) provides for an exemption where the environmental damage results from compliance with a mandatory requirement issued by a competent public authority. This mechanism is grounded in the “act of state” doctrine within liability law, designed to reconcile the potential conflict between the duty to comply with lawful administrative orders and the imposition of compensatory liability. The exemption for environmental damage caused by compliance with an administrative order, as stipulated in Article 8(4)(a) of Directive 2004/35/EC, constitutes a narrow exception to the fundamental polluter pays principle (PPP). Its core rationale allows an operator to be relieved from liability if it can be demonstrated that the environmental harm directly resulted from compliance with a binding and lawful directive or requirement issued by a competent authority. To qualify for exemption, the administrative act must possess legal binding force - that is, it must compel the operator to act or refrain from acting in a specific manner, rather than serving as a mere recommendation or voluntary guideline. In addition, the administrative decision must be lawful both in form and substance, meaning it was adopted within the proper competence and procedures, and its content conforms to environmental law and overarching legal principles. The causal relationship between compliance and environmental damage must be direct and inevitable, excluding alternative or concurrent causes and ensuring that the harm was the necessary consequence of lawful obedience. The theoretical foundation of this rule lies in the act of state doctrine, which recognises that a person or entity cannot be held legally liable for adverse outcomes directly resulting from the execution of a lawful order of the State. This doctrine seeks to balance the operator’s obligation to comply with binding administrative decisions - under the threat of administrative or even criminal sanctions for non-compliance - with the general principle of environmental responsibility. Article 8(4)(a) resolves this normative tension by excluding the operator’s liability, while leaving open the possibilityof attributing responsibility to the public authority that issued the order, depending on the provisions of national law.

However, this exemption has been interpreted and applied strictly, ensuring that it does not become an unconditional “shield” for operators. The core requirement lies in the burden of proof: the operator must demonstrate that the administrative order was mandatory, lawful, and that there existed a direct causal link between compliance and the resulting damage. NIf the administrative decision is later declared unlawful, or if the operator failed to comply accurately with the order - for instance, by exceeding the limits of the permit - the exemption shall not apply. Moreover, damage exceeding the normal threshold inherent to the authorised activity is likewise excluded from exemption, as confirmed in the Fipa Group case (CJEU, C-534/13) [17]. TIn that case, the Court of Justice of the European Union (CJEU) held that compliance with an administrative permit does not automatically exempt the operator from liability where the permitted activity itself entails inherent environmental risks and the damage arises from the ordinary operation of the facility. The exemption applies only when the damage results directly and exclusively from a specific and binding instruction issued by a competent authority. In conclusion, the exemption under Article 8(4)(a) ELD serves as a protective mechanism for operators acting under State orders, but it remains narrowly confined so as not to undermine the polluter pays principle (PPP). It reaffirms the balance of responsibility between individuals, enterprises, and the State, while underscoring that the burden of proof lies with the operator. This ensures the deterrent effect and the effectiveness of the EU environmental liability system are maintained.

2.2.3. Permit Defence

Within the framework of Directive 2004/35/EC on Environmental Liability, Article 8(4) establishes a conditional exemption mechanism for operators, based on the legality of the activity that caused the environmental damage. Specifically, an operator may be exempted from the obligation to bear the costs of remediation if it can be demonstrated that: (i) the damage originated from an activity carried out under a valid permit, or (ii) the activity was performed in accordance with technological standards accepted at the time of the emission, provided that (iii) the operator fully complied with all conditions stipulated in the permit or relevant regulatory standards, and (iv) no breach of applicable law occurred. This mechanism reflects the concept of the “lawful permit defence”, under which exemption from liability does not rely on external or fortuitous circumstances—such as third-party actions or force majeure—but rather on the legitimate compliance with an established legal and technical regulatory framework.

However, this exemption mechanism is not absolute, but is strictly circumscribed by a set of supplementary provisions. Notably, the final paragraph of Article 8(4) expressly excludes the possibility of invoking the permit defence in cases where the environmental damage concerns biodiversity within protected areas designated under Directives 92/43/EEC or 2009/147/EC, including those forming part of the Natura 2000 network. Moreover, the exemption shall not apply where the operator knew or ought to have known of the risk of potential damage. This restriction aims to prevent the misuse of permits as a “legal shield” for environmentally harmful conduct - a position clearly affirmed by the Court of Justice of the European Union (CJEU) in Case C-529/15, Gert Folk[18].

