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Retailers closed during Covid-19 will have to pay rent

Published on July 19, 2022 by Pierre Belhache - 4 mins reading time
Professional Companies Case law

At the end of June, the French Supreme Court ruled that shopkeepers forced to close during periods of confinement had to pay their rent. According to the high court, confinement does not constitute force majeure.

Total rental income estimated at over 3 billion euros

During the spring 2020 containment period, almost half of all retailers had to close their doors to stop the virus spreading. The French Ministry of the Economy and Finance estimates the total amount of unpaid rents and rental charges at over 3 billion euros, even though companies were able to benefit from support measures and assistance schemes (solidarity fund, fixed costs and rental assistance).

Several professionals have lodged appeals with the French Supreme Court (Cour de Cassation) to obtain a rebate on their rents. The court has chosen three of them to rule on all legal grounds.

Unjustified loss of the item

In all three cases, which pitted the managers of small shops against their landlords, the Court ruled in favor of the latter, finding that the ban on leaving the premises was a "general and temporary measure" not attributable to the landlords, and whose sole aim was to "preserve public health". It therefore did not have the effect of permanently depriving the shopkeepers of the use of their premises.

Considering that "a tenant may request a reduction in the price of the lease or its termination if he has lost the thing he is renting under fortuitous conditions", the Cour de cassation concludes that shopkeepers are not entitled to claim a reduction in their rent. Indeed, the ban on receiving the public under the state of health emergency cannot be equated with a loss of the property.

 

No force majeure

The other argument rejected by the Cour de cassation was that of force majeure. Article 1218 of the French Civil Code specifies that, in contractual matters, force majeure is recognized when an event is beyond the control of individuals and is by nature unavoidable. The event must be external, unforeseeable and unavoidable.

"The measures taken by the public authorities to combat the spread of Covid-19 did not preclude the application of ordinary law to the contractual relationship", the Court ruled. In other words, tenants who are not unable to fulfill their obligation to pay rent cannot invoke force majeure to derogate from this obligation.

Following publication of the Court of Cassation's decision, the lawyers for the various businesses concerned reacted.

"This is a disappointing decision for the lessees, who will now consider how to hold the State liable," Guillaume Hannotin, lawyer for the Action discount chain, told AFP.

 

Court of Cassation, Civil Division 3, June 30, 2022, 21-19.889

Court of Cassation, Civil Division 3, June 30, 2022, 21-20.127

Court of Cassation, Civil Division 3, June 30, 2022, 21-20.190