Corporate Counsel Team: Huaicheng lawyers
Edit | July
Author | Huaicheng lawyer Sun Wei
Sun Wei
Liaoning Huaicheng Law Firm
Contract disputes, civil litigation, labor disputes
Subrogation litigation refers to the creditor (the applicant for enforcement of the enforcement procedure) has a due claim against the debtor (the person subject to enforcement), but the debtor's negligence in exercising its creditor's right, or the subordinate rights related to the creditor's right, affect the realization of the creditor's claim.
At this time, the creditor lists the counterparty as the defendant in his own name and subrogates the debtor's rights against the counterparty.
As we all know, there is a principle of "res judicata" in litigation, and in the field of civil law, this principle is embodied in the prohibition of repeated prosecution.
In practice, creditors may still not be able to obtain repayment through subrogation actions.
So, can a creditor sue the debtor to assert rights? If so, does it constitute a duplicate prosecution?
1
Subrogation Actions
Not cleared
The Supreme People's Court has released such a Guiding Case.
Between 2012 and 2013, Company A signed more than 40 procurement contracts with Company B, stipulating that Company B would sell goods to Company A.
During the performance of the contract, the value of the goods supplied by Company B was less than the amount paid by Company A, and Company A had due claims against Company B.
Company B's passive exercise of its creditor's rights against Company C resulted in the failure of Company A's creditor's rights to be realized.
As a result, Company A filed a subrogation lawsuit with the court with Company C as the defendant and Company B as the third party.
After obtaining the judgment in favor of Company A, Company applied to the court for compulsory enforcement, but the court ruled to terminate the enforcement procedure because Company C had no property to enforce.
Company A failed to receive any repayment from Company C and sued Company B in court.
2
Creditors have the right to:
The debtor asserts otherwise
(Click on the image to ask a lawyer)
The focus of this case is whether Company A's lawsuit against Company B constitutes a duplicate lawsuit. The effective judgment of the court held that:
First, Article 20 of the Judicial Interpretation (I) of the Contract Law (now Article 537 of the Civil Code) stipulates that if a subrogation lawsuit filed by a creditor against a secondary debtor is determined to be established after trial by the people's court, the secondary debtor shall perform the repayment obligation to the creditor, and the corresponding creditor-debtor relationship between the creditor and the debtor, or between the debtor and the secondary debtor, shall be extinguished.
According to this provision, the premise for determining the extinguishment of the corresponding creditor-debtor relationship between the creditor and the debtor is that the secondary debtor has actually fulfilled the corresponding repayment obligations to the creditor.
In this case, Company C did not actually perform its repayment obligations, and the creditor's rights and debts relationship between Companies A and Company B was not extinguished, and Company A had the right to make a separate claim against Company B.
Second, from the perspective of the value orientation of subrogation litigation, subrogation litigation belongs to the debt preservation system.
The purpose of this system is to prevent the debtor's property from being improperly reduced, or should be increased but not increased, creating obstacles to the creditor's realization of the creditor's claim, rather than requiring the creditor to choose between the debtor and the secondary debtor as the subject of the performance of the obligation.
Third, this case does not violate the principle of non bis idem.
According to article 247 of the Judicial Interpretation of the Civil Procedure Law, the main conditions for determining whether a duplicate lawsuit is constituted are whether the parties, the subject matter of the litigation and the litigation claims are the same, or whether the litigation claims of the later litigation substantially negate the judgment of the previous litigation.
A subrogation action is not the same as a lawsuit against a debtor.
Therefore, Company A's lawsuit against Company B in this case does not constitute a duplicate lawsuit.
3
Huaicheng lawyer suggested
In view of the problems existing in subrogation litigation, combined with the court's adjudication rules and practical experience, Huaicheng lawyers remind and suggest that:
1. If the creditor is unable to be repaid through a subrogation lawsuit, it may sue the debtor separately to claim its rights.
2. In a subrogation lawsuit, if the court finds that the creditor's claim does not meet the conditions for exercising subrogation, it shall reject the claim, but it shall not affect the creditor to sue again on the basis of new facts.
3. Subrogation litigation is under the jurisdiction of the court at the place where the defendant is domiciled, except where the provisions on exclusive jurisdiction shall apply in accordance with law.
If you have a question to ask a lawyer, there is no problem to learn law, and you can consult and solve legal problems anytime and anywhere, please click below to follow, if the article is useful to everyone, please like and forward it to support the creation of lawyers, thank you!
Applicable Law:
Civil Code of the People's Republic of China
Article 537:Where the people's court finds that the right of subrogation is established, the debtor's counterpart is to perform its obligations to the creditor, and after the creditor accepts the performance, the corresponding rights and obligations between the creditor and the debtor, or between the debtor and the counterparty, are terminated. Where the debtor's claim against the counterparty or the subordinate rights related to the creditor's right is subject to preservation or enforcement measures, or the debtor goes bankrupt, it shall be handled in accordance with the provisions of the relevant laws.
● For the relevant issues involved in this article, you can also enter the "Huaicheng Lawyer" official account and click "Ask" or "Find a Lawyer" at the bottom of the page to communicate with the lawyer.