2.2.4. Emxeption based on scientific and technical limitations (State-of-the-art Defence)

Within the framework of EU environmental law, the exemption from liability based on scientific and technical limitations - the so-called state-of-the-art defence under Article 8(4)(b) of Directive 2004/35/EC - serves as a mechanism to balance the requirement of environmental prevention with the reasonable expectations concerning an operator’s knowledge and technological capacity at the time the damage occurred. This defence allows an operator to be exempted from liability if they can demonstrate that the damage resulted from an activity conducted in full conformity with the scientific and technical knowledge available at the relevant time, and that the risk of harm could not reasonably have been foreseen. However, this mechanism must be interpreted in light of the precautionary principle, which constitutes a fundamental pillar of EU environmental law, as clarified by the Court of Justice of the European Union (CJEU) in the landmark judgment Case C-127/02 (Waddenzee) [19]. In that case, the Court established a stringent standard for assessing environmental impacts on Natura 2000 protected areas, holding that where “it cannot be excluded that a plan or project will have a significant effect”, an environmental assessment must be carried out. Moreover, authorisation may only be granted where “no reasonable scientific doubt remains” as to the absence of adverse effects. This interpretation demonstrates that, despite the inherent limitations of scientific knowledge, neither the competent authorities nor the operators are thereby relieved of their responsibilities. On the contrary, they are required to adhere to a heightened standard of prudence, ensuring that the protective purpose of EU environmental law is not undermined by scientific uncertainty.

The relationship between Article 8(4)(b) of the Environmental Liability Directive (ELD) and the reasoning in the Waddenzee case reflects a tension between the legal protection afforded to operators and the duty to preserve the environment. In Waddenzee, by giving precedence to the precautionary principle, the Court effectively limited the applicability of the state-of-the-art defence in situations involving potential risks to sensitive ecosystems. Accordingly, while the ELD allows operators to invoke scientific uncertainty as a ground for exemption, the Waddenzee judgment imposes a duty to act even in the absence of conclusive scientific evidence - affirming that scientific uncertainty cannot be invoked to avoid assessment obligations or to delay protective measures.

3. Exemption from liability under Article130 of Vietnam's Law on Environmental Protection 2020

The Law on Environmental Protection 2020 (LEP 2020) marks a fundamental shift in Vietnam’s environmental policy framework, reflecting a clear trend towards alignment with international standards through the domestic incorporation of core principles of global environmental law. The Polluter Pays Principle (PPP) is explicitly established as a cornerstone of the LEP 2020, as provided in Article 4(4), which requires that any organisation or individual responsible for pollution must remedy and compensate for environmental damage, and bear the full costs of clean-up, remediation, and environmental restoration. Prior to the LEP 2020, the Formosa environmental incident of 2016 represented one of the most severe environmental disasters in Vietnam’s history. The event caused massive fish deaths, marine pollution, and serious ecological degradation along the central coast, severely affecting marine ecosystems and the livelihoods of hundreds of thousands of residents [20]. Clause 4, Article 130 of the LEP 2020 [21] signifies a major legal development, as it establishes for the first time a statutory framework for exemptions from liability for environmental damage (environmental damage liability exemption) for organisations and individuals that own waste treatment systems meeting prescribed standards and fully comply with environmental regulations.

Although the provision was initially expected to serve as a regulatory incentive promoting compliance and investment in waste treatment technologies, it simultaneously reveals a number of limitations and legal loopholes. Revisiting the Formosa incident, although the company possessed a valid discharge permit and operated a waste treatment system that was deemed to be “in compliance” with prevailing standards, the incident nevertheless resulted in severe environmental damage due to incomplete treatment facilities and technical failures during operation. The Formosa case demonstrates that many enterprises may rely on administrative documentation and periodic monitoring reports to claim regulatory compliance, while in practice causing substantial harm to the environment and affected communities. However, the terms “full compliance with the law”, “meeting prescribed standards”, and “causing no damage” as used in this provision remain overly broad and indeterminate, allowing for formalistic compliance that does not necessarily reflect the actual environmental performance of operators. This case thus provides clear evidence of the deficiencies in Vietnam’s current exemption mechanism for environmental damage liability, underscoring the urgent need for more detailed regulatory criteria and independent, transparent monitoring mechanisms to ensure effective environmental protection and safeguard the rights and interests of affected communities.

