The impact of COVID-19 on the obligations of the tenants
Both the spreading of COVID-19 and the measures taken by the government in order to prevent its spreading deeply impacted the economy and that lead the tenants struggling to pay their rents.
Furthermore, the tenants may not be able to fully and freely enjoy the leased premises.
Since the government did not take any action so far in this concern, courts must assess the parties’ liabilities.
Thus, are the tenants entitled to suspend the payment of the rents or renegotiate the lease contract during these exceptional circumstances?
Are the tenants entitled to claim for an event of force majeure?
An event of force majeure may excuse one party to a contract from performing its contractual obligations, suspending the performance.
Under the Algerian practice, even in the absence of a clear definition in the law, force majeure is defined, in compliance with the international standards, as an unforeseeable and unavoidable event, which makes the execution of the obligation impossible.
According to the article 467 of the Algerian Civil Code, the obligation of the tenant is to pay the rent. Indeed, money is a fungible good and can be replaced, so performing a payment is theoretically never impossible.
In other words, even if the tenant is severely affected by the impact of the crisis, legally its obligation to pay rent does not become impossible.
Therefore, in the event of non-payment, the tenant’s contractual liability can be raised.
Is there a possibility for the tenant to suspend the lease contract ?
The CFL2020 has not provided an updated definition of the beneficiaries. Nevertheless, article 54 of financial law of 2010 provided that investors duly registered in the commercial register whose activity is directly linked to the production chain purpose, are eligible for this authorization.
Indeed, beneficiaries should also justify having an infrastructure suitable for operating the imported production chain.
Thus, the ratio of this provision is to be read in the framework of the politics aimed to promote the investments and it does not cover trading transactions.
Could the tenant have the right to renegotiate the lease contract?
Under the Algerian Civil Code, the tenant could be entitled, under special circumstances, to renegotiate the terms of the leased contract, including its price.
Indeed, article 107 of the Civil Code provides that the obligations must be executed in good faith.
Yet, with the impact of COVID-19 as exceptional circumstance, the parties are obliged to renegotiate in good faith, in particular, the terms and deadlines for payment.
Also, under the same article, when the performance of an obligation is not impossible yet it becomes extremely burdensome, it is possible to ask the judge to renegotiate the price of the contract.
In any case, to safeguard its rights, the tenant must notify the lessor of the times of the damage suffered.