This article only discusses the situation where multiple guarantors are jointly and severally liable.
For the guarantor of joint and several liability, according to paragraph 2 of Article 693 of the Civil Code, "if the creditor of the joint and several liability guarantee fails to request the guarantor to bear the guarantee liability during the guarantee period, the guarantor shall no longer bear the guarantee liability." Therefore, the creditor should claim its rights against the joint and several liability guarantor in a timely manner during the guarantee period, otherwise, the joint and several liability guarantor will no longer bear the guarantee liability.
However, in reality, due to changes in the guarantor's domicile and contact information, or malicious loss of contact, commercial banks and other financial institutions may sometimes have many practical difficulties in claiming rights against all guarantors during the guarantee period.
Today, we will discuss a very interesting legal issue: if there are multiple joint and several liability guarantors in the same debt, and during the guarantee period, the creditor only claims rights against some of the guarantors during the guarantee period, and now that the guarantee period has expired, can the other guarantors claim exemption? That is, if only some of the joint and several liability guarantors claim their rights during the guarantee period, does the effect extend to other guarantors, and can it be regarded as claiming rights against other joint and several liability guarantors during the guarantee period?
1. Judicial views before the implementation of the Civil Code
The Civil Code and the Interpretation of the Civil Code on the Guarantee System came into force on January 1, 2021. Prior to its implementation, judging from the relevant precedents of the Supreme People's Court and local courts, the prevailing view at that time was that in a joint and several joint guarantee, multiple guarantors were jointly liable to the creditor as a whole, and the creditor did not need to claim rights against all the guarantors one by one in order to realize its claims, but could claim rights against any one guarantor, and its legal effect should extend to other joint and several joint guarantors who were still within the guarantee period.
Therefore, according to the previous judicial view, in a joint and several guarantee, if the creditor claims rights against some of the guarantors, as long as the other guarantors are still within the guarantee period, it should be deemed that the creditors have also claimed rights against the other guarantors during the guarantee period, and the other guarantors cannot claim exemption from the guarantee liability on the ground that the creditor has not required them to bear the guarantee liability during the guarantee period.
For example, in the case of a contract dispute between Zhejiang Zhuji Kangye Pharmaceutical Co., Ltd. and Fujian Sanming Pharmaceutical Co., Ltd., Zhejiang Zhuji Kangye Pharmaceutical Co., Ltd. and Fujian Sanming Pharmaceutical Co., Ltd. [Supreme People's Court (2015) Min Shen Zi No. 2064] The Supreme People's Court held that in a joint and several joint guarantee, the guarantor is jointly liable to the creditor as a whole, and the creditor's claim against any one of the co-guarantors is an act of the creditor requiring the guarantor to bear the guarantee liability, and its effect naturally extends to all guarantors.
In previous judicial practice, there have been many cases that have held this view, including:
【Case】Fang Gui, Yan Huizhi, Xiangshan International Yacht Club (Xiamen) Co., Ltd., Fang Dongluo, Wu Wenke, Private Lending Dispute, Supreme People's Court (2014) Min Si Zhong Zi No. 5.
【Case】Jiangsu Xinyi Rural Commercial Bank Co., Ltd. vs. Xinyi Shiji Grain Depot and Xinyi Xiangyuan Grain and Oil Storage Co., Ltd., Jiangsu Provincial High People's Court (2017) Su Min Zhong No. 352
【Case】Trading Company v. Tian Yuan Company, A Dispute over the Right of Recovery of Guarantee Contract, Gazette of the Supreme People's Court, No. 6, 2002. Yunnan Provincial High People's Court, judgment dated July 22, 2002
【Case】Civil Judgment of the Second Instance of Liu Wei and Liu Yulan's Financial Loan Contract Dispute [Liaocheng Intermediate People's Court |(2016) Lu 15 Min Zhong No. 2049]
2. The latest views of the Interpretation of the Civil Code on the Guarantee System
According to paragraph 1 of Article 29 of the Interpretation of the Civil Code on the Guarantee System, "if there are two or more guarantors for the same debt, and the creditor claims that it has exercised its rights against other guarantors during the guarantee period on the ground that it has already exercised its rights against some of the guarantors in accordance with the law during the guarantee period, the people's court shall not support it." ”
According to the latest provisions, if there are more than two guarantors for the same debt, regardless of whether the guarantors provide a general guarantee or a joint and several liability guarantee, and regardless of whether the guarantors can recover from each other, the creditor shall exercise its rights against some of the guarantors in accordance with the law during the guarantee period, and the effect shall not extend to the other guarantors.