Firstly, the terms “causing no damage” and “full compliance” are defined in overly broad and ambiguous terms, lacking specific guidance on quantitative criteria and assessment methodologies. This vagueness poses significant risks in the environmental context - a complex and dynamic system in which various forms of harm (such as cumulative, indirect, or long-term ecological damage) may only manifest after an extended period of time [22]. Allowing enterprises to rely solely on point-in-time monitoring results deemed “compliant” to deny any liability is therefore deeply concerning. Similarly, the concept of “full compliance with the law” is practically unattainable given the multi-layered, fragmented, and sometimes conflicting nature of Vietnam’s environmental legal framework - comprising Laws, Decrees, Circulars, National Technical Regulations (QCVN), Environmental Impact Assessments (EIA), and Environmental Permits at both central and local levels. Ensuring absolute, continuous compliance (for instance, temporary exceedances during plant start-up or shutdown phases in cement production) would require resources far beyond the current capacity of enforcement agencies. Moreover, the absence of clearly defined criteria, monitoring mechanisms, and competent authorities to validate whether a facility has “met the requirements” allows many operators to self-declare compliance based merely on environmental permits and EIA reports, effectively legitimising pollution under the guise of formal legality.

Secondly, the evaluation of waste treatment systems as “meeting requirements” and the presumption that they “cause no environmental damage” reveal serious conceptual and practical limitations in environmental governance. First, đcompliance with discharge standards under the QCVN does not necessarily mean that no adverse environmental impacts occur. Continuous and prolonged discharges from multiple sources can result in cumulative pollution and severe environmental degradation, which treatment systems can only mitigate rather than eliminate entirely. Second, most waste treatment facilities are designed to target a limited set of key pollutants, while many other hazardous compounds - especially persistent organic pollutants (POPs) - may remain uncontrolled, leading to latent forms of environmental harm and biodiversity loss. Third, the determination of “no damage” is often based solely on periodic monitoring results that meet QCVN standards, yet such measurements do not necessarily capture cumulative, long-term, or indirect effects. Empirical evidence continues to demonstrate cases of environmental damage occurring despite systems being technically “compliant.” Finally, the burden of proving “no damage” is disproportionately placed on the victims—those who generally lack the financial, technical, and legal capacity to conduct environmental assessments - while enterprises can easily rely on their legal documentation, internal monitoring data, or hired expert opinions to deny liability. The inevitable consequence is a significant restriction of access to environmental justice, coupled with the erosion of the Polluter Pays Principle (PPP). This, in turn, undermines progress toward sustainable development goals (SDGs) in the face of increasingly complex and multidimensional environmental challenges.

Thirdly, the lack of a clear distinction between legal exemption from liability and corporate social responsibility (CSR) within the provisions on environmental damage compensation has significantly weakened the Polluter Pays Principle (PPP). Enterprises may be granted full exemption from liability merely for meeting formal legal requirements, without consideration of their social obligations toward affected communities, thereby creating a tangible risk of responsibility evasion and legitimisation of pollution. Moreover, the current legal framework fails to establish a clear and immediate causal link between the act of discharge and the resulting environmental damage. In reality, the environment is a complex and interdependent system, where harm often manifests belatedly, indirectly, or cumulatively over time. The incompatibility between ecological characteristics and the existing legal approach has consequently resulted in significant difficulties in determining legal responsibility for polluting entities. As a result, not only has the effectiveness of legal instruments in preventing and addressing environmental harm been undermined, but the incentive for stakeholder participation in environmental protection and remediation efforts has also been markedly diminished. Consequently, the core objectives of ensuring environmental justice and promoting sustainable development are confronted with a serious systemic obstacle.

Fourth, the absence of an independent, objective, and transparent verification mechanism regarding the criterion of a “waste treatment system meeting required standards” - a decisive condition for establishing exemption from environmental damage liability - represents a critical institutional deficiency. This provision, which primarily relies on self-assessment reports submitted by enterprises and the limited capacity, expertise, and proactivity of regulatory authorities, has severely undermined the deterrent effect of environmental law, while simultaneously creating legal space for regulatory capture and the legitimisation of non-compliance under the guise of formal adherence. From the perspective of the business community, the lack of transparency in inspection and verification mechanismsmay disadvantage enterprises that comply genuinely with environmental obligations, while enabling unfair competitionfrom those deliberately evading legal duties. From a theoretical standpoint, the absence of quantitative technical standards, independent auditing procedures, and objective certification mechanisms results in discretionary application, thereby weakening consistency and fairness in law enforcement.

