Under former civil law rules, the inability to operate a business due to government measures against COVID-19 could qualify as “temporary impossibility” to fulfil the contract.
On 26 May 2023, the Belgian Supreme Court ruled that the consequences of the COVID-19 pandemic and the government-imposed lockdowns on commercial lease agreements are subject to Article 1722 (old) of the Civil Code. This article pertains to the "destruction" of leased premises and the resulting termination or reduction of lease agreements.
Before this judgment, there was uncertainty regarding whether the lockdown measures qualified as "destruction" under Article 1722 (old) Civil Code. Some tenants were required to continue paying full rent despite the lockdowns, while others received partial reductions or waivers based on varying interpretations by different justices of peace.
The Supreme Court clarified that the inability to operate a commercial business due to government measures against the COVID-19 pandemic qualifies as a "temporary impossibility" under Article 1722 (old) Civil Code, rather than a "temporary loss of enjoyment". Therefore, tenants affected by the lockdowns may now claim a reduction or full waiver of rent for the lockdown period(s).
However, the significance of this judgment is limited since many parties already reached amicable agreements regarding the impact of COVID-19 closures in over 95% of cases. Additionally, tenants may need to decide whether to reopen discussions with landlords to claim rent paid during the lockdown period or continue business peacefully, taking into account inflation and potential indexation issues. Furthermore, new agreements under Book V of the Civil Code, effective from 1 January 2023, introduce the concept of hardship, which may affect future lease agreements, though parties can choose to exclude its application.
