Discussion Of Several Issues Of Creditor's Subrogation Right System

The system of creditor's subrogation right is one of the most important components of the debt theory. After the PRC Contract Law is promulgated, especially with the related judicial interpretations of the Supreme People's Court coming into force, as a completely new system and comparing with other jurisdictions and areas of the continental law system, the Chinese system of creditor subrogation right of our owns distinctive features. Giving more considerations on the new angle of view and cut-over point is of great use not only in the study of theory, but also in the judicial practice. The thesis stresses on the discussion on the matters of the traditional theory of the subrogation right system, the features and improvement of the subrogation right system of China and the issues of lawsuits concerning subrogation rights. 1. Analysis of Traditional System of Creditor's Subrogation Right The establishment and development of the subrogation right system is in compliance with the basic characteristics of the economic development of the society. Based on the principle of honest and cridibility, the subrogation right system breaks the traditional relativity nature of debt, by paying the price of sacrificing some individual freedom to obtain a safe and stable order of the commodity exchange system. The definition of subrogation right is that when a debtor fails to perform his right upon a third party which will impact the achievement of the obligatory rights of a creditor, the creditor may subrogate the debtor to perform the right upon the third party in his own name, in order to preserve his obligatory rights. The creditor's subrogation right is different from the right of representation, the right of set-off, as well as the assignment of obligatory right. In respect of the nature of creditor's subrogation right, there are several theories, namely, (a) the theory of right of alteration, (b) the theory of right of supervision and (c)the theory of sub-right. The writer believes that the explanation of the nature of creditor's subrogation right should be synthesized on the basis of analyzing every necessary elements of the creditor's subrogation right. The inheritance of the traditional theories, the development of the practice, the matured foreign experience and the domestic resources shall all be taken into account. The creditor's subrogation right is a statutory right of claim, i.e., claiming the obligatory right in his own name against the debtor of his own debtor via a court action. The meaning of the creditor's subrogation right is not only in offering the procedural function for realizing the obligatory right, but also in the provision of a statutory substantive right. According to the traditional theory, the factors of the constitution of the creditor's subrogation right shall be strictly limited. First, the relationship of the credit and the debt between obligator and debtor must be legal and valid. Secondly, the debtor actually enjoys right against a third party, and the right which could be carried out in subrogation must be an existing right. Thirdly, the debtor fails to perform his right, which means that the debtor shall and is able to perform his right but in fact not do so. Fourthly, the performance of the right of debtor is delayed. Fifthly, there is necessity for the creditor to preserve the obligatory right. In light of the traditional theory, the property obtained form the subrogation shall be included in the responsible property of the debtor. The creditor's obligatory right will afterwards be paid off in accordance with the rules of debt paying-off. 2. Analysis and Improvement of the Chinese System of Creditor's Subrogation Right The legislation and judicature shows the course of the establishment of the system of creditor's subrogation right, and the growth of the system from relatively in principle to the stage of being quite operative and finally formed its own features. The main differences between the Chinese creditor's subrogation right system and the traditional one include the following: (a) different ownership of results, (b) different method of performance and (c) different objects. There are advantages of the Chinese creditor's subrogation right system, namely, (a) that it avoids the problem of lack of motivation in carrying out the creditor subrogation action, (b) that it solves the problems that happened in the judicial practice that creditor is generally hard to enforce its right against a third party and (c) that it is cost effective for transactions. The author believes that the title of "requirements of performingelements"is more suitable than "requirements of constituting elements", and that the requirements of performing elements of the creditor's subrogation right shall be summarized from both positive and negative sides. The positive elements include legitimacy, causality, time limitation and monetary feature. The negative elements mean the obligatory right of the debtor is not exclusively owned by the debtor himself. The performing effectiveness of the creditor's subrogation right shall be that once the creditor's subrogation right has been established, and the sub-debtor (the debtor of the debtor) has carried out his paying-off responsibility to the creditor, the related relationships of credit and debt among the debtor, the sub-debtor and the creditor who brought lawsuit for exercising subrogation right shall be terminated. In the lawsuit of creditor's subrogation right, sub-debtor may launch counter claims against the debtor directly against the creditor. The benefit gained from the lawsuit of subrogation right by creditor can be rewarded directly from sub-debtor, and the creditor shall realize its obligatory right directly through the performing of subrogation right. The rationality of the mechanism is also analyzed. The thesis starts from the general nature of right, stating that the benefits reflected by right and responsibility and the action taken for pursuing the benefits are limited within the fundamental benefits of the ruling class and the general benefits of the society, and limited to the capacity of the society. The creditor's subrogation right system helps the related civil law theory to get better improvement, but whether it can eventually achieve its legislative goal depends on proper interpretation and suitable application of the system. In the meantime, it is also necessary to absorb the advanced experience from foreign judicial theories, and to reinforce its legal life with the help of our judicial practice. The following aspects shall be improved: (a) the adjustment of legislation system, (b) the extension of the scope of the creditor's subrogation right and (c) more concrete procedural regulations. 3. Litigious Issues in the Creditor's Subrogation Right System The thesis concerns the matters of subrogation right suit and qualification of proper litigant. It states that when a debtor fails to perform his due obligatory right and causes damages to his creditor, it creates a "lawsuit benefit"between the creditor and the sub-debtor. Because of the existence of the lawsuit benefits, the creditor acquires the right of...