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One of the problems that the Covid-19 pandemic is creating worldwide is the havoc that it is causing in the economy the measures impose by the authorities in relation to economic activity.

In Spain, depending on the autonomous region that the activity is based, there are more or less permissive/restrictive measures, which actually vary from week to week.

What is happening with the rental contracts for commercial premises?

Undoubtedly, each month hundreds of businesses close starved by the combination lack of income and high rents. As “relatively” little time has elapsed, there are hardly any judicial decisions that deal with this matter, so a judgement issued by the Barcelona court number 20 (which can still be appealed) ordering the reduction of 50% of the rental paid by a tenant in his premises, in application of the clause “rebus sic stantibus”, and based on the loss of income of the tenant due to Covid-19, has marked a possible path for other tenants of business premises, including shopping centres .

The ruling accepts the petition made by the plaintiff to reduce the amount of the rent by 50%, arguing that the request is proportional since the losses in the business are greater than 50%.

It must be borne in mind that the landlord was a large owner, although perhaps the resolution would have been the same in the case of a private owner since the Court did not apply the government decree (RDL 15/2020), but rather the clause “rebus sic stantibus”.

 What does the “rebus sic stantibus” clause refer to?

It is estimated in the Judgment that the parties, when entering into the lease agreement, could not foresee the existence of this extraordinary situation such as the Covid-19 pandemic and therefore it is possible to apply the “rebus sic stantibus” clause.

What is the clause?

It is the legal doctrine allowing for a contract or a treaty to become inapplicable because of a fundamental change of circumstances. In public international law the doctrine essentially serves an “escape clause” to the general rule of “pacta sunt servanda” (promises must be kept).

In this judicial process, for example, it was proven that the tenant tried to reach an agreement expressly requesting the reduction of the rent to 50% on understanding that his business had been reduced in income by more than 50%, proving that the tenant could continue to pay rent although only at 50%.

The judgment compels the landlord to reduce the rent retrospectively from April 2020 to March 31, 2021. The tenant has also been awarded the costs of the trial.

This clause has been used in many cases throughout history for different unpredictable events.

However, its application has also been rejected recently, for example to suspend the eviction of a woman who judicially requested a rent reduction. She claimed that she could not afford the cost in view of the extraordinary situation created by the pandemic. The judge rejected that the lawsuit filed referring to the aforementioned clause enervates the eviction action and causes prejudice, as well as the suspension of the action because the tenant was already paying  30 percent of the rent.