Under Article 584 of the Civil Code 2015 of Vietnam, two grounds for exemption from liability in tort are recognised: (1) force majeure events, and (2) damage caused entirely by the fault of the injured party. The first situation (1) can be interpreted as referring to natural disasters or catastrophic events beyond the preventive or responsive capacity of enterprises, which consequently result in environmental pollution. A typical example is the 2011 Fukushima tsunami in Japan, which led to a severe radioactive leak from nuclear power plants, causing widespread environmental contamination - primarily of soil and water - and adversely affecting the local population [23]. Although no similar incident has occurred in Vietnam, from a legal perspective, an enterprise encountering such a situation could, in principle, invoke Article 584 of the Civil Code (2015) as a ground for exemption from environmental damage liability. However, the second situation (2) - damage entirely attributable to the fault of the injured party - is hardly conceivable in the context of tort liability for environmental pollution. This is because, in such cases, one side of the relationship is the People, as the natural environment constitutes a resource under the ownership of the entire people, with the State acting as the owner’s representative [24]; and the other side comprises individuals residing in the affected area. The People, as a collective, cannot be deemed at fault in environmental damage cases. While it may be theoretically possible that certain residents contribute to local pollution, such individuals would be considered co-offenders rather than victims, and therefore the enterprise still cannot rely on Article 584 of the Civil Code (2015) to claim exemption from liability. In conclusion, Vietnamese civil law effectively recognises only one applicable ground for exemption from environmental damage compensation - that is, force majeure.

4. Comparison of the exemption mechanisms for environmental liability: A cross-reference between Directive 2004/35/EC and the Law on Environmental Protection 2020 of Viet Nam

The legal systems of the European Union (EU) and Viet Nam share certain foundational principles in the regulation of environmental liability.

Firstly, both legal instruments institutionalize the Polluter Pays Principle (PPP) as a fundamental policy pillar. However, the degree of implementation differs. While the Environmental Liability Directive (ELD) – Directive 2004/35/EC applies this principle in an absolute manner through a regime of strict liability imposed on hazardous activities [25], the Law on Environmental Protection 2020 of Vietnam adopts a relative approach, reflected in a mechanism of “conditional liability.” The application of the PPP in relation to environmental damage compensation under Article 130(4) of the Law on Environmental Protection 2020 is carried out indirectly, by linking legal liability to certain administrative conditions - such as compliance with licensing requirements or the operation of a waste-treatment system meeting prescribed standards - while the burden of proof rests with the polluting entity. This mechanism contradicts the spirit of the PPP as set forth in Article 4(6), and simultaneously creates a paradoxwhen compared to the carbon mechanism under Article 139, where the PPP is applied absolutely. Hence, this constitutes the clearest manifestation of “conditional liability” within Vietnam’s environmental law framework.

Both legal systems acknowledge the necessity of establishing exemption mechanisms in order to strike a balance between (i) environmental protection, (ii) the encouragement of lawful business activities, and (iii) the promotion of technological innovation. However, the specific manner in which such exemptions are codified differs significantly between the two systems.

Secondly, the ELD adopts a closed-list system of exemptions, limited to four clearly defined cases set out in Articles 4(3) and 8(4). These exemptions are governed by strict and specific conditions: the third-party fault exemption requires proof of a "sole cause”; the compliance-with-order exemption applies only where the administrative order was "mandatory requirement"; and the state-of-the-art defence demands evidence of the "objective limits of scientific knowledge" at the relevant time. In contrast, Article 130 of Vietnam’s Law on Environmental Protection 2020 establishes an open-ended system based on three broadly worded conditions, leaving considerable gaps in practical application. These limitations include the lack of clear distinction between different types of exemptions, the standard of “legal compliance” being interpreted merely as formal compliance, and the absence of a cumulative risk assessment mechanism.

Thirdly, the ELD establishes a mechanism of positive proof obligation, which places the burden of proof on the operator. This obligation requires operators to provide comprehensive scientific evidence demonstrating that they have applied the best available precautions (BAT) and maintained complete legal documentation [26]. In contrast, Article 130 of the Law on Environmental Protection 2020 creates a fragmented proof system, reflected in the division of the burden of proof as follows:(1) the plaintiff must prove the actual damage and the polluting act;(2) the defendant must prove non-liability by showing compliance with the law, the operation of a standard-compliant waste treatment system, and the absence of damage (as provided in Clause 4); (3) The court must independently assess causality and allocate liability.This fragmentation, combined with the lack of coordination between these obligations, imposes a disproportionate evidentiary burden on the plaintiff (often the victim), while allowing the defendant to exploit the “self-exoneration”mechanism. As a result, the effectiveness of environmental damage compensation is significantly undermined, contradicting the risk-based approach declared in Article 4(4) of the same Law.

