учебный год 2023 / de la Mata Munoz, Personal Security

bb)Specific conditions: cases for relief

(i)In general

Even if the debtor had agreed to the guarantee, the right to be release is limited by the law to specific cases. These cases are explicitly established in art. 1953 Italian CC and art. 1843 Spanish CC. Basically, the conditions for release are of two kinds; either is the debtor unable to perform his debt or the guarantor has been sued by the creditor. These two kinds of conditions are referred to in both provisions of Italian and Spanish civil codes with a parallel wording, as follows: 1) when the guarantor has been sued for payment; 2) in case of bankruptcy or insolvency; 3) when the debtor is bound to relieve him from guaranteeing within a given term and the term has expired; 4) when the term has become due because the term within which it should have been paid has expired; 5) at the end of five years in Italy (ten years in Spain), when the principal obligation has no fixed term for maturity, unless it is of such nature that it can only be extinguished in a term longer than five/ten years respectively422 .

These five cases are the only ones upon which the guarantor may require reliet423 • Analogical application is not admitted424 • Moreover, the creditor must have notice of the intention and consent the discharge of the guarantor for the granting of a new security.

(ii) Detailed consideration ofthe cases for release

(a.) The guarantor has been suedfor payment

The guarantor may be discharged if he has been sued for his guarantee obligation. The start of judicial proceedings entails costs and risks for the guarantor425 • Therefore, only such proceedings grant the guarantor the right to demand release. Simple demands for payment, which are not judicial, are not enough to grant the guarantor the preventative right of discharge426. However, it is not necessary that the creditor has obtained an enforceable judgement for satisfaction against the guarantor, like it is in Germany (§ 775 par. 1 no. 4 German CC).

422For Germany see § 775 par. 1 nos. 1, 2, 3 and 4.

423STS 17 October 1990 [RA 1990 no. 7976); STS 31October1994 [RA 1994 no. 8007); Giusti, 246; Bo, voce, Fideiussione, 1123.

424Diez-Picazo, Fundamentos, 438.

425Giusti, 245.

426Carrasco, Cordero and Marin, 280. It is clear in the wording of arts. 1953 Italian CC and 1843 Spanish CC ("convenuto in giudizio"/"judicialmente demandado").

(/3) The debtor is bankrupt or insolvent

(aa) Meaning of "insolvency"

The term "insolvency" is used in this case as describing the durable and objective insufficiency of the debtor's patrimony to perform the debt (factual bankruptcy)427• Also the danger of insolvency has been considered enough to justify the application of art. 1843 par. 2 Spanish CC428• "Insolvency" is hence not used as a technical meaning for this purpose429• If the insolvency proceeding has been started and the debtor has been officially declared insolvent, the right to demand relief is no longer useful. The guarantor may not be discharged and no security can be granted. Therefore, the broad construction of the term "insolvency" is the only possible one430. As a result, the judge must decide each time, whether the debtor can be

427Giusti, 245; Carrasco, Cordero and Marin, 281; Guilarte, 304 ff. (esp. 305).

428Diez-Picazo, Fundamentos, 439.

429As described in Italian and Spanish Bankruptcy Acts. Art. 5 par. 2 Legge Fallimentare: "Lo stato d'insolvenza si manifesta con inadempimenti od altri fatti esteriori, i quali dimostrino che il debitore non e' piu' in grado di soddisfare regolarmente le proprie obbligazioni". Art. 2 Ley 22/2003, concursal: "Presupuesto objetivo.

1. La declaraci6n de concurso procedeni en caso de insolvencia del deudor com(m.

2.Se encuentra en estado de insolvencia el deudor que no puede cumplir regularmente sus obligaciones exigibles.

3.Si la solicitud de declaraci6n de concurso la presenta el deudor, debera justificar su endeudamiento y su estado de insolvencia, que podra ser actual o inminente.

Se encuentra en estado de insolvencia inminente el deudor que prevea que no podra cumplir regular y puntualmente sus obligaciones.

4.Si la solicitud de declaraci6n de concurso la presenta un acreedor, debera fundarla en titulo por el cual se haya despachado ejecuci6n o apremio sin que del embargo resultasen bienes libres bastantes para el pago, o en la existencia de alguno de los siguientes hechos:

1° El sobreseimiento general en el pago corriente de las obligaciones del deudor.

