2010 Pennsylvania Code
Title 13 - COMMERCIAL CODE
Chapter 51 - Letters of Credit
5117 - Subrogation of issuer, applicant and nominated person.

     § 5117.  Subrogation of issuer, applicant and nominated person.
        (a)  Subrogation rights of issuer.--An issuer that honors a
     beneficiary's presentation is subrogated to the rights of the
     beneficiary to the same extent as if the issuer were a secondary
     obligor of the underlying obligation owed to the beneficiary and
     of the applicant to the same extent as if the issuer were the
     secondary obligor of the underlying obligation owed to the
     applicant.
        (b)  Subrogation rights of applicant.--An applicant that
     reimburses an issuer is subrogated to the rights of the issuer
     against any beneficiary, presenter or nominated person to the
     same extent as if the applicant were the secondary obligor of
     the obligations owed to the issuer and has the rights of
     subrogation of the issuer to the rights of the beneficiary
     stated in subsection (a).
        (c)  Subrogation rights of nominated person.--A nominated
     person who pays or gives value against a draft or demand
     presented under a letter of credit is subrogated to the rights
     of:
            (1)  the issuer against the applicant to the same extent
        as if the nominated person were a secondary obligor of the
        obligation owed to the issuer by the applicant;
            (2)  the beneficiary to the same extent as if the
        nominated person were a secondary obligor of the underlying
        obligation owed to the beneficiary; and
            (3)  the applicant to the same extent as if the nominated
        person were a secondary obligor of the underlying obligation
        owed to the applicant.
        (d)  Time at which subrogation rights arise.--Notwithstanding
     any agreement or term to the contrary, the rights of subrogation
     stated in subsections (a) and (b) do not arise until the issuer
     honors the letter of credit or otherwise pays and the rights in
     subsection (c) do not arise until the nominated person pays or
     otherwise gives value. Until then, the issuer, nominated person
     and the applicant do not derive under this section present or
     prospective rights forming the basis of a claim, defense or
     excuse.

        Special Provisions in Appendix.  See section 28 of Act 18 of
     2001 in the appendix to this title for special provisions
     relating to applicability of transitional provisions.
        Cross References.  Section 5117 is referred to in sections
     5103, 5108, 9700 of this title.