COVID-19 global Real Estate legal comparison

Country comparison

To see how different jurisdictions approach the enforcement of contractual obligations, choose a topic then select two countries 

Belgium
Belgium

There is no legal definition in the current Belgian Civil Code of the Force Majeure.

This definition results from the Belgian case law.

Under Belgian case law, the “force majeure” is traditionally defined as an exceptional, and to a certain extent unforeseeable event, which cannot be avoided through the use of caution and preventative measures and renders the performance of a party’s obligations definitely or temporarily, totally or partially impossible. This requires therefore that due to a sudden and unexpected event beyond the control of a contracting party, this contracting party is impossible (and not only difficult) to execute its contracting obligations and is released/liberated from any liability.

In presence of synallagmatic contracts (such as the lease agreements), the extinction of the obligations of one contracting party due to Force Majeure implies the extinction of the obligations of the other contracting party, and as result the dissolution of the contract, and the temporal suspension of the obligations of one contracting party due to Force Majeure implies the temporal suspension of the obligations of the other party (even if the execution of its obligations is not affected by Force Majeure).

Under Belgian law, is considered as “force majeure” the “fait du prince”, being all impediment resulting from an order or a prohibition emanating from the public authority (Bruxelles (1ère ch.), 25 January 2000, J.T., 2000 p. 790).

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

The definition of Force Majeure in Zimbabwe is not codified and is largely derived from judicial precedent / case law.

Force majeure is defined as generally including “risks beyond the reasonable control of a party, incurred not as a product or result of the negligence of the afflicted party, which have a materially adverse effect on the ability of such party to perform its obligations”.

In determining the existence of a force majeure event Zimbabwean courts will take into account:

  1. the nature of the contract,
  2. the relation of the parties,
  3. the circumstances of the case, and
  4. the nature of the impossibility invoked by the defendant.

Force majeure will not apply if the impossibility is self-created; nor will it absolve the defendant if the impossibility is due to his or her fault.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

No. When the parties have agreed on a contractual definition of Force Majeure, then only such tailored contractual definition is enforceable amongst them.

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

No. There is no “State Definition” of Force Majeure. Parties to a private contract are free to contract and are bound by the agreed definition and scope of what constitutes a force majeure event in a particular contract. 

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

No. The theory of the “imprecision” related to the change of circumstances is not legally consecrated and is banned by the Belgian case law.

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

Yes. Contracts may be deemed impossible to perform because of changed circumstances in instances where the change meets the following general criteria:

  1. It must be objective and absolute,
  2. The change must not have been capable of being foreseen,
  3. The change must be neither caused by nor preventable by the party even when exercising the utmost skill, care or diligence, and
  4. It must be beyond the control of the party.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

No prohibition of opening imposed by public authorities (currently applicable for warehouses, office spaces)

The obligation for the tenant to pay the rent and others sums due to the landlord cannot be suspended on the ground of Force Majeure insofar as it is a pecuniary obligation that merely requires a transfer of funds which is still possible through the banking system. Application is made here of the principle “Genera non pereunt”.

Prohibition of opening imposed by public authorities (currently applicable for stores)

Under Belgian law, the Supreme Court consecrated the suspensive effect of the temporary “force majeure” on the synallagmatic contracts (Cass., 13 January 1956, Pas., 1956, I, p. 460).

The total lock-down of leased premises imposed by the public authorities due to the coronavirus – Covid 19 (currently limited to the stores) could be considered as a “fait du prince”. This “fait du prince” prohibits the opening of the stores and therefore hinders the landlords to provide the tenants with the enjoyment of the leased premises (considered as an essential obligation for the landlords) and causes a suspension of this obligation. Consequently, this situation would allow the tenants to also legally suspend the execution of their contractual obligations resulting from their leases, during the whole period of lock-down imposed by the public authorities, without being liable for breach of contract, by application of the “théorie des risques” (as this theory results from Cass., 13 January 1956, Pas., 1956, I, p. 460). There will be a temporarily suspension of the leases. The landlords cannot provide enjoyment of the leased premises due to “fait du prince”; consequently, the obligation of the tenants to pay the rent is suspended ; the whole lease agreements are suspended due to “fait du prince”.

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

The COVID-19 pandemic in itself does not constitute an absolute force majeure event which absolves parties from performing obligations in terms of lease agreements.

In the case of Chinyakata v Crystal Cabs & Another HC5253/14[2015] ZWHHC 660-15 it was held that:

“As a general rule impossibility brought about by vis major or casus fortuitous will excuse performance of a contract. But it will not always do so. In each case it is necessary to look to the nature of the contract, the relation of the parties, the circumstances of the case, and the nature of the impossibility invoked by the defendant, to see whether the general rule might, in the particular circumstances of the case, be applied. The rule will not avail the defendant if the impossibility is self-created; nor will it avail the defendant if the impossibility is due to his or her fault”.

In view of the above, the Court will consider the specific circumstances on a case by case basis. For example, if as a direct result of COVID-19 lockdown measures a party can satisfy the causation test in illustrating its inability to perform, such party may rely on force majeure as a defence for failure to perform in terms of a lease agreement.

