UBER’S LEGAL CHALLENGES AROUND THE WORLD AND IMPLICATION ON RIDE-HAILING SERVICES IN VIETNAM
The series of legal complications with the popular ride hailing service provider Uber continue to develop in an unexpected manner. The most recent ruling in France of a dispute between Uber France and the taxi drivers is another strike to its business in Europe. Its novel business model generates much-heated concern from the relevant stakeholders, mostly about the following issues: (i) claims of unfair competition on the ground that Uber circumvents many types of fees and restrictions imposed upon its traditional competitors; and (ii) claims of drivers for the recognition of labor relations and relevant rights and interests. Such issues are the causes for various lawsuits and examinations from the authorities in various countries in the world.
In the UK
Since its launch in 2012, Uber is now available in over 40 towns and cities across the UK. Although there have been no notable lawsuits against Uber on the ground of unfair competition, in 2017, Uber had to face an administrative ban from the Transport for London (“TfL”) with concern over its lack of proper operating license and potential harm to public safety. In 2019, TfL stripped Uber of its license for a second time. However, in September 2020, Uber won its legal fight to continue operating in London, as the judge found that Uber no longer posed a risk to public safety. The judge, then, overturned the ban on the ride-hailing app and granted Uber a new 18-month license.
In early 2021, the long-standing case between Uber and its drivers (Aslam and others) was finally settled by the UK Supreme Court, which confirmed the views of the lower Courts on the worker status of Uber drivers. Specifically, the UK Supreme Court has dismissed Uber’s appeal against the ruling that its drivers should be classed as workers with access to the minimum wage and paid holidays. Thus, on 16 March 2021, Uber announced that they were issuing labor identification for Uber drivers in the UK and from 17 March 2021, more than 70,000 drivers in the UK will be considered workers when driving for Uber.
In the US
Uber has to face the largest number of disputes in the US, despite being its birthplace. For example, in March 2016, the Philadelphia Taxi Association Inc. filed a federal lawsuit against Uber for the antitrust allegation. The court then dismissed the claims and held that the plaintiff failed to prove any negative impact of Uber’s presence in the marketplace on the price, quality, or quantity of taxicab or vehicle for hire services. Thus, the plaintiff failed to prove the essential indications of antitrust injury as they did not allege any injury to competition services.
Regarding the employment relationship, until now, Uber drivers are still going on strike to win labor rights for U.S. gig workers. In an effort to avoid providing its drivers with the minimum benefits and protections for employees under the Fair Labor Standards Act and state laws, Uber has classified each of its drivers as independent contractors, rather than employees. In September 2019, an Uber driver sued the company for misclassifying its drivers as independent contractors but this dispute is pending until now.
As mentioned in the first paragraph, on 10 September 2021, a French Court ruled against Uber in a dispute between Uber France and the Paris taxi driver federation representing 910 taxi drivers for the claim of unfair competition. The Court ruled that Uber had to pay €180,000 to 910 taxi drivers and their federation (192 euros for each driver and 5,000 euros for the federation). The ruling was based on the consideration that Uber had created an unfair competition by offering cheap fares as a result of their avoidance of fees related to licensing drivers. The Court accepted the complaint and also found that passing off untrained drivers as professionals hurt the image and the reputation of licensed taxi drivers. It is unannounced whether Uber will appeal this ruling.
Earlier, in 2020, the French Court of Cassation also upheld the first instance ruling, in which an Uber driver was recognized as the employee of Uber France. The Court found that Uber France exerted control over the driver and managed the clients to the driver via the app, and therefore the driver should not be considered as an independent contractor but an employee. Besides seeking for his “commercial accord” with Uber reclassified as an employment contract, the driver also demanded reimbursement for holidays and expenses as well as payment for “undeclared work” and unfair contract termination.
The situation was much worse for Uber in Germany. The highest court in Germany ruled in 2018 that Uber service was illegal, following a lower court ruling in favor of the plaintiff (Taxi Deutschland – a Berlin taxi business) that such service had violated German laws governing car rentals. The Court argued that Uber lacked a necessary license to offer passenger transport services using rental cars.
While there have been no known disputes regarding the labor relationship between Uber and its drivers (partly maybe because of the early ban on Uber ride-hailing service in Germany), the above decision also took into account that the Uber drivers were classified as employees. Such labor relationship is the prerequisite for the obligation of Uber to acquire proper licenses for its drivers under German laws governing car rentals.
The implication on ride-hailing services in Vietnam
The legal claims against Uber are setting a common practice that is detrimental to the free development of ride-hailing services around the world. While Uber has closed its business in South East Asia per its international business strategy, the e-hailing business model is dominated by other regional providers such as Grab. Therefore, the problems above persist for the market and have the potential to spark legal disputes as well as social backlash if left unattended, with the dispute between Grab and Vinasun, a local taxi company in Vietnam, as an example. In Vietnam, the operation of e-hailing service providers as well as Vietnamese regulations on the relevant matter have certain distinctions.
For antitrust matters, the most potential issue is administrative regulation on mergers and acquisitions to prevent a certain service provider from owning too big a portion of the market share.
For legal requirements of car drivers, the Government already issued Decree No. 10/2020/ND-CP regulating the transportation business by cars, including the e-hailing business. This Decree clearly defines and distinguishes between the “transportation connection support business” and “transportation business” and provides respective requirements for each type of business. This sets a clear legal ground for compliance as well as the basis for any arising dispute. Based on such definitions, both the legal requirements for operation and relations between the e-hailing service providers and the drivers can be determined with ease.
However, a large part of transportation service in Vietnam is carried out by motorbike drivers, in addition to car drivers. Currently, this area of business is not particularly regulated by any specific legal framework, which may create the potential for disputes, especially in labor relations.
In conclusion, ride-hailing service providers in general are subject to multiple legislative changes, which may partly result from the global legal trend and attitude towards this business model. It is recommended for e-hailing service providers to make adaptive changes to their business models to better fit in with the legal requirements as well as market rules, most ideally with the support of a professional legal advisor.