With all certainty, since Royal Decree 463/2020 of March 14 declared the State of Alarm, surely you have become familiar with the so-called “rebus sic stantibus” clause, the Latin phrase that only slipped from time to time in judicial writings, and even less frequently in the judgments of our courts.
In recent months, there is not a week in which the press has not echoed judicial decisions that are presented as pioneers for allowing substantial reductions in the payment of the rent of business or industrial premises, or for adopting precautionary measures that allow relieve the economic pressure of the obliged to certain payments.
Thus, for example, the Barcelona hotelier got off to a good start. In the face of the crisis generated by COVID-19, his expectations of achieving a significant reduction in the rent to which he was forced by the lease of 27 properties that he operated under the regime were fulfilled. of tourist accommodation and whose activity was suspended due to the declaration of the State of Alarm.
The timid reopening of tourist accommodation with strong travel restrictions worldwide, determines that any resumption of the business will mean substantially lower economic results than the previous ones from the pandemic.
In other cases, precautionary measures have been obtained that imply the non-execution of guarantees or guarantees provided, or the prohibition of including the debtor in delinquent files.
The application of this clause has been applied in a traditional and mostly restrictive way by our courts, but the crisis generated by COVID-19 is opening the door to its application, – for the moment, mainly on a precautionary basis -, although with different results. throughout the national territory, which generates a certain distrust and prevention.
From the first months of the pandemic, voices were raised requesting the incorporation of the rebus sic stantibus clause into national legislation as occurs in German or Italian regulations, or in the style of the so-called hardship clauses of the Anglo-Saxon world.
Decree Law 34/2020, of October 20, of the Generalitat of Catalonia on urgent measures to support economic activity carried out in leased business premises has timidly opened the door to this possibility by anticipating income reductions linked to certain circumstances that Catalan courts are already applying.
It is true that the news has come to us especially from the leasing area, a very relevant area both for its importance in legal traffic, and for the volume it represents in the economy as a whole.
And here, is when you should ask yourself, “And to me, does the rebus serve me?”
That is, you, an entrepreneur who does not have leasing problems, a manufacturer that owns your own warehouse, it is logical that you wonder if, given the circumstances, this clause can also be extrapolated to other business areas such as work execution contracts in which Compliance with the deadline is decisive, supply contracts, contracts in which you have not been able to meet the delivery deadline, or that construction contract in which you have had to paralyze the works of a building during confinement.
In these, and in endless cases, we can analyze each contract that concerns you in order to assess the eventual application of this clause in a way that allows you to save, modify or terminate the contract in the best conditions for both parties.
The questions that we will have to assess will basically be the following:
- Has there been an extraordinary and unforeseeable alteration of the elements that we took into account when we signed the contract? With the declaration of the State of Alarm, the answer will be mostly affirmative, but this will not be enough.
- The alteration that hes suffered, has it frustrated the purpose of the contract itself? Is it causing excessively onerous harm only to me but not to the other party? If so, we will advise you to prepare a good accounting expert test that reflects the reality of the business before and after the pandemic. It is not a question of convincing the judge that there are losses, but of demonstrating their scope, their link with the pandemic, as well as the impossibility of absorbing them with other measures.
- Have the parties negotiated the possibility of modifying the contract? No way to reach an agreement? At this point, an attorney will help you in a true, flexible, imaginative and innovative negotiation.
- And finally, in application of the rebus clause , what solution are we going to ask the court? Here you have to look for a modification or termination of the contract that is the most fair and equitable solution for both parties as a formula to obtain from the court the resolution that interests you the most.
As you can see, the possibilities are endless. And as lawyers we can help you find imaginative solutions to many of the problems that this crisis has generated for us because you, precisely you, can also use the “rebus”.
For further information, please contact:
Gloria Vinyals, Lawyer
Bufete Mañá-Krier-Elvira, Barcelona
e: se.kmb@vg
t: +34 93 4878030
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