On the Impact of Arbitration Agreements on the Exercise of Subrogation Rights——Comment on Article 36 of the Judicial Interpretation of the General Principles of Contract Compilation of the Civil Code
Due to the exercise of subrogation rights involving three parties:the creditor,the debtor,and the counterparty of the debtor,there is often a dispute in practice as to whether an arbitration agreement should bind a third party when there is an arbitration agreement between the two parties.In order to unify the rules of arbitration,Article 36 of the Judicial Interpretation of the General Principles of Contract stipu-lates the impact of arbitration agreements on subrogation rights.This provision does not recognize that a subrogation arbitration agreement cannot naturally bind creditors,thus maintaining the application of the relativity rule of contracts in arbitration.It also clarifies that even if there is an arbitration agreement,cred-itors can exercise their subrogation rights through litigation procedures,but when exercising their subroga-tion rights,creditors must be bound by the arbitration agreement.According to this provision,if the debtor's counterparty has applied for arbitration before the end of the first instance debate,the subrogation law-suit should be suspended.This provision effectively connects the relationship between subrogation rights and arbitration agreements,reflects respect for the autonomy of the parties in private law,and also resolves long-standing disputes injudicial practice.
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