The English courts have now accepted that the concept of unjust enrichment plays a role in subrogation. [5] In contrast, this approach has been strongly contested by the High Court of Australia, where the doctrinal basis for subrogation is to prevent unscrupulous results: for example, the discharge of a debtor or party benefiting from double recovery. [6] Was Bupa`s right to subrogation affected by the circumstances under which the negligence proceedings were resolved? Subrogation is a relatively specialized area of law; Entire legal textbooks are devoted to the subject. [3] [4] 2017 Informa plc. This article was first published in Maritime Risk International, November 2017, www.maritime-risk-intl.com/legal-and-regulatory/fighting-in-the-middle-127292.htm The uniqueness of subrogation under Chinese law creates problems when a transferred claim is litigated in Chinese courts under South African or English law – for example, in situations where the recovery target resides in China or the tort is in China. Chinese law, which is the law of the Forum, will require that Chinese law be applied when it comes to subrogation as a procedural matter, notwithstanding the fact that the Policy may be governed by South African or English law. Due to the ever-increasing volumes of goods and merchandise traded and transported around the world, it is not uncommon for insurers to handle claims that are affected by more than one jurisdiction. South Africa and China are good examples. Trade relations between the two countries are developing rapidly, but there are striking differences between the law of subrogation established by the two jurisdictions. It is crucial that all parties concerned are aware of the differences in order to avoid the consequences of ill-considered action in this legal minefield. Was Bupa prevented from exercising its right of subrogation because of its own conduct? In English terms, the concept of subrogation means that once an insurance company has paid the claim, if the damage was caused by a third party, the insurance company can put itself in the place of the insured person and sue the third party to compensate for the damage. If this happens, the insurer “passes into the rights of the insured”.
The right to subrogation is enshrined in both China`s Insurance Law and China`s Code of Special Maritime Procedures. It is therefore a substantive and procedural issue. Chinese law requires that cancelled claims be issued in the name of insurers and not in the name of the insured in the amount of compensation they paid to the insured. This means that if the insurers are a consortium of insurers, they must participate in the procedure as co-applicants. This also means that if the insured has only been compensated by the insurers for part of his damage, he must act in his own name against the third party who, as a co-plaintiff with the insurers, is legally liable for the uninsured part of his damage. Countries that have inherited the common law system generally have a doctrine of subrogation, although their doctrinal basis in one jurisdiction may differ from that of other jurisdictions, depending on the extent to which justice in that jurisdiction remains a separate body of law. Fiduciary creditors (i.e., persons who have become the trustee`s creditors as trustees) may have the right to enter into the trustee`s privilege. This is a particularly precarious “right” of trustees: a trustee may not be entitled to compensation (e.g. because he has committed a breach of trust by incurring liability towards the creditor concerned) or he may be limited (e.g.
if the trustee has committed an independent breach of trust and the accounting rule applies). In some jurisdictions, the trustee`s right to indemnification may be excluded altogether. In these cases, subrogation may be rendered worthless or impossible. Under Chinese law, the legal basis for the right of subrogation is less clear. It is generally accepted that this is a form of legal assignment that arises automatically with the payment of compensation by the insurer. This is done without formalities. The insured effectively assigns his rights and defences against the third party to the insurers upon receipt of the insurance indemnity. However, it is less regulated if the insurer compensates only part of the damage and the insured retains the right to join the insurers as co-plaintiffs in suing the third party for his uninsured injury. If this occurs, it is questionable whether the third party has a total or partial defence against the assigned claim if the insurer or insured does not participate in the proceedings of the assigned claim. Have you ever wondered about the difference between claim rights and contribution rights? The waiver of subrogation is useful to protect someone from legal action by one insurer, but it does not allow their insurer to avoid premium claims from other insurers.