The context of the establishment of Order 2020-427 of April 15, 2020
Law No. 2020-290 of March 23, 2020, concerning emergency measures to deal with the Covid-19 epidemic, notably established a state of health emergency and allowed the Government to adopt, by decree, emergency measures related to the Coronavirus-Covid-19 crisis.
In this context, an order no. 2020-306 of March 25, 2020 relating to the extension of deadlines that expired during the health emergency period and to the adaptation of procedures during this same period was adopted.
By Ordinance No. 2020-427 of April 15, 2020 , the Government intended to make adjustments and additions to the provisions taken by Ordinance 2020-306 and by Ordinance 2020-305 adapting the rules applicable before the courts of the administrative order.
At this stage, only the provisions of Articles 2 and 4 of Ordinance 2020-427 will be examined, which:
- clarify the meaning and scope of article 2 of ordinance no. 2020-306, which is not applicable to reflection, withdrawal and waiver periods;
- amend and supplement article 4 of ordinance no. 2020-306 relating to the course of penalty payments and the application of penalty clauses, termination clauses and forfeiture clauses.
According to the report to the President of the Republic which accompanies Ordinance 2020-427, details are provided regarding the conditions under which the derogative regime resulting from these ordinances (No. 2020-306 and No. 2020-305) will end.
➢ As a reminder, Ordinance 2020-306 of March 25, 2020, established a system for postponing various deadlines and due dates. It defined for this purpose a "legally protected period" which runs from March 12, 2020, until one month after the end of the state of health emergency.
➢ To date, the duration of the state of health emergency is scheduled to end on May 24, 2020 (art.4 of the law of 23.03.2020), so that the "legally protected period" would end one month later, on June 24, 2020.
➢ The order of March 25, 2020 on deadlines, like other orders adapting emergency measures to deal with the epidemic, thus defined the end of the regime they established according to the end of the state of health emergency.
The end date for this exceptional arrangement has therefore been set, at this stage, on a provisional basis. Should the end of the lockdown be organized from May 11, 2020, the end of the "legally protected period" would need to be adjusted accordingly.
Article 2 of Ordinance 2020-427
The clarifications provided
Article 2 of Ordinance 2020-306 of March 25, 2020 provides for
“Any act, appeal, legal action, formality, registration, declaration, notification or publication prescribed by law or regulation under penalty of nullity, sanction, lapse, preclusion, prescription, unenforceability, inadmissibility, expiry, automatic withdrawal, application of a particular regime, invalidity or forfeiture of any right whatsoever and which should have been carried out during the period mentioned in Article 1 shall be deemed to have been done in time if it has been carried out within a period which cannot exceed, from the end of this period, the legally prescribed period for taking action, up to a limit of two months.
The same applies to any payment prescribed by law or regulation for the acquisition or preservation of a right
Article 2 of Ordinance 2020-427 of April 15, 2020 provides for
Article 2 of the same ordinance is supplemented by the following paragraph:
"This article does not apply to reflection, withdrawal or waiver periods provided for by law or regulation, nor to the time limits provided for the reimbursement of sums of money in the event of the exercise of these rights."
Analysis
The mechanism implemented by this article 2 of ordinance no. 2020-306 of March 25, 2020 simply allows us to consider that the act or formality carried out within the initially allotted legal time (within the limit of two months), calculated from the end of the period referred to in article 1 (“legally protected period”), will be deemed to have been validly done.
The aim is to allow, retroactively (and as if the deadline had been met), what was impossible to do during the period of health emergency plus one month.
This mechanism can only work if the time limit for action is "prescribed" by law or regulation, "under penalty" of a sanction or forfeiture of a right.
➢ The time limits for withdrawing or cancelling a contract are therefore excluded from the scope of Article 2.
A contrary interpretation would have the effect of freezing all ongoing transactions.
➢ Reflection periods, before the expiry of which the recipient of a contractual offer cannot express their acceptance, are also excluded from the scope of Article 2.
This is not an action that must be carried out within a specified timeframe under penalty of sanction, but simply a period imposed on the prospective contracting party to reflect on their commitment.
➢ This exclusion also applies to the time limits provided for the reimbursement of a sum of money in the event of exercising the right of withdrawal or cancellation.
This article is interpretative in nature and is therefore necessarily retroactive.
Article 4 of the ordinance
The modifications and additions made
Article 4 of Ordinance 2020-306 of March 25, 2020 provides for
"Penalties, penalty clauses, termination clauses and clauses providing for forfeiture, when their purpose is to penalize the non-performance of an obligation within a specified period, are deemed not to have taken place or produced any effect, if that period has expired during the period defined in I of Article 1.
These penalties take effect and these clauses produce their effects from the expiry of a period of one month after the end of this period if the debtor has not fulfilled his obligation before this deadline.
The accrual of penalty payments and the application of penalty clauses that took effect before March 12, 2020 are suspended during the period defined in paragraph I of Article 1
Article 4 of Ordinance 2020-427 of April 15, 2020 provides for
"The second paragraph of Article 4 of the same ordinance is replaced by two paragraphs worded as follows:
"If the debtor has not fulfilled his obligation, the date on which these penalties take effect and these clauses produce their effects is postponed by a period, calculated after the end of this period, equal to the time elapsed between, on the one hand, March 12, 2020 or, if later, the date on which the obligation arose and, on the other hand, the date on which it should have been fulfilled.
"The date on which these penalties take effect and these clauses take effect, when their purpose is to penalize the non-performance of an obligation, other than sums of money, within a specified period expiring after the period defined in I of Article 1, is postponed by a period equal to the time elapsed between, on the one hand, March 12, 2020 or, if later, the date on which the obligation arose and, on the other hand, the end of this period."
Analysis
➢ Regarding the clauses and penalties which penalize the non-performance of an obligation which fell due during the legally protected period
The date on which these clauses and penalties will take effect is modified => the postponement is no longer fixed at one (1) month but will be equal to the duration of the execution of the contract which has been impacted by the measures resulting from the state of emergency.
➢ Addition of a mechanism for postponing the course of penalty payments and the taking effect of penalty, termination and forfeiture clauses when these penalize the non-performance of an obligation, other than a sum of money, provided for a date after the end of the legally protected period.
This postponement will also be calculated, after the end of the legally protected period, based on the duration of the contract which will have been impacted by the constraints of the lockdown.
Even after the expiry of the legally protected period, debtors of an obligation to do something will find themselves, due to the difficulties imposed by the lockdown, unable to meet the deadlines to which they have committed.
The parties to the contract remain free to waive their right to invoke the provisions of this article.
Concrete examples
First example: if a deadline was expected on March 27, 2020, i.e. 15 days after the start of the legally protected period, the penalty clause sanctioning non-compliance with this deadline will only take effect, if the obligation is still not executed, 15 days after the end of the legally protected period.
Second example: if a termination clause, resulting from an obligation that arose on April 1, 2020, was to take effect, in the event of non-performance, on April 15, this 15-day period will be postponed to the end of the legally protected period so that the debtor can still validly fulfill his obligation before the termination clause takes effect.
3rd example: a work contract prior to March 12, 2020 provides for the delivery of the building on a date which falls after the end of the legally protected period, the penalty clause sanctioning the possible non-performance of this obligation will only take effect on a date postponed by a period equal to the duration of the legally protected period.
