учебный год 2023 / de la Mata Munoz, Personal Security

mechanisms,145 in addition to the origination data and performance data requirements create a further layer of reporting requirements, which will not only help to improve a lender's internal risk management, but will also improve transparency.

III. Legal nature ofthe credit insurance

It may be questioned whether credit insurance falls within the scope of personal security rights 146• As it is a form of insurance contract and the insurance elements are clearly predominant, credit insurance is not usually studied as a personal security right. However, from a functional perspective, the "surety" (insurance company) covers the creditor against the risk of loss as a consequence of the debtor's default. It does not guarantee the payment of the debtor upon default, but rather undertakes a principal obligation to indemnify the creditor's losses upon the uncertain event of default of the debtor. The guaranteeing function derives from its indemnifying character. The insurer's obligation is therefore principal, conditional and also always onerous, as it is exercised by professional insurance compames.

IV. Legislation applicable to credit insurance contracts

Credit insurance in Italy and Spain has become increasingly regulated in the last thirty years by insurance legislation. In Italy credit insurance was governed by art. 440 former Comm. C. of 1882, but it is not specifically mentioned in art. 1904 f. Italian CC of 1942147 as one of the different types of insurance for damages (assicurazione danni). However, the general regulation on insurance contracts is applicable as well as the special regulation referring to this contract148•

145Mortgage scoring is more sophisticated than credit scoring, which only takes into account the borrowers credit score. Mortgage scoring considers not only this variable, but also takes into account the mortgage product, duration of the mortgage, repayment type, property type etc.

146The issue of the legal nature of credit insurance has been controversial in neighbouring countries (see references in Mouly, 304) but has not been treated in Italy and Spain.

147Current Italian CC unified former Civil and Commercial Codes.

148The different types of credit insurance are also indicated in the Decreto Legislativo no. 175 of 17th of March 1995. Circolare Ministeriale dell'industria e commercio no. 433

of 16th of November 1979 and its predecessor, Circolare Ministeriale in materia di assicurazione del credito no. 145 of 7th of December 1960. See Univelex, dir. Di Brina, Natura specifica del contratto di assicurazione del credito, Assicurazione del credito (http:// univelex.unive.it/diritto-commerciale/menu/mf400000.htm).

In Spain the first regulation of credit insurance was provided by the Ordenanzas de Seguro Maritimo de Bilbao of 1737, which par. XLIII allowed insurance of "the risks of payments or borrowed sums". However, subsequent legislation, first the Comm. C. of 1829 and later the Comm. C. of 1885 (in force today), avoided any reference to credit insurance. Paradoxically, credit insurance began then to be used in practice in terms of art. 438 149 Comm. C. of 1885. Since 1980, the contract of credit insurance is specifically regulated by art. 69 to art. 72 Ley 50/1980 del Contrato de Seguro (LCS). The different types of credit insurance are contained in the 1st disposicion adicional of the Ley 30/1995, de Ordenacion y Supervision de los Seguros Privados.

149 Rules on Insurance Contract, derogated in 1980 by Ley 50/ 1980 del Contrato de Seguro (LCS). For more extensive historical references see: Tirado/Motos/Albadalejo, 451 f.

b) Plurality ofpersonal guarantees independent from each other

The co-guarantee has been distinguished from the case of the "plurality of personal guarantees independent from each other"2 · In this case there is a plurality of guarantors that ensure the obligation of one debtor. Therefore, each guarantor is party to a different guarantee that exists independently from the others. There is a common debtor and a common debt, which is secured by virtue of different guarantors that do not have any relationship to each other. It is a case of the coexistence of different personal guarantees that are independent and autonomous from each other. Each of the guarantees secures the whole debt3 • The subjective element or interest in granting security is different for each guarantor. They do not assume the obligation collectively and they may even ignore the existence of other guarantees or they may simply wish to constitute each guarantee independently from the others4 . There are as many obligations as there are guaran- tors5.

c) Legal regulation of both cases

The Italian and Spanish Civil Codes regulate the situation of the coguarantee, but do not provide an explicit definition not do they distinguish between co-guarantee and plurality of guarantors independent from each other.

The Spanish Civil Code lacks terminological accuracy. Some provisions (art. 1837, art. 1844, art. 1850, art. 1852) use the very general expression "plurality of guarantors" (which actually refers to both, the co-guarantee and the plurality of guarantees that are independent from each other) although the title of the whole section6 refers to the co-guarantee and the term "co-guarantors" ("co-fideiusores") is used again in art. 1845.