2° La existencia de embargos por ejecuciones pendientes que afecten de una manera general al patrimonio del deudor.

3° El alzamiento o la liquidaci6n apresurada o ruinosa de sus bienes por el deudor.

4° El incumplimiento generalizado de obligaciones de alguna de las clases siguientes: las de pago de obligaciones tributarias exigibles durante los tres meses anteriores a la solicitud de concurso; las de pago de cuotas de la Seguridad Social, y demas conceptos de recaudaci6n conjunta durante el mismo periodo; las de pago de salarios e indemnizaciones y demas retribuciones derivadas de las relaciones de trabajo correspondientes a las tres ultimas mensualidades".

430It concurs with Spanish historical law: The Partidas of Castilla, V, XII and XIV cited by Diez-Picazo, Fundamentos, 439. See Comments of Garcia Goyena on art. 1757 Draft Spanish CC of 1851 (Garcia Goyena, on art. 1757).

considered "insolvent" or not431 . However, the guarantor has the burden of proof of the debtor's factual insolvency432. In modern German law the guarantor may demand release from the guarantee "if the financial condition of the principal debtor has become materially worse" (§ 775 par. 1 no. 1 German CC433). This wording is more accurate, practical and clearer in the context of a previous discharge of a guarantor. The use of the term insolvency is confusing. A general wording has been also chosen in § 1365 Austrian CC. The situation of the debtor must have worsened so as to fear his inability to perform; i.e. the subjective factor of a funded fear is included.

(pp) Insolvency of the debtor

Art. 1953 no. 2 Italian CC clearly specifies that the insolvency referred to is the insolvency of the debtor. Art. 1843 Spanish CC is less accurate and does not specify whether the insolvency regards the guarantor or the deb-

tor. The writers agree on considering that the wording of this article makes reference to the bankruptcy of the debtor434 or any of the joint and several

co-debtors435. This interpretation agrees with Spanish historical background436 and with the regulation in neighbouring countries437. Moreover, it is difficult to understand why the insolvency of the guarantor, which does not have any legal consequences for the debtor, should allow him to anticipate his proceedings against the principal debtor438.

431Carrasco, Cordero and Marin, 281. For Germany, Horn/Staudinger, on § 775 no.

8 a).

432Diez-Picazo, Fundamentos, 439; Guilarte, 306.

433§ 775 par. 1 no. 1 German CC: "wenn sich die Vermogensverhaltnisse des Hauptschuldners wesentlich verschlechtert haben". See Reinicke and Tiedtke, Btirgschaftsrecht, no. 438.

434 In opinion of Diez-Picazo, art. 1943 par. 2 Spanish CC may also be applied in case of bankruptcy of the guarantor if the administrator of the bankruptcy considers it convenient. (Diez-Picazo, Fundamentos, 438).

435Perez Alvarez, 265.

436Law 8°, Titles 18, Book 3°of the Fuero Real; Law 14, Title 12 of the Partida Vex-

plicitly referred to the debtor. Art. 1757 of the Draft Spanish CC of 1851 by Garcia Goyena.

437Art. 1953 no. 2 Italian CC; art. 2032 no. 2 French CC and § 775 par. 1 sent. 1 German CC (mutatis mutandi).

438Guilarte, 309.

(y) The debtor is bound to release the guarantor from his guarantee within a given term and the term has expired.

If the debtor has agreed to release the guarantor upon a term, the guarantor may require release when the term is reached439• He does not need to be required for payment first by the creditor. The agreement of release within a given term, may have been included in the guarantee or in a separate document afterwards. The term may be a moment in time, explicitly agreed, but it may also be a condition. The guarantor may then ask for release upon fulfilment of the condition.

(~) The debt has become due because the term within which it should have been paid has expired.

The guarantor should not suffer the consequences of the debtor's delay in paying his debt. Therefore he may ask for release from the moment in which the debt has become due, unless the guarantee was agreed for a longer term. It is not necessary that the creditor has required the debtor or the guarantor to perform. The only condition is the expiration of the term for the principal debt440• The same rule is contained in § 775 par. 3 German

cc441.

(c:) At the end offive years in Italy and ten years in Spain, when the principal obligation has no fixed term.

