I. The subrogation

A. Automatic transfer of the creditor’s rights

1 As per Art. 149 para. 1 CO, the creditor's rights automatically pass from the creditor to the debtor by operation of law to the extent that the debtor has satisfied the creditor. This is an assignment by law according to Art. 166 CO.

Subrogation presupposes that the debtor has an independent right of recourse according to Art. 148 para. 2 CO. Subsequently, the debtor entitled to recourse disposes of two parallel remedies that compete with each other: the right of recourse according to Art. 148 para. 2 CO and the subrogated creditor’s rights pursuant to Art. 149 CO. The subrogated claim serves to facilitate and secure the recourse. The claim of the joint and several debtor against his co-debtor resulting from subrogation only exists to the extent of the right of recourse according to Art. 148 CO, i.e. the amount exceeding their internal liability quota.

2 If applicable, it is necessary to convert the subrogated claim into a monetary claim if the debtor has provided a performance in kind or service to the creditor.

3 The subrogation according to Art. 149 CO only applies in the case of perfect joint and several liability, not in the case of imperfect joint and several liability.

B. Effect of the subrogation

4 The difference compared to the independent right of recourse under Art. 148 para. 2 CO is that – on the one hand – all ancillary rights transfer to the debtor with the subrogation in addition to the main claim (cf. Art. 170 CO). The joint and several debtor can now benefit from any securities such as liens or guarantees, as they also pass on to them.

5 On the other hand, the claim is transferred together with all objections against the creditor. In other words, the other joint and several debtors may then raise all objections in the internal relationship that would have also been open to them against the creditor, namely individual acquittals on the part of the creditor (Art. 507 para. 3 CO analogously).

The current prescription period is also continued without interruption. This may result in the subrogation claim becoming time-barred before the recourse claim or – if the debtor pays an already time-barred debt to the creditor – that the subrogated claim continues to be time-barred and therefore remains unenforceable.

6 The other co-debtors are not jointly and severally liable to the entitled debtor. They are only liable for their individual quota in their internal relationship.

II. Creditor’s liability

7 Although the creditor is principally free to choose how much they claim from which joint debtor,

the creditor is nevertheless under a duty not to improve the legal position of one joint and several debtor to the detriment of the others (Art. 149 para. 2 CO). If this duty is not fulfilled, they are responsible for the damage caused accordingly.

8 Cases of application arise when the creditor releases securities such as a lien and the joint and several debtor to whom the subrogation claim is transferred falls short because they were not sufficiently satisfied in the internal relationship (in the absence of a realisable lien).

The same applies if the creditor does not hand over the promissory letter or other evidence pertaining to the debt (cf. Art. 170 para. 2 CO).

9 A unilateral acquittal by the creditor in favour of a joint and several debtor is not a case of application of this favourable treatment within the meaning of Art. 149 para. 2 CO. The joint and several debtor taking recourse is still entitled to the undiminished recourse according to Art. 148 para. 2 CO against their co-debtors, as the acquittal generally has no effect in the internal relationship.

10 The legal consequence of this breach of duty is a claim for damages under Art. 149 para. 2 CO by the debtor against the creditor. This can be asserted against the creditor either by way of an objection or by means of a lawsuit.

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