Case law and legal writers7 have construed arts. 1837 together with art. 1844 ff. as to develop a definition of co-guarantee. This is the case regu-

2The Spanish writers have largely ignored the study of this matter and Supreme Court decisions are recent occurrences. In Spain see: Guilarte, 231232 and Carrasco, Cordero and Marin, 290 ff. The situation is different in Italy, where both case law and scholars have developed a clear view of both constellations and the differences between them. See: Fragali, Confideiussione, 1963, I, 196 ff.

3Ramon, La distincion entre cofianza (http://www.uv.es/-ripj/5cof.htm).

4Giusti, 211; Cass. 12 July 1962 no. 1862, GC, 1962, I, 2099.

5Ramon, La distincion entre cofianza, (http://www.uv.es/-ripj/5cof.htm); esp. punto 2 "Distinci6n con la pluralidad de fianzas independientes".

6Chapter II, Title XIV, Book IV, section three Spanish CC (arts. 1844 ff.) is entitled "About the effects of the co-guarantee among co-guarantors".

7STS 4 May 1993 [RA 1993 no. 3403]; RGD no. 585, june 1993, 5861 f.; La Ley, 1993-3, 336; Ramon, La distinci6n (http://www.uv.es/- ripj/5cof.htm).

lated in the Spanish CC and which is thus distinct from other kinds of plurality of personal guarantors. The same position is to be found in Italy8 with regard to arts. 1946, art. 1947 and art. 1954 Italian CC.

In order to determine if a case of plurality of guarantors is a coguarantee, it must be decided whether the interests of the guarantors were autonomous or independent from each other or if they wished to guarantee together9• This can only be observed on a case by case basis. However, there will be a presumption of common interest (co-guarantee) if the position cannot be deduced from the circumstances10• In any case, the plurality of guarantees is not specifically regulated in either of these Civil Codes. The rules on co-guarantee cannot be applied11 (not even by analogy) 12 due to the different nature of both situations13 • However, the general regulation on the guarantee shall be applied.

2. Plurality ofpersonal and real securities

Another possibility is that of the concurrency of personal and real security rights. This situation is not regulated in Italian or in Spanish Civil Codes. Each security obligation is regarded as independent from the others and the circumstances that may affect one of them is not taken to affect the others.

Ill. Relationship ofthe different sureties vis-a-vis the creditor

There are no special provisions regarding the relationship between the coguarantors and the creditor. The civil code applies in general and especially the rules on the guarantee mutatis mutandis.

1. Order ofpayment

The laws of Italy and Spain are both silent with regard to the rank or order of payment in case of plurality of securities. If the liability of the surety is joint and several (solidaria) in relation to the main debt, the surety might

8Cass. 18 March 1999 no. 2459 I. 2253, FI, no. 7-8, July-August, 1999; Cass. 18 July 1997 no. 6635 in Giusti, 211; Cass. 11July1967 no. 1712, FI, 1968, I, 212; Rescigno/Bozzi, La fideiussione, le figure affini e l'anticresi, 256; Fragali, Confideiussione,

196f.;Petti, 191.

9Cass. 12 July 1962 no. 1862, GC, 1962, I, 2099; Carrasco, Cordero and Marin,

290.

10 Giusti, 211.

11STS 18 September 1997 [RA 1997 no. 6705], La Ley, no. 4405, miercoles 29.10.1997, 7 ff.

12Ramon, La distinci6n entre (http://www.uv.es/- ripj/5cof.htm); punto 2 ,,Distinci6n con la pluralidad de fianzas independientes".

13Diez-Picazo, Fundamentos, 445 ff.; Gullon, Sobre el aticulo 1844 del Codigo, 1030; Contra: Lacruz, Elementos, 1986, 541 ff.

be compelled to perform before default of the debtor. This order of events cannot occur if the security is a secondary obligation.

The possible combinations of the plurality of security rights are the followmg:

a)if all securities are joint and several with regard to the principal debt, the

creditor may request performance from any of the sureties from the moment the debt is due and payable14;

b)if some of them are joint and several while others are secondary in relation to the principal debt, the creditor can enforce payment from the principal debtor or the sureties that are joint and severally liable while secondary sureties enjoy the benefit of discussion; and

c)obviously if all securities are secondary to the principal debt, all of them will enjoy the benefit of discussion.

