As the weeks go by since the Spanish government declared the state of alert in the middle of March 2020 to deal with the health crisis caused by the COVID-19 pandemic, the increase in litigation in matters relating to contracts has become evident and we are starting to see the first court decisions of minor jurisprudence which shall be our guide in this regard over the coming months.
The aphorism of Rebus Sic Stantibus or “things thus standing” (RSS) is being alleged by lessees wishing to reduce the rents for which they are creditors and being defined by the courts on a case by case basis.
In our recent article titled “CONTRACT AMENDMENT VIA REBUS SIC STANTIBUS” we refer to the Court Order issued by the Court of First Instance number 60 of Madrid, dated 30th April 2020 and that of the Court of First Instance number 3 of Zaragoza, dated 29th April 2020, which both received requests for precautionary measures based precisely upon the concurrence of the legal figure RSS.
In this sense, requests for precautionary measures have been resolved in the Court of First Instance number 1 of Valencia in Court Order dated 25th June 2020, in the Court of first instance number 2 of Benidorm in Court Order dated 7th July 2020; and in the Court of the First Instance of El Prat de Llobregat, in Court Order of 15th July 2020.
- Court Order issued by the Court of First Instance number 1 of Valencia of 25th June 2020
This is an Order issued in the context of a procedure for precautionary measures prior to the filing of a claim for the reduction of the rent of an industrial lease contract, under the rebus sic stantibus clause.
The Court agreed, as a precautionary measure, the deferment, during the procedure, of the payment of 50% of the minimum monthly rent agreed in the industrial lease contract as from the monthly payment of June 2020 until the issuance of the Judgment, and thereinafter maintaining said deferment of the rent generated as from the month of March 2021, when the new hotel season is to begin, provided that the current legal restrictions on capacity and access to the border for European tourists remain in place.
- Court Order issued by the Court of First Instance number 2 of Benidorm of 7th July 2020
In this case, the lessee filed a claim for the temporary reduction of the rent under the rebus sic stantibus clause due to the crisis caused by COVID-19, likewise requesting the adoption of an unheard of precautionary measure.
The Court agreed to the implementation of precautionary measures consisting of the suspension of the obligation to pay rent in the same percentages and for the same period of time the reduction of the rent was intended, prohibiting the lessor from filing an eviction claim during the procedure.
Thus, the Court understood that fumus boni iuris concurred or the appearance of legal standing and periculum in mora or the procedural risk of imminent and irreparable damage, which existed in said case, which may have been avoided with the implementation of the indicated measures. Likewise, a deposit of 50 Euros was requested from the lessee.
- Court Order issued by the Court of First Instance number of El Prat de Llobregat, of 15th July 2020
Pursuant to a procedure of precautionary measures prior to the filing of a claim so that the non-requirement of the obligation to pay was declared, during the period of validity of the order that forced the closure of commercial establishments and the subsequent limited opening, in application of the doctrine of “rebus sic stantibus“. By means of the requested precautionary measure, it was intended that the lessor would not enforce the guarantee constituted for the payment of the rents.
The Court agreed the precautionary measure filed for, consisting of the prohibition or temporary suspension of the faculty of the requested party, either through judicial channels or out-of-court channels, the enforcement of the guarantee (guarantee on first demand).
Therefore, in the aforementioned three cases, the Courts understood that the crisis derived from the COVID-19 pandemic was not foreseeable; that the situation had affected the financial situation of the parties requesting such measures in an extraordinary, immediate and intense manner; and agreed to the precautionary measures requested by the lessees.
We are certainly faced with a completely new situation which has generated numerous reflections in the doctrine regarding the possible application of the rebus sic stantibus clause.
In any case, said measures must be of a temporary nature, and the difficulty shall lie in determining the terms and parameters which shall serve as a basis for readjusting -if possible automatically- the provisions of the parties of the contract in question, once the exceptional circumstances have been overcome which have led to these modifications.
Carla Villavicencio
Vilá Abogados
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25th September 2020
