On 29 November 2022, in a judgment that was published in January, the Spanish Constitutional Court declared Catalonia’s pandemic-era legislation on commercial leasing unconstitutional, as it violated the contractual freedom of the parties involved.
The Court made the ruling in response to a constitutional question raised by a lower court. The applicant before the Constitutional Court – a company – sought to suspend rent payments for a commercial property due to the severe financial impact of the COVID-19 restrictions on its business and was subsequently sued by the property owner.
The contested measure, part of Catalan decree-law 34/2020 of 20 October on urgent measures in support of economic activity, sought to regulate the leasing of business premises during the COVID-19 pandemic by imposing reductions on rents and other amounts owed when landlords and tenants failed to reach agreements.
The Court held that the affected contracts were subject to the autonomy of the will and principle of freedom of contract – as set out in the Spanish Civil Code – and that the respect for the freedom to establish rental rates formed part of the foundation of contractual obligations. The Court declared the measure unconstitutional because it did not restore the contractual balance between the parties, but instead established a legal distribution or allocation of risks, based on an objective data point – the suspension of business activity or partial restriction of use due to a government decision. The contested measure had been replaced in the meantime.
Reference: judgment 150/2022; ECLI:ES:TC:2022:150.