Therefore, if there is a plurality of securities, the creditor is free to demand fulfilment from any of his sureties, provided these securities are enforceable and it is a matter of hazard as to which one of them will be requested to perform. The person who provides payment first will assume the risk of the insolvency of the parties from whom he may be reimbursed15 •

It has been intensively discussed in Germany whether the guarantor should enjoy a priviledged position with regard to the other sureties. The reasons adduced by the scholars in favour of this position regard mainly the especial risk assumed by the personal guarantor as he remains liable with his present and future patrimony for the secured debt16• A proof of this is certainly the growing tendency in the German Supreme Court to consider that the guarantor's position should be strengthened17• However, in this case the Supreme Court has decided that the guarantor should not enjoy a privileged position as to the other sureties that secure the same debt 1 •

14See SAP Barcelona 13 June 2008 WL no. 329/2008: A plurality of joint and several co-guarantors, guarantee a plurality of guarantors, severally liable. The co-guarantors are jointly liable only for the part of the debt which was not fulfilled by one of the guarantors.

15Alternatives are perhaps preferable as to avoid the effect of hazard regarding the performing surety. Personal securities could be privileged with regard to real ones, or the order of payment could be determined upon the moment of the conclusion of the guaranteeing contract. The treatment of this matter is related to the study of the internal relationships between the different sureties. This is because it seems to be important to determine who will finally suffer the patrimonial detriment upon the demand for payment, and not only who will be the performing party in first place. See infra Chapter 4, A., IV. Internal relationship among the different sureties, 236.

16Horn/Staudinger, on§ 774, no. 68; Reinicke and Tiedkte, 2000, 422 ff.

17See Tiedtke, Rechtsprechung, 1015 ff.

18BGH 26 une 1989, BGHZ 108, 179 and BGH 24 September 1992, W 1992, 3228. See comment in Reinicke and Tiedtke, 2000, 422 ff.

2. Extent of liability ofeach one ofthe security rights

a) In the co-guarantee

aa) Regulation

In Italy the liability of the co-guarantors is conceived of as being joint and

19

several (art. 1946 Italian CC ). The benefit of division may also be agreed to by the parties, in which case each co-guarantor is only liable for his part of the debt and the creditor cannot compel any of them to perform with

20

regard to the total obligation (art. 1947 sent. 1 Italian CC ). Only if any of the co-guarantors is insolvent at the time at which the original benefit is agreed, the co-guarantors are proportionally liable in relation to the share of the other guarantor (art. 1947 sent. 2)21 •

The Spanish regulation on the co-guarantee is extremely contradictory as compared to the Italian. In Spain the liability of the co-guarantors can be a) joint and several (solidaria) orb) several (mancomunada simple)22.

According to art. 1837 sent. 1 Spanish CC23 , the co-guarantors are sev- erally liable (mancomunidad). Every guarantor is liable only for his share of the whole debt24. Thus each guarantor exists independently from each of their co-guarantors, whose insolvency will thus only affect the position of the creditor. Guarantors are not able to set up defences that pertain to the other co-guarantors, nor do they enjoy a right of recourse between each other.

19 Art. 1946 Italian CC: "If a plurality of persons has provided guarantee to the same debtor and for the same debt, each one of them is compelled for the entire debt, unless the benefit of division has been agreed."

20 Art. 1947 Italian CC: "If the benefit of division has been agreed, each one of the co-debtors being required for the payment of the entire debt can compel the creditor to reduce the content of the claim to the part that he owns."

21Petti, 178.

22If an obligation is mancomunada the debt is vis-a-vis the creditor, divided among the debtors {per capita unless otherwise agreed) and each one of them is only liable for his own part of the debt. The creditor must rise a claim against each one of them and they do not have a right of recourse against the others in case of payment. This is the general regime for co-debt in Spanish law, unless the solidarity Uoint and several regime) is expressly agreed. See art. 1137 Spanish Civil Code: "The concurrence of two or more obligees or two or more obligors in a single obligation does not imply that each of the former has a right to demand or that each of the latter is bound to perform, the obligation in its entirety. This shall only take place when the obligation provides for it expressly, the obligation being contracted as solidary."

23Art. 1837 sent. 1: "When there are several sureties of only one debtor and for one debt only, the obligation of responding herefor shall be divided among all. The creditor can only demand from each surety his corresponding share, unless solidarity has been expressly stipulated."

24See art. 1137 Spanish CC on several liability of co-debtors.

The position of several liability among co-guarantors is not the normal rule within modern continental regulations25 . It is surprising that the Spanish CC, extremely similar to the French, creates an exception in this area, distancing itself from its own near-historical background26. Nevertheless, a system of several liability for co-guarantors is a perfectly feasible alternative.

Therefore, apart from historical reasons, it would be quite acceptable for art. 1837 Spanish CC to finish at the stage of its first sentence. However, the second part of this provision27 unexpectedly refers to the benefit of division, which can only occur within joint and several obligations. It therefore seems to be a point of debate as to whether the co-guarantee is a joint and several or a several obligation in the Spanish context.