Parties to a lease may therefore resort to varying lease agreements in a number of ways which include:

  1. Rent deferrals: This entails the deferral in payment of the full rental consideration or a portion of a tenant's rent for payment later, either in a lump sum or by increasing subsequent payments.
  2. Rent relief: This entails the reduction or complete waiver of rental payments for a defined period.
  3. Security deposit arrangements: This is an arrangement whereby the Landlord applies the security deposit to the rent payment due. In turn the tenant will be afforded an extended period within which to replenish the security deposit.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Zimbabwe

There is no obligation on parties to finalise the subject matter of negotiations by entering into a binding agreement. Should parties opt to enter into an agreement it is imperative to include force majeure clauses which make provision for pandemics.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Zimbabwe

There is no obligation on parties to finalise the subject matter of negotiations by entering into a binding agreement. Should parties opt to enter into an agreement it is imperative to include force majeure clauses which make provision for pandemics.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

The signing or closing of a real estate transaction could be delayed because of the occurrence of Covid 19, for instance due to unavailability of signatories or the notary public.

The principle of good faith would compel the parties to act consistently and to agree on a report for the signing or closing of the real estate transaction. Notarial purchase deed can now be signed via videoconference organiser la passation de l’acte par vidéoconférence.  Cela veut dire que les vendeurs viennent chez nous et les acquéreurs vont chez leur notaire. Cette une nouveauté, réglée par la loi) »

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

The conclusion of necessary contracts and documentation may be postponed due to the inability of parties to attend to signing original physical copies. It will also be difficult to facilitate the conveyancing process which entails filing of physical documents at relevant stakeholder offices. While the Deeds Registries Amendment Act, 2017 provides for an electronic filing system within the Deeds Registry, the necessary infrastructure is yet to be put in place.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

Generally, in Belgium, the construction agreements provide for clauses related to Force Majeure. Epidemic such as the occurrence of Covid 19 could be mentioned as an occurrence of Force Majeure or the contrary (epidemic is not Force Majeure), in which case the consequences thereof shall be governed by their contractual provisions.

If there is no contractual provision governing Force Majeure, the qualification of the occurrence of Covid 19 as Force Majeure shall be examined in accordance with the definition of Force Majeure resulting from the case-law.

Currently the Belgian authorities have adopted several measures which could be of interest for constructors:

  • Temporary unemployment due to force majeure
  • Temporary unemployment for economic reasons
  • Payment plan for employers' social security contributions
  • Payment plan for VAT
  • Payment plan for withholding tax
  • Payment plan for personal income tax/corporate tax
  • Reduction of tax prepayment for self-employed persons
  • Postponement of or exemption from payment of social security contributions for self-employed workers
  • Entitlement to replacement income for self-employed persons (droit passerelle/overbruggingsrecht/bridging right)
  • Flexibility in the performance of federal government contracts

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

The most common types of contracts especially where foreign investors are involved are the International Federation of Consulting Engineers (FIDIC) construction contracts. In these contracts, a list is provided of what may constitute a force majeure event. The said list is however not exhaustive as the standard wording therein is inclusive which may allow for circumstances such as the novel Covid-19 pandemic. In terms of FIDIC contracts the general characteristics of a force majeure event are that it:

  1. Must be beyond a party’s control
  2. Such party could not have reasonably provided against it prior to entering the contract.
  3. Which having arisen, such party could not reasonably have avoided or overcome it and
  4. Which is not substantially attributable to the other party.

With due regard to the adequate causation test, COVID-19 may constitute a valid force majeure event in construction contracts which may serve to defer obligations without the imposition of penalties as opposed to extinguishing contractual obligations.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

Under Belgian law, if obligation(s) of a contract is(are) affected by condition(s) precedent, the default of fulfilment thereof at the latest on the contractual deadline implies that the contract is extinct as of right, by application of articles 1176 or 1177 of the Belgian Civil Code.

If the default of fulfilment is due to a fault of the debtor of the obligations contracted under condition(s) precedent, the creditor thereof (i.e. the other contracting party) could claim that condition(s) precedent is(are) fulfilled and the contract is binding, pursuant to article 1178 of the Belgian Civil Code. The debtor could avoid application of said sanction if it can demonstrate the occurrence of Force Majeure.

The qualification of the occurrence of Covid 19 as Force Majeure should be examined in accordance with the definition of Force Majeure resulting from the case-law or the terms and conditions of the contract concluded between parties.

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

Conditions precedent are events or obligations which must come to pass for a contract to be considered in effect. In view of the pandemic, certain conditions precedent may be impossible to fulfil within the agreed timelines.

The period within which conditions precedent must be met is however ordinarily capable of extension, variation or waiver subject to further negotiation and agreement by the parties to a contract.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

Belgium
Belgium

It depends on the scope of the insurance contract. Generally pandemic is excluded from insurance coverage.

Key contacts:

Dirk Caestecker

T: +32 (0)2 500 15 95

dirk.caestecker@dlapiper.com

Zimbabwe

No. The extent of coverage (if any) will be determined on a case by case basis with particular reference to the wording of individual contracts.

Key contacts:

Lloyd Manokore
T: +263 242 746 787
lmanokore@manokore.com

 

 

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