Covid-19: Fate of the penalty payments taking effect after June 24, 2020

Ordinance No. 2020-306 of March 25, 2020 introduced a postponement of the deadlines for completing certain procedures prescribed by law or regulation, as soon as these deadlines expire between March 12, 2020 and March 24, 2020. June 2020 (date which corresponds to that scheduled for the end of the state of crisis, increased by one month).

Under the terms of article 4 of the ordinance, the penalty payments which began to run before March 12, 2020 have their effects suspended until June 24, 2020 but will regain their comminatory effect after this date.

The penalty payments which should have run between March 12 and June 24, 2020 also see their effects suspended and will regain their comminatory effect from July 25, 2020, unless in the meantime the debtors, who thus have a period additional automatic payment of one month, have fulfilled the obligations imposed on them.

On the other hand, the ordinance does not say a word about the periodic penalty payments pronounced before the establishment of the state of crisis and the effects of which were deferred to a date after that of June 24, 2020. These include, for example, orders to carry out work , under a penalty payment which will not begin to run until the end of a period (2, 4, 6 months) expiring after June 24, 2020.

The debtors concerned by these decisions do not benefit, a priori , from the delays established by the ordinance, since their situation is not covered by it.

However, they risk having difficulty fulfilling their obligations before the penalty payment that accompanies their conviction takes effect, in particular because of the restrictions imposed by the public authorities.

It is therefore on the classic ground of impossibility (as provided for by Article L. 131-4 al. 3 of the Code of Civil Enforcement Procedures ) that they will have to position themselves to have it judged that they was impossible to perform the obligations imposed on them, due to a "foreign cause".

The question then arises as to whether the restrictive measures imposed by the public authorities do indeed constitute a “foreign cause” within the meaning of Article L. 131-4 al.3.

For the record, the "foreign cause" must, to be admitted, take on the characteristics of force majeure: be irresistible (it made execution impossible for the debtor) and unforeseeable (it could not be foreseen), the judges having , in the matter, of a sovereign power of appreciation.

It is therefore on a case-by-case basis that the debtors will have to demonstrate that they were unable to perform their obligations because of the restrictions imposed by the public authorities.

As such, it is to be feared that the theoretical demonstrations will not be sufficient and that, on the contrary, it will be necessary to establish in a detailed manner, with supporting evidence, the reality and the extent of the obstacles having made the execution impossible.

Moreover, it is not impossible that the judges, in the assessment that they will make of the situations, enter into the details and seek to know if the obligations of the debtor could not have been executed at least partially.

Thus, in the context of work to be carried out within a certain period, it could be that the debtor who would have suspended all activity, is subsequently criticized for not having continued the execution of what could be despite the state of health crisis (establishment of plans and work schedules, conclusion of contracts with future subcontractors, etc.).

The debtors concerned would therefore be well advised to sort out the obligations that are truly impossible to perform and those that could, despite everything, give rise to a start of performance.

Above all, they should take care to properly document their steps in order to provide themselves with proof, not hesitating either to be transparent with their creditors, who will be able to reproach them all the less for having been negligent if they have been informed of the implementation difficulties encountered.

The teams of the firm Arst Avocats remain at your disposal to assist you in the context of such procedures.

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