Unforeseen circumstance
The COVID-19 pandemic and the ramifications that the pandemic would have come to have for our society were unexpected to say the least. Aside from the threat posed to public health, the measures that have been implemented by the Government of Aruba has meant that many businesses were not able to be open and generate income. This of course will have caused a strain on the company’s solvency which in turn will put a strain on the legal obligations of the company. One such an example is the legal obligation to pay rent. While one might think that a pandemic is to be considered an ‘unforeseen circumstance’ or to which ‘force majeure’ can be invoked to temporarily excuse the tenant of its obligation to pay rent to the landlord, this may not always be the case.
The applicable laws gives the landlord the discretion to offer or to accept a discount on the monthly rent due to an unforeseen circumstance. In recent preliminary judgements, the Courts have ruled that an appeal on force majeure by the tenant will not be possible. If the tenant wants to get out of its obligation to pay rent, the tenant can try to have the contract dissolved or amended due to unforeseen circumstances. However it must be noted that this is difficult to achieve, such an amendment or dissolution can only be effected through Court.
It must concern circumstances about which parties have not arranged anything in the agreement itself. For example, if the agreement does not indicate the consequences of a pandemic for the agreement. If such – unforeseen – circumstances arise, the Court can adjust or dissolve the agreement at the request of a party if an unaltered continuation of the existing agreement cannot reasonably be required. The judge can even give retroactive effect to a dissolution or amendment of the agreement. This means that the Court may rule that the dissolution of the agreement or the discounted lease payment is effective as of a date prior to the sentencing date of the Court.
Such unforeseen circumstances are circumstances that, due to the nature of the agreement or the prevailing views in society, are not for the account of the person who invokes it. The trend that can be observed in the preliminary judgements is that the decision of the Court to amend or dissolve a lease agreement will also depend factually on how much of the tenant’s revenue has been affected by the COVID-19 crisis. Another factor that plays a role for the judges is the ability to open the store again once the government has eased lockdown rules.