Fourthly, regarding the monitoring and enforcement system, the ELD establishes an effective multi-tiered supervision mechanism, which includes national monitoring by the environmental authorities of Member States, transnational oversight by the European Commission, and independent supervision by the IMPEL network as well as civil society organizations. In contrast, the Law on Environmental Protection 2020 of Vietnam primarily relies on a single-layer administrative supervision mechanism, which reveals significant shortcomings - such as dependence on the often uneven capacity of local authorities, the absence of an independent and objective monitoring mechanism, and limited participation of relevant stakeholders.

The aforementioned differences give rise to three significant legal implications. First, the ELD establishes a strong deterrent effect due to the stringency of its exemption conditions, whereas the Law on Environmental Protection 2020 risks fostering a minimum compliance syndrome.Second, the EU system promotes technology forcing by requiring the application of Best Available Techniques (BAT), while the Vietnamese framework fails to generate similar incentives as it remains largely dependent on national technical standards (QCVNs) for benchmarking. Third, the EU’s multi-tiered monitoring mechanism ensures objectivity in law enforcement, whereas the Vietnamese system is prone to discretionary enforcement risks. In contrast, international environmental law, particularly within the EU and OECD legal frameworks [27], regards the right to bring environmental lawsuits as a fundamental element of environmental justice. In Vietnam, however, the legal safeguards for exercising this right remain insufficient in practice, despite the People’s Procuracy now being vested with the authority to file civil lawsuits to protect the environment and ecosystems [28]. Meanwhile, local communities - as those directly bearing the consequences of environmental harm - play a crucial role in early detection of environmental risks. Therefore, establishing a comprehensive and effective legal framework that enables communities to actively monitor, file complaints, and initiate lawsuits is not only a reflection of the principles of transparency and accountability in environmental governance, but also a necessary condition for ensuring democracy, fairness, and realizing the “no one left behind” commitment in Vietnam’s sustainable development agenda aligned with international standards.

Finally, a clear divergence can be observed in the legal orientation between the European Union and Vietnam. While EU environmental law places its core emphasis on environmental restoration as a fundamental principle - aimed at ensuring the integrity and functional recovery of ecosystems - the Vietnamese legal framework, despite formally recognizing environmental restoration obligations, in practice still focuses primarily on civil compensation mechanisms for individuals and organizations directly affected by environmental harm. Therefore, the Vietnamese legal system should be further refined to clearly define and distinguish between two separate mechanisms: (i) civil compensation for damage, which protects the lawful rights and interests of affected individuals and entities; and (ii) Environmental restoration as an independent obligation, designed to safeguard the public interest and promote sustainable development. Such a clear differentiation between these two mechanisms is essential for the following reasons:

From a legal standpoint, civil liability compensation and environmental remediation exist as two parallel yet fundamentally distinct legal mechanisms, differing profoundly in their objectives, subjects of application, methods of quantification, and philosophical foundations in addressing environmental harm. This distinction serves as a cornerstone for the effective design and implementation of a legal framework governing environmental liability.

In terms of purpose, civil liability compensation seeks to reimburse specific losses in property, health, and non-material interests suffered by private individuals or entities, embodying a compensatory nature. In contrast, environmental remediation aims to restore environmental quality to its original or an acceptable state, thereby protecting public interests and the ecosystem as a whole. It reflects a responsibility that is both preventive and restorative (remedial).

The fundamental distinction is most evident in their objects of application: while civil compensation focuses on humans, environmental remediation targets the natural environment. This difference leads to divergent beneficiaries - individuals and organizations suffering damage under the compensation mechanism, versus the community and the State (as its representative) under the remediation mechanism.

Their methods of quantification also differ substantially. Civil compensation is primarily assessed based on economic value, including medical costs, property damage, and mental suffering. In contrast, environmental remediation is quantified through the actual costs of technical measures such as pollution treatment, environmental rehabilitation, and ecosystem restoration. In terms of legal basis, civil liability compensation is primarily governed by the Civil Code 2015, characterized by horizontal legal relations between equal parties. Meanwhile, environmental remediation is grounded in the Law on Environmental Protection 2020, reflecting vertical legal relations between the State and the polluter.

