The following Dispute Resolution guidance note Produced in partnership with Harris Bor of 20 Essex Street provides comprehensive and up to date legal information covering:
Subrogation is an equitable mechanism aimed at preventing unjust enrichment by permitting one party to ‘step into the shoes’ of another and to bring an action in that other’s name.
For further guidance on unjust enrichment generally, see Practice Notes:
Restitution for unjust enrichment—elements of the claim
Defences to restitutionary claims
Two common situations where subrogation arises are:
where one party has indemnified another against a loss, for which a third party is liable (ie, party A has indemnified party B against a loss caused to B by party C. Party A can 'step into the shoes' of party B and bring an action against party C); and
where one party discharges an obligation owed to another, the discharging party is entitled to step into the shoes of the party that was owed (ie, party X has paid a debt which party Y owes to party Z, party X can 'step into the shoes' of party Z and bring an action against party Y)
More specifically, the remedy is commonly available, together with a restitutionary remedy, where:
insurers cover losses caused by another
a guarantor/surety pays the loan to another
a director uses a company’s money to pay off a personal debt, and
where a bank lends money for a party to pay
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