This provision prevents the guarantor from being bound for too long time

when the principal debt has been agreed without time limit442 • The uncertainty of the guarantor is limited by the law to five years in ltaly443 and ten years in Spain444•

This rule does not apply for those obligations which nature makes it impossible to extinguish before five/ten years445 . It applies, by contrast, to continuing guarantees without time limit and to those conditional obligations, which may come about before or after the given terms.

439Also in art. 2032 no. 3 French, Belgian and Luxemburgian CC; art. 648 lit. d Portuguese CC and § 1364 sent. 1 Austrian CC.

440Giusti, 245, 246; Carrasco, Cordero and Marin, 281 , 282.

441Art. 775 par. 3 German CC: "wenn der Hauptschuldner mit der Erfollung seiner Verbindlichkeit im Verzug ist".

442Obligations agreed with a time limit, which overcomes five/ten years do not fall within the scope of this provision.

443Also in art. 646 lit. e Portuguese CC.

444The term of ten years is also established in art. 2032 no. 5 French, Belgian and Luxembourgian CC and used to be in art. 1919 former Italian CC.

445Giusti, 246; Carrasco, Cordero and Marin, 282.

d) Debtor's defences against the guarantor's claim for release

The debtor may set up against the guarantor's claim for release those defences arising from his relationship with the guarantor but not those based on his relationship with the creditor. For instance, he may set up as a defence the lack of claim for reimbursement of the guarantor446•

e) Consequence of no release: damages

If the debtor fails to perform his duty to release vis-a-vis the guarantor, he remains liable for the damages caused to the guarantor447. It is however unusual in the practice and also fruitless since these damages are difficult to prove.

IV. Rights ofthe guarantor after performance

1. Jn general

a) Duality ofclaims: reimbursement and subrogation

The basic right of the guarantor against the debtor after he has performed his guarantee obligation is a right to be indemnified in respect of the amounts that he has paid by reason of the guarantee. This right is restitutionary in nature.

The guarantor's right to recover indemnification from the debtor may be founded in two claims448 : a) reimbursement (regresso/reembolso) (art. 1950 Italian CC and art. 1838 Spanish CC) and b) subrogation to all the rights that the creditor holds against the debtor (art. 1949 Italian CC and art. 1839 Spanish CC)449•

446Carrasco, Cordero and Marin, 278.

447Cass. 21 April 1965 no. 699, FI 1965, I, 2090; Guilarte, 310 ff. In France, Belgium and Luxembourg it is even included in the law (art. 2032 CC).

448The duality of claims is founded in French Law (art. 2028 and art. 2029 French

CC). It is also contained in the modern Dutch CC (art. 7:866). Differently, German CC and Portuguese CC do not grant the claim for reimbursement in the law (only the claim for subrogation). However, a claim for reimbursement is founded on the legal relationship, which gives origin to the guarantee. Such relationship is, in most cases, a mandate or negotiorum gestio. See for Germany: Seiler/Erman, on § 774, no. 12, § 670 German CC, which grants the mandatory the claim for reimbursement of payments, necessary for the performance of the mandate. For Portugal, see Almeida Costa, 780).

449The guarantor's claim for subrogation is a right given in most European guarantee's regulations: § 774 par. 1 sent. 1 German CC; § 1358 Austrian CC; art. 2029 French, Belgian and Luxembourgian CC; § 644 Portuguese CC. By contrast it is not explicit in Dutch CC.

b) Differences between subrogation and reimbursement

The differences between the claim for subrogation and the claim for reimbursement have important practical consequences450•

aa) The nature ofthe claims

The claim for reimbursement is a new claim, based on the guarantor's right to recover the money paid to the creditor. It starts at the moment the guarantor has performed his obligation. Differently, upon subrogation, the guarantor assumes the claim of the creditor, as it originally was. He "substitutes" the creditor in his rights against the debtor451 . He is "entitled to stand in the shoes of the creditor"452 . Therefore, the subrogated guarantor obtains the same rights453 the creditor had against the debtor. The credit relationship remains existent but there is a change within the parties (mod-

454

ificazione soggetiva nel lato attivo del rapporto obligatorio ). Conse- quently, in contrast to reimbursement, the guarantor enjoys the benefit of all accessories of the credit (especially the privileges, preferences and any kind of security rights455) held in respect of the guaranteed debt.

bb) Extent ofthe claims

The extent of the claim for reimbursement is broader than that of the subrogation, since it includes the refund of judicial costs suffered as well as the interest (at least legal interest) for the sum paid by the guarantor from the moment of payment. Contrarily, upon subrogation the costs are not included, because they are not part of the creditor's rights against the debtor. The subrogated guarantor may claim for interest only as far as the creditor had this right456. The right of reimbursement is, hence, more advantageous if the debtor is solvable457 .

