Introduction
In order to deal with the epidemiological emergency from Covid-19, the Prime Minister’s Decrees of 8, 9, 11 and 22 March 2020 provided, inter alia, the mandatory suspension of several commercial activities, with the sole exception of those considered essential.
These containment measures are clearly expected to have significant negative consequences for the those who carry out the suspended commercial activities. In particular, as a result of the decrease of their business volume, operators may find it difficult to handle the fixed costs arising, first and foremost, from their commercial lease agreements.
We therefore consider it useful to provide a brief overview of the legal remedies available to the tenants to deal with this emergency and, more precisely:
- temporary impossibility of the performance (“impossibilità sopravvenuta temporanea”);
- unreasonable onerousness (“eccessiva onerosità”);
- withdrawal for serious reasons (“recesso per gravi motivi”).
- a) Temporary impossibility of the performance
With reference to such subject, pursuant to Article 1256 of the Italian Civil Code (“Permanent impossibility and temporary impossibility”): (i) if the impossibility of the performance is temporary, the debtor, for as long as such impossibility is continuing, is not liable for the delay; and (ii) the obligation is terminated if the impossibility, having regard to the obligation’s title or the nature of its object, lasts until the debtor can no longer be considered bound to perform, or the creditor is no longer interested in obtaining the performance.
Moreover, in accordance with Article 1464 of the Italian Civil Code (“Partial impossibility”) if the impossibility of an obligation is partial, the other party is entitled to obtain a proportional reduction of its obligation or can withdraw from the contract if it has no appreciable interest in a partial performance.
Applying the principles set out above, the tenant whose activity has been suspended by the containment measures issued by the Italian authorities may therefore invoke the rules of the impossibility of the performance in a judicial proceeding, albeit limited to the payments due for the period of suspension.
- b) Unreasonable onerousness (“eccessiva onerosità”)
The remedy of the termination of the contract for unreasonable onerousness is regulated by Article 1467 of the Italian Civil Code (“Contract with consideration services”) according to which, in contracts with continuous, periodic or deferred performances, if the obligation of one party becomes excessively onerous due to extraordinary and unforeseeable events, the party liable for such performance may request the judge to terminate the contract.
Since the court decisions on the applicability of the remedy in question to commercial lease agreements are conflicting, the availability of this mechanism shall have to be evaluated on a case-by-case basis by the judge, taking into account the nature, methods and timing of the reciprocal performances related to the contract, as well as the actual presence of “extraordinary and unforeseeable” events.
Apart from the above, however, the consequence of the statement of unreasonable onerousness will be, as anticipated, the termination of the contract, which may not be an optimal solution for those who would only want a reduction of the fees during the crisis period.
- c) Withdrawal for serious reasons (“recesso per gravi motivi”) pursuant to Article 27 of Law No. 392/1978
The “serious reasons” that allow the withdrawal are unforeseeable facts, not depending on the will of the tenant and occurred after the lease agreement that make the continuation of the lease burdensome, even if only for economic reasons.
The burden of proof of the “serious reasons” lies with the tenant. Therefore, in the case of any objection by the landlord, the court’s decision shall be based on a case-by-case assessment, to be made taking into account, inter alia, the duration of the event in relation to the duration of the contractual relationship.
Even in this case, however, the presence of “serious reasons” would necessarily lead to the termination of the contract. In addition, it is worth remembering that the right of withdrawal for serious reasons makes it impossible for the tenant to receive the goodwill compensation otherwise due by law.