Presentation of Article 14 of Law No. 2020-1379 of November 14, 2020, authorizing the extension of the state of health emergency and containing various measures for managing the health crisis
The context of the establishment of Law 2020-1379 of November 14, 2020
To address the Covid-19 epidemic, a new state of health emergency was temporarily established in the Public Health Code by the law of March 23, 2020. It remained in effect for almost 16 weeks, until July 10, 2020, after being extended by the law of May 11, 2020. It was on this basis that the nationwide lockdown was decided in the spring of 2020.
Given the resurgence of the epidemic, this exceptional measure was again declared by a decree of October 14, 2020 , from October 17 for one month.
Law 2020-1379 (hereinafter "the Law") extends the state of health emergency for three months, until February 16, 2021 inclusive, across the entire national territory. The transitional regime for exiting the state of health emergency is also extended until April 1, 2021. This will allow the Prime Minister and the prefects to take certain measures once the state of health emergency has ended.
The Law also authorises the Government to reinstate or extend, by way of ordinances, the provisions which it had taken during the first wave of the Covid-19 epidemic (aid to businesses, partial unemployment, labor law, deadlines for procedures and hearings of administrative and judicial courts).
of the Law provides for a new mechanism designed to protect tenants of professional or commercial premises in which the activity carried out has been affected by an administrative closure decision or by the health restrictions implemented.
Presentation of article 14
The measures taken
Rents and rental charges relating to professional and commercial premises operated by companies administratively closed or whose activity is particularly affected by the health restrictions implemented remain due however , failure to pay will not (immediately) be penalized.
This is why the companies concerned cannot :
- incur interest, penalties or any financial measures;
- any action, sanction or means of enforcement against them for delay or non-payment of rents or rental charges relating to professional or commercial premises in which the activity carried out is affected by an administrative police measure.
The text also specifies that:
- Real and personal guarantees ensuring the payment of the rents and rental charges concerned cannot be implemented;
- the landlord cannot take precautionary measures;
- Enforcement proceedings that may have been initiated by the landlord against the tenant for non-payment of rent or rental charges due are suspended.
These provisions are a matter of public policy but do not preclude compensation within the meaning of Article 1347 of the Civil Code.
The companies concerned
Natural and legal persons under private law carrying out an economic activity affected by an administrative police measure taken pursuant to Article 1 – I, 2° and 3° of Law No. 2020-856 of 9 July 2020 organizing the exit from the state of health emergency or Article L.3131-15-1 5° of the Public Health Code (administrative closure measure or health restrictions).
The eligibility criteria for the scheme must be specified by decree, which will determine the thresholds for staff and turnover of the persons concerned as well as the threshold for loss of turnover observed as a result of the administrative police measure.
Although the precise application criteria are not yet known, it can be assumed, at this stage, that they will be similar to those established within the framework of the measures taken in March 2020, namely:
- companies with a turnover of less than 1 million euros, less than 60,000 euros in taxable profits and a workforce of 10 employees or fewer
- businesses forced to remain closed until further notice (non-essential shops, cafes, bars, restaurants, etc.) or which have suffered a significant loss of turnover (70% in March 2020)
The application of these measures over time
These measures apply:
- To the rents and rental charges due for the period during which the company's activity is affected by an administrative police measure.
- Retroactively from October 17, 2020 and until the expiry of a period of two months from the date on which the activity of the company concerned ceases to be affected by the administrative police measure.
Late payment interest or financial penalties will only be due and calculated from the expiry of the aforementioned two-month period.
Critical analysis
Although these measures are clearly similar to those taken under Ordinance 2020-316 of March 25, 2020, they appear to be even more protective of the interests of tenants whose business is affected.
The Law provides, in an unprecedented manner, that:
- The landlord can no longer take precautionary measures to guarantee the payment of rents and rental charges from October 17, 2020 until the expiry of a period of two months from the date on which the activity of the companies concerned ceases to be affected by the administrative police measure.
- All enforcement proceedings initiated by the landlord against the tenant for non-payment of rent or rental charges are suspended.
It remains to be seen whether the impossibility for the landlord to carry out precautionary measures and to pursue enforcement measures that he had already undertaken to recover rents and rental charges "due" only concerns rents and rental charges due from October 17, 2020 or whether it also concerns those that had already fallen due before the entry into force of the system.
In the second case, the landlord's options for action would be truly paralyzed since he would be unable, for the entire duration of the lockdown and up to two months later, to continue the recovery of his unpaid rents and rental charges, regardless of whether they were due before October 17, 2020.
Only time will surely provide the answers we are looking for…
