In the case in question, the lessee obtained a court order on the 25th June 2020, pronounced by the court of first instance of Valencia no. 1, agreeing to the precautionary measure consisting of:
- Postponement, during the processing of the procedure, of the payment of 50% of the minimum monthly rent agreed in an industrial rental contract, from the monthly payment of June 2020 until the judgement is passed;
- Postponement of any rent generated after March 2021, when the new hotel season is due to begin, only if the current legal restrictions on capacity and border access for European tourists remain in place.
The precautionary measure came with the condition that the requesting party makes a deposit of 500,000 Euros within a period of 30 days.
The landlord appealed against the measure for two reasons:
- First: the lack of “fumus boni iuris”, for the contract established a fixed rent and another variable rent, the reason for which being precisely to mitigate risks;
- Second: the lack of proportionality, for the measure was to last until at least the month of March 2021, regardless of whether, on said date, the limitations on the capacity of hotels and the restrictions on the entry of foreign tourists into Spain were in place or not.
I.- Regarding the first reason:
1st) The Court considered the caselaw of the CRSS from the Supreme Court Judgement (STS – Sentencia del Tribunal Supremo) 807/2012 of the 27th December and thereinafter, highlighting the STS of the 17th January 2013 which states, “there is a clear tendency for the regulation to be incorporated in proposals of international texts -article 6.2.2 UNIDROIT Principles, 6.111 of the Principles of European Contract Law- and national texts -article 1.213 of the Civil Code (CC – Código Civil) according to the Proposal for the modernisation of the law of obligations and contracts prepared by the General Codification Commission”.
2nd) The court understands that both the previous rulings, and also those listed in the appeal, refer to cases which are different to the one in question, and also to situations derived from economic conditions or fluctuations in the market, or those occurring as a result of foreseeable legal changes within the scope of the normal risks of the contract, but never to a “circumstance so exceptional, unpredictable, and extraordinarily serious (catastrophic, we might add)” like the one caused by the COVID-19 pandemic. It considers that, from the outset, the claim filed deserves a favourable provisional and circumstantial judgement, given that, in the light of the purpose of the contract and the balance of the services, it is difficult to imagine a more serious situation which is different to the normal or predictable risks of the contract.
3rd) It does not agree with the argument that, contractually, the risk had already been spread by the implementation of a variable rental clause based on billing, with a fixed minimum, for this does not allow for the avoidance of the serious effects of the health crisis, nor was said clause introduced to avoid the devastating effects of a pandemic, but rather to ease the consequences of market fluctuations or of cyclical crises, and also to establish a prorated rent for the whole year.
4th)) It argues that the virtuality of the CRSS has transcended the jurisprudential sphere to the extent that the legislator has established similar measures, like the moratoriums for SME’s (small and medium-sized enterprises) established in the Royal Decree no. 15/2020 of the 21st April, and also in the Royal Decree-Law no. 35/2020 of the 22nd December, emphasizing that said provisions do not prevent the requesting of similar measures in the courts to obtain a contractual modification.
5th) The ruling put forward by the appellant (STS 19/2019 of the 15th January) is not in fact applicable, because it considers a case which is not similar, namely the reduction in billing of a company due to an economic crisis, a risk belonging to the economic system which must be, or can be, foreseen in a long-term contract.
II.- Regarding the second reason:
1st) The Court analyses the context behind the declaration, in October 2020, of a new state of alarm, extended until the 9th of May 2021, entailing the adoption of various restrictive measures regarding the free circulation of people throughout national territory, the limitation of opening hours especially in the hospitality and catering sectors, and the implementation of a curfew in numerous autonomous communities. It highlights that what is relevant is not so much whether or not a certain norm is in force on a given date, but rather if the situation continues, and, with it, “the extraordinary effect on tourism demand, which is what can affect the balance of the provisions and result in the frustration of a contractual commutativity”.
2nd) It implies that it is clear that the decline in the demand for services in the tourism sector is lasting longer than expected and desired, and that the situation is continuing, because of, among other factors, the population’s fear of contagion, the new outbreaks and mutations, the restrictions on mobility and perimeter confinements, and also the controls on tourists, all of which result in a context which is extremely unfavourable for the tourism business.
For this reason, the Court does not consider the measure adopted by the judge of first instance as disproportionate, especially considering that the end of the state of alarm does not necessarily mean the end of the pandemic. It is also important to remember that the precautionary measures are contingent, and that they can change if there is any positive development in the fight against the pandemic.
The Court therefore dismisses the appeal, confirms that the court order is passed in the first instance, and imposes the procedural costs on the appellant.
Mireia Bosch
Vilá Abogados
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1st of April 2021
