Subrogation: Difference between revisions
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{{a|security|}}The | {{a|security|}}{{dpn|sʌb rɪˈɡeɪʃᵊn|n|}} | ||
The process whereby one person “steps in” to the legal shoes of another to exercise that other’s legal rights against a third party, by way of satisfying a legal claim between the first two. Three places you might expect to see this: when an insurer, having paid out on an insurance claim, prosecutes the insured’s rights against a third party; where a secured creditor exercises the contractual rights under a debt which has been assigned to it by way of security, or where a guarantor assumes a creditor’s rights to take action to recover a debt from a debtor. | |||
{{subrogation setoff}} | {{subrogation setoff}} | ||
{{sa}} | {{sa}} | ||
*[[Interpretation - ISDA Provision|Netting and set-off under an ISDA]] {{premium}} | |||
*[[Guarantee]] | *[[Guarantee]] | ||
*[[Set off]] | *[[Set off]] | ||
{{ref}} | {{ref}} | ||
Revision as of 09:25, 2 July 2023
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A word about credit risk mitigation
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Subrogation
sʌb rɪˈɡeɪʃᵊn (n.)
The process whereby one person “steps in” to the legal shoes of another to exercise that other’s legal rights against a third party, by way of satisfying a legal claim between the first two. Three places you might expect to see this: when an insurer, having paid out on an insurance claim, prosecutes the insured’s rights against a third party; where a secured creditor exercises the contractual rights under a debt which has been assigned to it by way of security, or where a guarantor assumes a creditor’s rights to take action to recover a debt from a debtor.
A debtor cannot set off a subrogated claim against liabilities the guarantor has to that debtor[1]. Would the converse situation apply? Could a debtor set off a subrogated claim by the guarantor against another liability owed to the debtor by the beneficiary of the guarantee? On one hand the set-off should have been applied before the guarantee has been called upon. On the other hand, what if the guarantee is expressed to be payable regardless of any set-off (as usually it would be).
See also
References
- ↑ A. E. Goodwin Ltd v A. G. Healing Ltd [1999] 1AC 1.