Their applicable principles are also distinct: civil compensation adheres to the principle of full and timely compensation, whereas environmental remediation applies the Polluter Pays Principle (PPP), extending liability to include long-term management and monitoring costs. In conclusion, civil liability compensation and environmental remediation should not be regarded as substitute mechanisms, but rather as complementary and parallel systems - civil compensation ensures justice for victims, while environmental remediation safeguards the public interest and ecological sustainability. It is precisely the integration of both that forms a comprehensive and balanced legal framework, reconciling justice for humans with justice for nature.

5.Conclusion and recommendations

Based on the foregoing analysis and reasoning, the revision and improvement of Vietnam’s environmental legislation should be guided by a modern risk-based approach to environmental governance, consistent with international best practices. The main shortcomings of the current system lie in its lack of a risk-based orientation, excessive reliance on rigid administrative licensing, and an insufficiently transparent monitoring mechanism. These weaknesses have created a gap between Vietnam’s legal framework and global standards, while also posing potential risks of non-compliance with environmental commitments under new-generation Free Trade Agreements (FTAs). The tiered and well-defined approach to exemptions under EU law provides valuable lessons to avoid the overgeneralized invocation of Clause 4, Article 130 as a means to evade liability for environmental damage. Accordingly, Article 130(4) should focus on clearly defining the three constitutive elements of the exemption mechanism: (i) the scope of application; (ii) the preconditions for exemption; and (iii) the reasonable limits of such exemption.

The grounds for exemption should not be limited solely to formal compliance, such as “adherence to the content of administrative permits,” but must instead be based on scientific and empirical assessment of the actual or potential environmental risks and damages. In particular, it is necessary to supplement the legal framework with quantitative and objective criteria for exemption consideration, such as the application of Best Available Techniques (BAT) and the establishment of monitoring and early warning systems according to international standards.... The exemption procedure should be designed to ensure transparency and accountability, including the following steps: independent assessment by competent authorities, consultation with affected communities, and an institutionalized policy review mechanism. This integrated risk governance model has been recommended by the Organisation for Economic Co-operation and Development (OECD) as a core element in the design of modern environmental policy.

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3. MEI-FANG FAN, CHIH-MING CHIU & LESLIE MABON, ENVIRONMENTAL JUSTICE AND THE POLITICS OF POLLUTION: THE CASE OF THE FORMOSA HA TINH STEEL POLLUTION INCIDENT IN VIETNAM, 5 ENV’T & PLAN. E: NATURE & SPACE (2022).

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6. Emilia Liaska & Angeliki Bosdogianni, Greece: Implementation of Environmental Liability Directive: Actors & Procedure, 30 Eur. Energy & Env’t L. Rev (Nov. 2021)

7. GABRIELLA MARCATAJO, THE ILVA DISASTER: A STUDY OF ENVIRONMENTAL LIABILITY IN ITALY, J. FIN. CRIME (2021)

8. C MASIERI, THE PERMIT DEFENCE BETWEEN THE EU ENVIRONMENTAL LIABILITY DIRECTIVE AND NATIONAL PRIVATE LAW: SOME COMPARATIVE LAW REMARKS, 6 IN EUROPEAN ENVIRONMENTAL LAW FORUM SERIES (2021).

9. EMANUELA ORLANDO, ENVIRONMENTAL LIABILITY AND THE INTERPLAY BETWEEN EU LAW AND INTERNATIONAL, ROUTLEDGE (2023)

10. Nguyen Duy Phuong, Law on Liability for Compensation for Environmental Pollution Caused by Enterprises in Vietnam, Hue University Journal of Science, No. 6A (2024).

11. KLEONIKI C. POUIKLI, OVERVIEW OF THE IMPLEMENTATION OF THE DIRECTIVE 2004/35/EC ON ENVIRONMENTAL LIABILITY WITH REGARD TO THE PREVENTION AND REMEDYING OF ENVIRONMENTAL DAMAGE AT EUROPEAN LEVEL, 57 DESALINATION & WATER TREATMENT (2016)

12. Kristel de Smedt & Britt Gerritsen, The Environmental Liability Directive 20 Years On: A Critical Evaluation, 28 Env’t Liability (Nov. 2024)

13. Vo Trung Tin, Polluter Pays Principle under Vietnamese Law, (Doctoral Dissertation in Law), Ho Chi Minh City University of Law (2018).

