What are the limits of subrogation in Brazil? According to Brazilian law, subrogation arises from the fulfilment of the obligation by a third party, with the consequent transfer to the new creditor of the rights, lawsuits, privileges and guarantees of the original creditor. Although there is a substitution of persons, the debt is not extinguished and becomes due to this third party, but only on the terms and limits in which the subrogation will occur. Payment with subrogation is provided for in Articles 346 to 351 of the Brazilian Civil Code and may be legal or conventional. Conventional subrogation arises from the will of the parties and must be expressed in a contract, setting its limits and conditions, so that it is possible for the parties to restrict or extend the rights to be assigned by virtue of the subrogation. On the other hand, legal subrogation arises exclusively from law, from which its operation is independent of any contract or term, with the only necessary prerequisite being the presentation of the receipt of the discharge given by the original creditor. With regard to insurance, subrogation is governed by Article 768 of the Civil Code, which, by express provision, restricts subrogation to the amount actually paid by the insurer to its insured. In addition, according to that same article, the insurer may exercise its rights only against third parties who are not the spouse, descendants, ascendants, consanguineous or in-law relatives of the insured. However, all these restrictions may be removed in the event that one or more of these persons have intentionally contributed to the occurrence of the indemnified claim. In this way, whenever there is a deductible or when the value of the damage is higher than the indemnity limit, the insured will be entitled to have against the party responsible for 76 LAWYER MONTHLY JUNE 2023 A Guide to Subrogation Actions in Brazil Thought Leader The correct implementation of subrogation is a vital tool when handling debtor and creditor matters. In this article, Luis Felipe Pellon provides an in-depth look at subrogation actions and the legislation that governs them in Brazil, going on to explore the differences in how such actions are handled by international courts.
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