3. Whether the new provisions have retroactive effect on acts before the implementation of the Civil Code
There are controversies in practice on this issue:
Opinion 1: Paragraph 1 of Article 29 of the Interpretation of the Civil Code on the Guarantee System has retroactive effect
For example, in the case of Chengdu Rural Commercial Bank Co., Ltd. Longquanyi Damian Branch and Ye Jian Financial Loan Contract Dispute [Chengdu Intermediate People's Court of Sichuan Province (2021) Chuan 01 Min Zhong No. 10051], the court held that: according to the Interpretation on the Guarantee System Article 29 stipulates that the claim of a creditor's right against some guarantors cannot exempt it from the obligation to claim rights against other guarantors during the guarantee period, and although this case occurred before the promulgation of the Civil Code, the judicial interpretation does not conflict with the previous legal documents and interpretations, and this court invokes and uses them in accordance with the law.
Other examples of this view include:
【Case】Yang Yuxia, Zhou Xiazhi v. Hengfeng Bank Co., Ltd., Chongqing Fuling Branch, Chongqing Fuling Branch, Chongqing No. 3 Intermediate People's Court (2020) Yu 03 Min Zhong No. 1881
【Case】Appellants Meng Yajun and Qian Hongtao in the second instance civil case of a financial loan contract dispute with the appellee Shaanxi Hengshan Rural Commercial Bank Co., Ltd. (hereinafter referred to as Hengshan Rural Commercial Bank), Yulin Intermediate People's Court (2020) Shaanxi 08 Min Zhong No. 3920
Viewpoint 2: Paragraph 1 of Article 29 of the Interpretation of the Civil Code on the Guarantee System has no retroactive effect and cannot be applied to the guarantee acts before the implementation of the Civil Code.
For example, in the case of Rizhao Lanshan Rural Commercial Bank Co., Ltd., Han Zhen, Han Li et al., a guarantee contract dispute [Rizhao Intermediate People's Court (2022) Lu 11 Min Zhong No. 248], the Rizhao Intermediate People's Court held that:
The issuance of the loans, the guarantee commitments, and the collection of the guarantee debts involved in the case all occurred before the implementation of the Civil Code, and the laws and judicial interpretations that took effect before the implementation of the Civil Code should apply. The Reply of the Supreme People's Court on the Issue of the Exercise of the Right of Recourse by a Guarantor Who Has Borne the Guarantee Liability to Other Guarantors (Fa Shi [2002] No. 37 stipulates that after one or more of the guarantors who have assumed the guarantee liability for joint and several liabilities have assumed the guarantee liability, they have the right to require the other guarantors to pay off their share of the guarantee liability, which is not affected by whether the creditor has claimed the guarantee liability against the guarantor who has not assumed the guarantee liability during the guarantee period. Referring to this provision, it is essentially equivalent to admitting that the joint and several debts are other, that is, the creditor claims rights against one of the joint and several liability guarantors, that is, it is deemed to have claimed rights against the other joint and several liability guarantors.
This is because if this otherness is not recognized, and it is determined that the creditor only claims rights against some of the joint and several guarantors during the guarantee period, but does not claim rights against the remaining joint and several liability guarantors, and the guarantee liability of the remaining joint and several guarantors is exempted, then the joint and several guarantors who have claimed their rights will not be able to recover from the other joint and several guarantors after assuming the guarantee liability, which is obviously contrary to the judicial interpretation. Therefore, according to the provisions of the judicial interpretation, joint and several debts are other-related. On December 16, 2017, during the guarantee period, the Appellee claimed the secured claims against Han Kai and Wang Hong, which was deemed to have claimed rights against the other joint and several guarantors, and the secured debts of the other joint guarantors had also been clarified.
Other examples of this view include:
【Case】Leshan Commercial Bank Co., Ltd. Meishan Branch, Liu Ke Financial Loan Contract Dispute Second Instance Civil Case, Meishan Intermediate People's Court (2021) Chuan 14 Min Zhong No. 212
【Case】Neihuang County Zhenghui Agricultural Investment Co., Ltd. and Neihuang Jixiang Agricultural Technology Co., Ltd., a second-instance civil case of loan contract dispute, Anyang Intermediate People's Court (2021) Yu 05 Min Zhong No. 1091
4. Summary and Recommendations
Based on the above analysis, paragraph 1 of Article 29 of the Interpretation of the Civil Code on the Guarantee System amends the original view in judicial practice, according to the latest provisions, if there are more than two guarantor creditors of the same debt and exercise their rights against some of the guarantors in accordance with the law during the guarantee period, the effect does not extend to other guarantors. In addition, there is controversy in practice as to whether paragraph 1 of Article 29 of the Interpretation of the Civil Code on the Guarantee System has retroactive effect on acts before January 1, 2021.
It is recommended that commercial banks and other institutions should claim rights against all guarantors in their business practice if there are multiple guarantors providing guarantee for the same loan, and there must be no omissions. According to paragraph 2 of Article 694 of the Civil Code, if the guarantor provides a joint and several liability guarantee, if the creditor of the joint and several liability guarantee requests the guarantor to assume the guarantee liability before the expiration of the guarantee period, the statute of limitations for the guarantee debt shall be calculated from the date on which the creditor requests the guarantor to assume the guarantee liability.