Supreme Court limits surety insurance claims without execution title

The Supreme Court ruled on April 16 in case 2025Da220126 that surety insurers bear no liability to pay claims when the insured party fails to secure an execution title regarding damages, regardless of whether the policyholder has received a discharge in bankruptcy proceedings.

The decision clarified that surety insurance contracts differ fundamentally from liability insurance. The court stated that provisions allowing third-party victims to file direct claims under Article 724, Paragraph 2 of the Commercial Act cannot be applied or analogized to surety arrangements due to differences in their basic nature, insured parties, and the types of damages covered.

Judges emphasized that compensation is strictly limited to the scope defined by insurance terms. Since the insured party did not possess the execution title specified in the contract clauses, the court found no legal basis under Article 726-5 of the Commercial Act for the insurer to disburse funds. This principle holds even when a lawsuit seeking damage compensation against the policyholder is deemed inadmissible due to a lack of interest in protection following a bankruptcy discharge.

The court noted that debt discharge does not extinguish the creditor's rights against guarantors or other joint obligors under the Debtor Rehabilitation and Bankruptcy Act. Consequently, the bench affirmed that an insured party with the right to claim surety money from an insurer may seek a final judgment confirming the existence of a specific damage claim against the policyholder.