14. Nguyen Truong, Sustainable Development Linked with Environmental Protection and Climate Change Adaptation in Vietnam Today, The Communist, July 15, 2022. https://www.tapchicongsan.org.vn/web/guest/bao-ve-moi-truong/-/2018/825772/phat-trien-ben-vung-gan-lien-bao-ve-moi-truong-va-thich-ung-voi-bien-doi-khi-hau-o-nuoc-ta-hien-nay.aspx

15. CHUXUAN WANG, STUDY ON PUNITIVE DAMAGES IN ENVIRONMENTAL TORTS, 5 FRONTIERS SOC’Y, SCI. & TECH (2023)

16. Law on Environmental Protection No. 72/2020/QH14, November 17, 2020.

17. Treaty on the Functioning of the European Union art. 191, 2008 O.J. (C 115), (May 9, 2008), https://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E191:EN:HTML.

18. Case C-127/02, Landelijke Vereniging tot Behoud van de Waddenzee & Nederlandse Vereniging tot Bescherming van Vogels v. Staatssecretaris van Landbouw, Natuurbeheer en Visserij, ECLI:EU:C:2004:482, CJEU 2004 ECR https://curia.europa.eu/juris/document/document.jsf?text=&docid=49452&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3648116

19. Case C 378/08 Raffinerie Mediterranee SpA (ERG) v. Ministero dello Sviluppo Economico, CJEU 2010 ECR I-12935 https://curia.europa.eu/juris/document/document.jsf;jsessionid=AF70FACC1B87C01D5619A8E8D668AA96text=&docid=72511&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3547458

20. Case C-529/15, Gert Folk v. Bezirksgericht Inneres Salzkammergut, ECLI:EU:C:2017:419, CJEU 2017 ECR https://curia.europa.eu/juris/document/document.jsftext=&docid=191243&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3556084

21. Case C-534/13, Ministero dell'Ambiente e della Tutela del Territorio e del Mare v. Fipa Group Srl, ECLI:EU:C:2015:140, CJEU 2015 ECR. https://curia.europa.eu/juris/document/document.jsf?num=C-534/13

[*] M.A. Tran Cong Thiet, University of Law, Hue University. Email: thiettc@hul.edu.vn

[**] Ph.D. Duong Van Hoc, Faculty of Law, University of Economics Ho Chi Minh City

[***] TS. Cao Thi Ngoc Yen, Faculty of Law, , University of Vinh

[1] Article 8. Clause 4. The Member States may allow the operator not to bear the cost of remedial actions taken pursuant to this Directive where he demonstrates that he was not at fault or negligent and that the environmental damage was caused by:(a) an emission or event expressly authorised by, and fully in accordance with the conditions of, an authorisation conferred by or given under applicable national laws and regulations which implement those legislative measures adopted by the Community specified in Annex III, as applied at the date of the emission or event;(b) an emission or activity or any manner of using a product in the course of an activity which the operator demonstrates was not considered likely to cause environmental damage according to the state of scientific and technical knowledge at the time when the emission was released or the activity took place.

[2] 4 Organizations or individuals that fully comply with environmental protection laws, operate a waste treatment system that meets required standards, and can demonstrate that no environmental damage has been caused, shall not be liable for environmental damage compensation, nor bear the costs related to damage assessment and the procedures for claiming compensation.

[3] RUDALL, J., RESPONSIBILITY FOR ENVIRONMENTAL DAMAGE. EDWARD ELGAR PUBLISHING (2024)

[4] BERGKAMP, L., LIABILITY AND ENVIRONMENT: PRIVATE AND PUBLIC LAW ASPECTS OF CIVIL LIABILITY FOR ENVIRONMENTAL HARM IN AN INTERNATIONAL CONTEXT. BRILL (2021)

[5] WILDE, MARK CIVIL LIABILITY FOR ENVIRONMENTAL DAMAGE: A COMPARATIVE ANALYSIS OF LAW AND POLICY IN EUROPE AND THE US. 2ND ED. OXFORD UNIVERSITY PRESS.

[6] LE HONG HANH, LE DINH VINH. ENVIRONMENTAL DAMAGE COMPENSATION LAW IN VIETNAM – THEORY AND PRACTICE. TU PHAP PUBLISHING HOUSE (2022).

[7] Kristel de Smedt & Britt Gerritsen, The Environmental Liability Directive 20 Years On: A Critical Evaluation, 28 Env’t Liability, 199–211 (Nov. 2024).

[8] Emilia Liaska & Angeliki Bosdogianni, Greece: Implementation of Environmental Liability Directive: Actors & Procedure, 30 Eur. Energy & Env’t L. Rev, 197 (Nov. 2021).