450See: Sicchero, 998 ff.; Simler, nos. 555 and 556.

451Giusti, 227.

452Andrews and Millet no. 11.17 cited from: Duncan Fox & Co v. North South Wales Bank (1880) 6 AppCas 1 (HL).

453The debtor may also raise against the guarantor all the defences, which he had

against the creditor.

454 G' . 227 lUStl, •

455 The guarantor obtains all kinds of securities; those established in the civil code and by especial laws. Cass. 19 july 1967 no. 1846, Fl, I, 1967, 2539: "La surrogazione legate a favore del fideiussore di cui all'art. 1203 no. 3 c.c. si estende anche ai privilegi stabiliti a favore del creditore da leggi speciali, pur se a garanzia di finanziamenti previsti per finalita di pubblico interesse".

456See Giusti, 230 and 231.

457Simler, no. 556.

cc) Prescription ofthe claims

The term for prescription of the claim for reimbursement starts at the day the guarantor performs his obligation. The period of prescription of the subrogated claims starts at the moment these could have been enforced; which is always prior.

c) Cumulative or alternative claims

It is indeed not clearly established in the law whether the reimbursement and the subrogation are cumulative or alternative claims. The issue has been extremely controversial. Different theories can be distinguished in this respect, but no definite conclusion has been reached.

aa)In opinion of some scholars the performing guarantor only enjoys one unique claim. For some of them the guarantor's claim is that for reimbursement, for others it is subrogation. In both cases, it is considered that

the content of the claim is extended by the law. Reimbursement also contains the rights of subrogation458 (art. 1839 Spanish CC). Subrogation is

extended to the rights of reimbursement, which include the expenses and interest459• The reimbursement is not a new claim. It only specifies the content of the subrogation. From a technical perspective, these theories lack of consistency. Subrogation and reimbursement are different claims, with a diverse nature and extent. They should not be confused.

bb)Another theory considers that reimbursement and subrogation are two

separate claims. The guarantor may choose one of them. He cannot accumulate both claims460 but he may set up one after the other461 • Case law has not clarified this matter, neither in Italy nor in Spain. However, some

decisions seem to grant the guarantor both claims as separate and altemative462.

458Reyes, Algunas consideraciones, 220; Perez Alvarez, Solidaridad, 288 ff. Mc Guiness, refers to this combination as "quasi-subrogative rights'', regarding Canadian law (The law of guarantees, 1986, 213).

459Cass. s.u. 15 January 1993 no. 449, GC, 1993, I, 351 ss ("il fenomeno del regresso come il momento dinamico del fenomeno della surrogazione").

460In Germany the guarantor may choose to claim for one or the other (OLG Koln WM, 1989, 1883, 1886) but he may also join (verbinden) them, so long as he is only reimbursed once: Horn/Staudinger on § 774 no. 5 a)).

461 Guilarte, 252 ff; Giusti, 233.

462Cass. 6 June 1972 no. 1744, FI, 1973, I, 1544; Cass. 5 February 1987 no. 1120 and

Cass. 14 May 1987 no. 4460; Cass. 4 February 1988 no. 1137 cited by Giusti, 234. STS 29 May 1984 [RA 1984 no. 2805]; STS 11 June 1984 [RA 1984 no. 3227]; STS 13 February 1988 [RA 1988 no. 1985]; STS 3 July 1998 [RA 1998 no. 5213]; STS 15 December 1997 [RA 1997 no. 8817].

cc)A third theory considers that both claims may also be raised together. The guarantor can so benefit from both claims simultaneously without being compelled to start new procedural claims after the first claim has been finished463. This theory appears to be the most practical one. Based on the idea of two different claims, it seems to be more efficient and save time and procedural steps. This is positive in any case and specially in countries like Italy and Spain, where Court's delay is considerably significant.

