The issue in question relates to a dispute between an insurance company and a sea carrier. The latter ‒defendant in legal proceedings for damages caused to the transported goods‒ pleaded the insurance’s lack of capacity to sue since, according to the defendant, the letter of subrogation and loan receipt signed by the insured upon receipt of the indemnity was not a valid subrogation pursuant to art. 1916 of the Italian Civil Code.
The case was therefore brought before the Corte di Cassazione (the Italian Supreme Court) which, through judgment of 23 June 2015, no. 12896, confirmed its case law, stating that if the insurer “pays the sum based on a “loan receipt”, it also has the right of subrogation pursuant to art. 1916 of the Civil Code, therefore he can take action in his own name against the liable party”. In fact, the loan receipt is a document – well known to insurances in North America (especially in the maritime field) – which shows that the insured receives from the insurer a sum ‒for the suffered damage‒ equal to the amount of the insurance indemnity, in the form of a loan to be repaid only if and to the extent of the sums which the injured party will be able to obtain from the third party by way of compensation. Therefore, in the event of a claim, the insurer does not pay the indemnity to its insured party but grants it as a loan, under the condition that it will be repaid only to the extent of the amount that the insured will be able to recover from the liable party. At the same time, the sum which the insured has to receive from the liable party is pledged for the repayment of the loan and the insurer is granted a mandate to collect it (loan receipt arrangement).
In other words, in these cases, there is an amount corresponding to the indemnity which is given to the insured as a loan.
It was precisely this aspect that gave rise to doubts regarding the possibility of equating the loan receipt clause to the payment of the indemnity required by Article 1916 of the Civil Code for the purposes of subrogation. The first Italian judgment on this specific insurance clause denied that the loan receipt could be a title document which could provide the insurer with the capacity to sue, since, rather than proving the occurred payment of the indemnity, it merely acknowledges that it was paid «as a possibly refundable loan» (Court of Livorno, 16 March, 1973). However, this approach remained isolated. In fact, the subsequent case law trend has been that of accepting the insurance’s subrogation: the loan receipt has to be considered as an actual payment of the insurance indemnity, since the loan is repayable only if the damaged party obtains compensation from the liable third party and to the extent of the same. Indeed, on more than one occasion the Italian Supreme Court considered the insurer who acts in subrogation by presenting this clause as fully legitimized based on the fact that such document, listing the amounts that must be repaid, contains the evidence of payment. This document, therefore, besides being the discharge of the payment of the requested sum, directly gives the insurer the right to recover compensation against the liable party.
(Bologna Office – Federico Tassinari – 0039 (0)51 2750020)
