As we have already explained in our article titled “LEASE AGREEMENTS ON BUSINESS PREMISES: APPLICATION OF THE REBUS SIC STANTIBUS CLAUSE”, since the declaration of the state of alarm triggered by the Covid-19 pandemic in March 2020, the maxim Rebus Sic Stantibus, or “things thus standing”, (RSS) is being alleged by the lessees of business and industry establishments wishing to reduce the rents for which they are creditors and which is defined by the courts on a case-by-case basis.

The RSS is a theory developed by jurisprudence as a mechanism to re-establish the balance of benefits between the contracting parties when, as a result of circumstances which are sudden and totally unexpected to the parties, the obligation of the contract becomes impossible or extremely onerous for one of the parties, as has been generally been the case in Spain in the last year due to the prohibitions, suspensions and restrictions imposed by the authorities to avoid the spreading of the Covid-19 pandemic regarding the material use of real estate leased for the use of industrial and commercial activities.

The RSS was not regulated by any regulation until the 20th October, when, on a regional level, the Decree-law 34/2020 was passed in Catalonia, containing urgent measures supporting the economic activity of leased business establishments; and, at a state level, the Royal Decree-law 35/2020, of the 22nd December, was passed, containing urgent measures supporting the tourist sector, hospitality, trade and also tax matters.

Said regulations, however, establish measures which are limited to the time in which the prohibitions or restrictions pronounced by the competent authorities are in force and, in any case, they are applicable in the absence of an agreement between the parties. In addition, the request to reduce or delay the payment of rent that may be made by the lessee to the landlord in accordance with the Royal decree-law 35/2020 must be made before the 31st January 2021.

In any case, the aforementioned regulations are compatible with the right of the parties to resort to judicial help to exercise any other aspiration relating to the lease contract, for which reason litigiousness in this matter continues to be commonplace.

Specifically, in the hotel sector:

  • The Provincial Audience of Valencia, Eighth Section, in its court order 43/2021, of the 10thFebruary, which refers to a hotel situated in Baleares, justifies the application of the RSS clause by the Court of First Instance no. 1 of Valencia in its court order of the 25th June 2020, and it ratifies the precautionary measure consisting of the postponement of 50% of the minimum rent agreed from June 2020 until a sentence is passed regarding the background/substance of the matter, the postponement being maintained for when the new hotel season begins (March 2021) if the limitations on capacity and on the arrival of European tourists are still in force. (for a more detailed analysis of this court order, please see our article of the 1st April: CLAUSE REBUS SIC STANTIBUS (“CRSS”). DECREE NO. 43/2021, OF THE 10TH FEBRUARY, PASSED BY THE EIGHTH SECTION OF THE PROVINCIAL COURT OF VALENCIA).
  • The Court of First Instance no. 26 of Barcelona, in its court order 70/2021, of the 22nd February(Hotel Sir Victor, of Barcelona), partially adopts the requested precautionary measures, upon understanding that the hotels of Barcelona are able to continue hosting clients who travel to the city for work purposes, as well as to redirect their business to that purpose, and even make use of their restaurant. In addition, it affirms that the claimant company forms part of an international business group, meaning that it can compensate the losses or reduction in profits of one of its hotels, with the rest of the establishments which generate more profit, without their being any serious liquidity problem in the group.
  • The Court of First Instance no. 29 of Barcelona, in its court order 78/2021, of the 8th March 2021, rejects the precautionary measure requested by a hotel company, consisting of the reduction or, alternatively, the postponement of, the payment of 50% of the rent, as of the filing of the claim until the resolution by a final ruling or, alternatively, until 2021, inclusive. The Judge considered that the requirement of good faith was not met, given that the measure deals with a long-term contract which the lessee is entitled to terminate with six months’ notice as of the fifth year, together with a variable rent according to income, hence showing that the risk of reduced income was borne by the lessee. Furthermore, the judge considers that there is no danger of procedural default, for there is no risk that the ruling passed in the principal procedure, if the claimant’s claims are upheld, will be ineffective, given that the claimant is still leasing the property and the defendant is the owner of a building in the centre of Barcelona.

 

 

Carla Villavicencio

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

16th April 2021