A number of district courts and courts of appeal have now ruled on cases concerning rent reductions during the coronavirus crisis. We discuss this in the articles below. The Limburg District Court recently decided to questions referred for a preliminary ruling to be submitted to the Supreme Court.
Heineken
The case concerns Heineken Nederland BV, which leases property and sublets it to the operator of a hospitality business. Heineken has decided to waive the rent for April and May 2020 for the operator of the hospitality business as a gesture of goodwill in light of the restrictive measures imposed by the government on the hospitality sector in connection with the coronavirus crisis.
Heineken is asking the landlord of the premises to contribute to this by agreeing to the pass-through of one of these two months. This will be done by deducting one-sixth of the monthly rent from the rent for the months of July to December 2020 inclusive. Heineken will implement this proposal itself by paying the landlord a reduced rent.
The landlord believes that Heineken is “handing out freebies”. Nowhere in the court proceedings was it established that the operator of the hospitality business had asked Heineken for the rent reduction. Furthermore, the landlord himself also operates hospitality businesses, the premises of which he owns and for which he receives no reduction on his mortgage payments. By passing on part of the rent reduction received from Heineken to him, he is supporting his competitor.
Questions to the Supreme Court
The Limburg District Court recognises a certain social need to share the enormous damage caused by the coronavirus measures between tenants and landlords. However, it is not clear to the Court how this can and may be given legal form. The questions the Court is putting to the Supreme Court are as follows:
- Should the closure of the hospitality sector, imposed by the government as a result of the coronavirus crisis, be regarded as a defect (within the meaning of Article 7:204(2) of the Dutch Civil Code)?
- If so, on the basis of which criteria should the extent of the rent reduction be assessed?
- Or does the restriction on the use of the rented property constitute a unforeseen circumstance which could lead to a reduction in rent?
- If so, which circumstances of the case are taken into account when determining or apportioning the damages?
Until the Supreme Court has ruled, the case law of the district courts and courts of appeal will continue to apply. Hopefully, the Supreme Court will provide clarity soon.