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If a joint and several obligor who has performed more than that obligor’s share is unable, despite all reasonable efforts, to recover contribution from another joint and several obligor, the share of the others, including the one who has performed, is increased proportionally.

 

COMMENT

 

1. Proportional sharing of the loss

 

A co-obligor exercising a contributory claim against another co-obligor may be unable to recover because the latter is insolvent or has disappeared or its assets are out of reach. In this case the burden of the loss is spread among the other co-obligors.

 

Illustration

 

1. Companies A, B and C borrow EUR 6,000,000 from bank X, their contributory shares being equal. After reimbursing the loan, A claims EUR 2,000,000 from B and EUR 2,000,000 from C. B turns out to be insolvent. The loss of EUR 2,000,000 has to be borne proportionally by the other co-obligors, including the one who has performed. Since their shares are identical, both A and C will bear an equal part of the loss, i.e. EUR 1,000,000 each. Consequently, A can recover EUR 3,000,000 from C.

 

2. All reasonable efforts

 

Before invoking this Article in order to claim increased contributions from the other co-obligors, the obligor who has performed must exert all reasonable efforts to recover from the defaulting co-obligor in the light of Article 5.1.4(2).

 

Illustration

 

2. The facts are the same as in Illustration 1. A does not question B’s assertion that it is unable to pay because of financial difficulties and immediately asks for an increased contribution from C. However, in order to avail itself of Article 11.1.13, A must demonstrate that it has exerted all reasonable efforts to recover from B, such as reminders, injunctions, attachments or legal proceedings, as may be appropriate.

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