The Supreme Court of Lithuania in its 24
October 2005 ruling in civil case
No 3K-3-503/2005 AB Lietuvos draudimas v UAB ERGO Lietuva, UAB Ritranspeda has addressed an issue concerning application of subrogation (the passing of the insured person's
rights to claim damages onto the insurer) in the case of civil liability insurance. The court has
stated that the purpose of subrogation is to set forth an exception to the general rule of the law that the fulfilment of an obligation will cause its expiration. Exceptions are established for the
creditor to retain all the rights of the previous creditor because, upon fulfilment of an obligation, the rights would expire under the general rule and, therefore, the creditor would lose the advantages of the previous obligation.
While providing for the cases of subrogation in the law, the very wording of subrogation makes reference to the manner of change of creditors
in the existing obligation because the claim right, upon passing onto the insurer, will be implemented complying with the rules that establish the mutual relations between the insured person (beneficiary) and the person
liable for damages. Subrogation may not be equalled to regress stipulated in insurance legal relations since in
such case the matter would be concerned with possible regress of the insurer against the insured person. The panel of judges have emphasised that in the case of civil liability insurance the following two options are possible:
(i) Where the insured person and the person liable for damages is one and the same person or where insurance covers indirect civil liability, the insurance protection will inure to the interest covered under insurance contract.
Accordingly, the insured person insures himself gainst damages inflicted to third parties, in order not to suffer losses upon occurrence of an insured event, or, for example, to guarantee that the insurer who has ensured civil liability of an
employer does not acquire the right to claim the indemnities from the employer's employees, i.e. the insured person, while insuring his civil
liability, also ensures the persons for whose actions he is liable. Thus, the right of recourse of the insurer who has paid an indemnity in respect of the insured person or the persons
covered by him would make the civil liability insurance meaningless. Consequently, the rules for impossibility of subrogation in the case of civil liability insurance are applicable only to
subrogation claims of insurance companies which have paid indemnities under civil liability insurance against the insured person (beneficiary);
(ii) A different situation is in the cases where a civil liability insurer and the person liable for damages are different persons, the insured person has insured only his own civil liability and has not insured the civil liability of the person liable for damages, i.e. the insurance
protection will inure only to the insured person and not to the person who has inflicted damages. In such cases, the insurer upon compensation of damages on behalf of his insured person will acquire the claim right to the person who has inflicted damages, or, if the
latter has insured his civil liability (his interest), jointly and severally to the said person and his insurer.