2. Subrogation

a) In general

The guarantor's subrogation into the creditor's claims as established in art. 1949 Italian CC and art. 1839 Spanish CC is a particular application to the guarantee of the general rules on subrogation (art. 1201 ff. Italian CC and art. 1209 ff. Spanish CC). According to such rules the guarantor, as performing party, subrogates into the creditor's rights (art. 1203 par. 3 Italian CC and art. 1210 par. 3 juncto art. 1212 Spanish CC). This principle is restated explicitly within the guarantee regulation.

b) Payment to the creditor as requirement for subrogation

The guarantor subrogates in the creditor's rights against the debtor upon performance. The term "payment" used in both Italian and Spanish CC refers to any kind of valid and effective performance; not only monetary payment. Such performance must be imputable to the guarantor, it needs to satisfy the creditor's claim464 and discharge the debtor vis-a-vis the creditor. The payment performed before the debt was due and payable is also valid with regard to subrogation.

The lack of consent on the guarantee by the debtor does not affect the guarantor's subrogation upon performance465. The same is valid when the debtor was not aware of the guarantee and even if it was granted against his will. The subrogation is a legal effect established by the law for the guarantee relationship, for which the will of the debtor is irrelevant.

The guarantor cannot be subrogated if the secured debt has extinguished466 or if it was void467.

463Carrasco, Cordero and Marin, 258.

464The guarantor cannot subrogate if he performed his guarantee obligation to the debtor (Cass. 8 April 1978 no. 1648, GC, 1978, I, 1, 1854).

465Giusti, 226.

466Cass. 18 January 1960 no. 30, FI, 1960, I, 213.

467Cass. 25 November 1986, no. 6929 cited by Giusti, 226.

c)Content ofthe right ofsubrogation

aa)In general

The guarantor subrogates upon performance in the creditor's claims against the debtor, with the interest and the accessories, with the specific security rights that the credit may have had, its privileges and preferences and all other faculties that could be considered accessories of the credit. It is irrelevant whether the claims where constituted before or after the guarantee468. Accordingly, the guarantor may withdraw the underlying obligation and claim for restitution instead of payment469. Moreover, the debtor's rights vis-a-vis third parties to which the creditor has subrogated are also included in the guarantor's subrogation470.

The guarantor subrogates also if debtor and creditor agreed not to assign their claims. Such agreement cannot be applied to the guarantor's detriment unless he agrees471 .

bb) Subrogation into the creditor's security rights

The guarantor subrogates into the security rights granted by the debtor in favour of the creditor (pledge, irregular pledges, reservation of title and transfer of property for security purpose, etc.). No special formalities are required. The guarantor does not need to inform or notify. Debtor and creditor do not need to explicitly accept. The guarantor must only perform those general requirements for the enforcement of the respective rights according to their nature. If the creditor was secured with a pledge, he must transfer to the guarantor the possession of the secured asset (unless they agree that the creditor remains possessor for the guarantor)472. Mortgages can only be subrogated if the general requirements for assignment of mortgage are fulfilled (art. 2843 Italian CC and art. 149 Spanish Ley Hipotecaria).

468By contrast, in art. 507 par. 2 Swiss Code of Obligations, securities constituted after the guarantee are not subject to subrogation ("Von den filr die verbilrgte Forderung haftenden Pfandrechten und andern Sicherheiten gehen aber, soweit nichts anderes vereinbart worden ist, nur diejenigen auf ihn Uber, die bei Eingehung der Btirgschaft vorhanden waren oder die vom Hauptschuldner nachtraglich eigens filr diese Forderung bestellt worden sind. Geht infolge bloss teilweiser Bezahlung der Schuld nur ein Teil eines Pfandrechtes auf den Bilrgen Uber, so hat der dem Glaubiger verbleibende Teil vor demjenigen des Bilrgen den Vorrang").

469Bo, voce Fideiussione, 1119 with further references; Giusti, 229; Carrasco, Corde-

ro and Marin, 261.

47°Cass. 26 June 1968 no. 2154, GC 1968, I, 1796; Carrasco, Cordero and Marin,

261,262.

471Carrasco, Cordero and Marin, 261.

472Carrasco, Cordero and Marin , 261.