The fairness and efficiency of the right of recourse between security providers: a comparative and economic analysis

Abstract

ABSTRACT The right of recourse, or the right of contribution, between third-party security providers for the same debt absent any relevant agreement, is widely recognized in most common law and civil law jurisdictions. So was it in China. However, since the promulgation of the Chinese Civil Code 2020, the right of recourse seems to have been abandoned. Given the great divide between such abandonment and the practices in most other jurisdictions, this article explores the justification for the right of recourse, primarily from both the perspective of fairness and that of efficiency. Fairness concerns, particularly in the sense of distributive justice, are frequently referred to when justifying the right of recourse. But there are some drawbacks in a typical fairness analysis. Not only is the so-called ‘fairness’ often confused with other concerns, but also is such analysis inherently too vague to produce rules. Nevertheless, an efficiency analysis could justify the right of recourse and help develop the most efficient share calculation rule. The justification discussed in this article will benefit the relevant discussions in the property law of almost every jurisdiction and might also contribute to the debate on the relationship between fairness and efficiency.