Spain's Supreme Court rules Covid-19 not a force majeure event exempting payment of rent on business premises

A lessor of business premises brought an eviction action for non-payment and requested the termination of the rental agreement and, additionally, the payment of the outstanding rents.

The defendant company, the lessee, objected, alleging, among other things, that they could not pay the rent due to a force majeure event. The defendant's argument was based on the economic loss they had suffered because of the restrictions imposed by the Spanish government during the Covid-19. The defendant argued that "the existence of a situation of non-payment, which was the ground for the eviction, could not be assessed". At the same time, the lessee filed an ordinary lawsuit invoking the rebus sic stantibus clause and requesting a review of the payment of the rent. For this reason, the lessee requested the suspension of the eviction procedure on the ground of civil "prejudiciality".

The court of first instance rejected the exception of civil prejudiciality and accepted the eviction for non-payment. The defendant appealed against this decision, but the Provincial Court uphold the decision of the court of first instance. The defendant then filed a cassation appeal and requested  once again that the eviction was suspended on the ground of civil prejudiciality.

Covid-19 and force majeure

The ruling number 1070/2024 of the Plenum of the Spanish Supreme Court of 24 July denied that the Covid-19 pandemic was as a force majeure event and, therefore, the non-compliance with the obligation to pay the rent of the business premises could not be justified.  

The High Court of Justice stated that, in order for the lessee to be released from their obligation to pay the rent due to a force majeure event, performance must be impossible (articles 1182 and 1184 CC). In the case at hand, the benefit due by the debtor (lessee) as a monetary debt was still possible and, consequently, the Hight Court of Justice rejected the force majeure allegation.

According to the court, the circumstances put forward by the lessee were not strictly speaking a force majeure event. However, these circumstances coincide substantially with the doctrine of the rebus sic stantibus clause because, according to the lessee, the reason why they could not pay the rent was their difficulty to generate income as the result of the measures adopted by the government on account of Covid-19.

The need for a counterclaim

The Plenum of the Supreme Court, however, placed the main focus on the procedural vehicle used by the lessee. The rebus sic stantibus clause was alleged not in the eviction hearing where the payment of the rent was claimed, but in a different ordinary trial.

The Supreme Court rejected the request for a suspension of the eviction procedure due to civil prejudiciality, and reproached the lessee for not having alleged the rebus sic stantibus clause in a counterclaim, where the reasons why they could not pay the rent should have been stated. As they were ruling on an eviction action where additionally payment of the rent was claimed, the case was to be ruled on a plenary proceedings with a res iudicata effect and, therefore, a counterclaim should have been filed.

In order to justify the filing of a counterclaim, the ruling referred to the Constitutional Court's decision number 106/2013 of 6 May 2013.

In this resolution, the Constitutional Court highlighted that the core concern was how to limit the claims being exercised. So, article 400.2 of the Spanish Civil Procedure Law – in connection with article 222.2  of the same Law – clearly refers to  the fact that the plaintiff's procedural burden (or the defendant who files a counterclaim) shall state in the claim all the facts, grounds and legal rationale on which the claim is based.

Osborne Clarke comment

The court interpreted, based on its previous case law, that the situation raised by the lessee was not the impossibility to perform, but the difficulty to comply with their contractual obligations. In this sense, it should be remembered that a monetary debt is a generic thing subject to the rule that "genus never perishes". 

When it comes to filing a counterclaim, it is essential to act with extreme caution and define properly the object and scope of the claims that are being exercised so as to avoid the loss of procedural opportunities.