The wording of art. 1837 has received academic analysis which has yielded a variety of different conclusions. One of the suggested solutions28 is that the co-guarantee should be held to be a several obligation. This view is put forward as the wording of art. 1837 sent. 1 is clear and is paral- lel to the general regulation in art. 1137 and art. 1138 Spanish CC, which establishes the several liability for the co-debtors (mancomunidad = division). However, this theory does not explain the inconsistency between sent. 1 and 2 of art. 1837.

For this reason another group of scholars29• place a great deal of importance on the historical background of this provision30. They consider that the first sentence is a "last moment adherence" in a coherent whole that should be maintained unaltered (art. 1844 to art. 1846 and art. 1850 Spanish CC are all based on the benefit of division and therefore apparently on the joint and several liability between co-guarantors).

25Art. 1946 Italian CC, § 774 German CC; Horn/Staudinger, on § 774, no. 43; art. 2025 French CC. For a comparative study, see: Guilarte, Notas sobre la cofianza, 891 ff. This conception of the liability in the co-guarantee has its origins in Roman Justinianian Law, where co-guarantors were liable in solidum, but the benefitium divisionis could be agreed among them. In this last case, each co-guarantor were allowed to compel the creditor to require payment of the respective parts of the debt to each one of the coguarantors.

26The Draft Spanish CC of 1851 of Garcia Goyena, followed in its art. 1750 the French solution as well as Spanish historical Law of the Partidas (joint and several liability with the possibility to agree the benefit of division).

27"The benefit of division agains co-sureties ceases in the same cases and for the same causes as that of discussion against the principal debtor."

28Lacruz, Elementos, 1986, 537; Guilarte, Notas sabre la cofianza, 891-920. Recently

also Carrasco, Cordero and Marin, 284.

29Castan, 707; Cristobal, 51 ff. For other references see: Guilarte, 227.

30The first paragraph was only lately introduced and it is a direct translation of the Belgian Project of Laurent. The second, however, derives from the important Project on a Spanish Civil Code of 1851, where the liability of guarantors was joint and several.

The Spanish Supreme Court31 has agreed with the first opinion and has thus declared that the co-guarantors are severally liable unless otherwise agreed. According to this viewpoint, it is to be concluded that: a) the benefit of division is not a special kind of benefit but a normal effect of the several (mancomunada) nature of the co-guarantee32 and b) unless otherwise agreed by the parties, each of the co-guarantors are severally liable (mancomunadamente responsables) and each one can therefore only be required to pay his or her particular part of the total debt. The wording of this last sentence of art. 1837 (benefit of division) refers to those cases in which an exception to the several liability shall be permitted. These exceptional cases are the same as those for which the benefit of division ceases for the principal debtor as set in art. 1831 Spanish CC: a) when the guarantor has expressly renounced his right to the benefit of division; b) in case of bankruptcy33 of any of the co-guarantors and c) when the guarantee of any of the co-guarantors cannot be enforced in the Spanish Kingdom.

In these cases, the other co-guarantors are severally liable for the part of the debt which belongs to the co-guarantor who has fallen under one of the abovementioned situations. Therefore, the share of the latter will be divided among all other co-guarantors and added to their respective partial liabilities. This is conceived of as being a benefit for the creditor, who must therefore take action to implement his right timeously. For example, if a bankruptcy proceeding has already been commenced against one of the co-guarantors and the creditor requires partial payment from each of the other co-guarantors, he loses the possibility to set up art. 1837 sent. 2 after

acertain point in time34.

bb)In the business practice

(i) Express agreement ofthe parties

The technical problems that are created by the deficient regulation of the co-guarantee in the Spanish CC, are minimised in commercial practice. Almost every guarantee and co-guarantee contract in Spain is agreed within the rules of solidarity; i.e. as joint and several guarantees. In this case the application of the regulation on co-guarantee is not problematic as it is

31STS 3 June 1968 [RA 1968 no. 3064]; STS 4 May 1993 [RA 1993 no. 3403].

32Spanish CC keeps silent about the establishment of a concrete moment to allege the division of the debt. See STS 4 May [RA 1993 no. 3403]. Contra: Carrasco, Cordero and Marin, 285.

33A restrictive interpretation of art. 1837 sent. 2 prevails (Guilarte, 246). Accordingly financial difficulties are not be considered enough but a bankruptcy proceeding (quiebra or concurso de acreedores) must have been open in order to apply this exception.

34Guilarte, 247.