Chile

On 1 December 2017, a company (lessee) and a natural person (lessor) entered into a lease agreement for an office to be used for commercial purposes. As of March 2020, the company decided to suspend the payment of the monthly rent because, due to the spread of the pandemic and subsequent restrictive measures on several economic activities, it could not use the office.

The lessor seized a tribunal in Santiago, requesting it to declare the contract terminated and to order the lessee the payment of all the rents due for the periods following March 2020. The Tribunal upheld the lessor’s claim. It declared the contract terminated and ordered the company to pay the rent due for the period March 2020 – February 2021, with the exception of the period April – August 2020. Following an appeal by the lessor, the Court of Appeal of Santiago ordered the company to pay all the monthly rents due, including those related to the period April – August 2020.

The company challenged the decision before the Supreme Court. In particular, the plaintiff argued that the impossibility to use the office located due to the measures adopted by the government should be considered as an impediment of legal nature under article 1932 of the Civil Code, which entitles the lessee to request the termination of the contract or a reduction in rent. By decision of 28 July 2022, the Supreme Court upheld the claims. In particular, the Court found that the spread of the COVID-19 pandemic constitutes a “fortuitous event” under article 1932 of the Civil Code, being an unforeseeable and irresistible external event. Based on a systematic interpretation of the law, the Court further stressed that article 1932 of the Civil Code must be understood as protecting a party to a contract from any circumstances that affect the quality of the property so as to make the property not suitable for the purpose it was originally meant to serve. In this regard, the Court concluded that the limitations imposed by the government constitute a legal impediment to the enjoyment of the property and that the lessee must be released from paying the rent for the time that such measures were in force.

Full text of the decision available at diarioconstitucional.cl es