[9] Nguyen Duy Phuong, Environmental Liability Law on Damage Compensation for Pollution-Causing Acts by Enterprises in Vietnam, Hue University Science Journal, Issue 6A, 227-242 (2024).

[10] Vo Trung , The “Polluter Pays” Principle under Vietnamese Law, (Doctoral Thesis in Law), Ho Chi Minh City University of Law, 44 (2018).

[11] The concept of “adverse selection” in environmental markets refers to the consequence of asymmetric information, where polluting entities - benefiting from legal liability exemptions - have lower operating costs and are thus incentivized to remain in the market, whereas compliant enterprises bear higher costs and are disadvantaged or pushed out of the market.

[12] Treaty on the Functioning of the European Union art. 191, 2008 O.J. (C 115) 132–33, (May 9, 2008), https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E191:EN:HTML.

[13] EMANUELA ORLANDO, ENVIRONMENTAL LIABILITY AND THE INTERPLAY BETWEEN EU LAW AND INTERNATIONAL, ROUTLEDGE, 59 (2023)

[14] Kleoniki C. Pouikli, Overview of the implementation of the directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage at European level, 57 Desalination & Water Treatment, 11520-27 (2016) https://doi.org/10.1080/19443994.2015.1101620

[15] PANAGIOTIS DIMITROPOULOS & KONSTANTINOS KORONIOS, CORPORATE ENVIRONMENTAL RESPONSIBILITY, ACCOUNTING AND CORPORATE FINANCE IN THE EU: QUANTITATIVE ANALYSIS APPROACH, SPRINGER NATURE SWITZELAND AG, CHAM, 17 - 49 (2021)

[16] Case C 378/08 Raffinerie Mediterranee SpA (ERG) v. Ministero dello Sviluppo Economico, CJEU 2010 ECR I-12935 https://curia.europa.eu/juris/document/document.jsf;jsessionid=AF70FACC1B87C01D5619A8E8D668AA96?text=&docid=72511&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3547458

[17] Case C-534/13, Ministero dell'Ambiente e della Tutela del Territorio e del Mare v. Fipa Group Srl, ECLI:EU:C:2015:140, CJEU 2015 ECR https://curia.europa.eu/juris/document/document.jsf?num=C-534/13.

[18] Case C-529/15, Gert Folk v. Bezirksgericht Inneres Salzkammergut, ECLI:EU:C:2017:419, CJEU 2017 ECR https://curia.europa.eu/juris/document/document.jsf?text=&docid=191243&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3556084

[19] Case C-127/02, Landelijke Vereniging tot Behoud van de Waddenzee & Nederlandse Vereniging tot Bescherming van Vogels v. Staatssecretaris van Landbouw, Natuurbeheer en Visserij, ECLI:EU:C:2004:482, CJEU 2004 ECR https://curia.europa.eu/juris/document/document.jsf?text=&docid=49452&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=3648116

[20] Mei-Fang Fan, Chih-Ming Chiu & Leslie Mabon, Environmental Justice and the Politics of Pollution: The Case of the Formosa Ha Tinh Steel Pollution Incident in Vietnam, 5 Env’t & Plan. E: Nature & Space, 189 – 206 (2022).

[21] 4. Organizations and individuals that fully comply with environmental protection laws, operate waste treatment systems meeting required standards, and can demonstrate that no environmental damage has occurred shall not be liable for environmental damage compensation, nor bear costs related to damage assessment or the procedures for claiming compensation.

[22] Chuxuan Wang, Study on Punitive Damages in Environmental Torts, 5 Frontiers Soc’y, Sci. & Tech, 12 (2023)

[23] Nuclear Energy Agency, Fukushima Daiichi nuckear accident, https://www.oecd-nea.org/jcms/pl_27411/fukushima-daiichi-nuclear-accident.

[24] Article 53, Constitution 2013 (amended and supplemented 2025).

[25] Michael Faure, Environmental Liability of Companies in Europe, 39 Ariz. J. Int’l & Comp. L, 1 (2022)

[26] Gabriella Marcatajo, The ILVA Disaster: A Study of Environmental Liability in Italy, 28 J. Fin. Crime, 1044 - 52 (2021)

[27] The Organisation for Economic Cooperation and Development (OECD) brings together 38 different countries. The majority of OECD members are prosperous, economically developed countries.

[28] Resolution 205/2025/QH15 on the pilot scheme for the People’s Procuracy to initiate civil lawsuits to protect the civil rights of vulnerable groups or safeguard public interests, dated June 24, 2025.