Patrimonial Responsibility
of the Administration

Loss of profits in businesses and activities

The patrimonial responsibility of the Administration derived from the pandemic , be it state, regional and / or local, can be pursued for different causes and also by different means. We will refer in a very summarized and practical way to those that our Firm is developing with all its clients, also international, for companies that are viable but in sectors that, however, are not: hostelry, restoration, tourism, distribution and services, culture, snow, cattle raising…

To consider the appropriate procedure, one must start from a premise that for our Firm is essential; financing through ICO COVID allows the business to be maintained but will ultimately have to be paid back with the performance of the business itself which, being less due to the pandemic, will have to generate resources bear the payments of this financing, which supposes an unnecessary risk since in many cases it will not be possible to meet the ordinary expenses and the debts contracted.

It is at this point where the entrepreneur is offered to study the financial situation in which he is and in which he will find himself in the coming months, as a consequence of the pandemic due to the financing obtained and the ERTE approved, to restructure and / or refinance it, adjusting the material and human resources to the future reality, so that the company is properly dimensioned to meet its real obligations. The possibility of restarting a new activity without risk of business succession will also be assessed.

Sometimes we will propose the request for bankruptcy with the sole purpose of agreeing with all of them with a that takes between 30 and 50% and a payment delay of up to ten years , with which the debt contracted could perfectly be assumed.

And in case of having to go to the extinction of the company, the exoneration of the unsatisfied liability will be sought ( second chance ) so that the entrepreneur can start his activity without having to bear previous debts.

In addition, the Firm can study the adaptation of the income of the business premises that the entrepreneur operates, requesting its adjustment to the temporary closure and openings with limited capacity so that the income is adjusted exactly to all this and, where appropriate, to the reality of the current market. If the eviction has been initiated by the property due to non-payment of rent, the request for precautionary measures to suspend it will be proposed until the litigation is decided to reduce the rent that must then be filed, as some Courts have already ruled.

Regarding the payment of rents for the leased premises, the Firm applies the rebus sic stantibus clause before the Courts and Tribunals since there is no reference to it in the current regulations, being, therefore, judicial interpretation, as it has already been the Supreme Court had the opportunity to rule on October 31, 1963 and currently lower courts as the occasion of the pandemic.

The precepts that support this action are all of the Civil Code :

• 1213 : “If the circumstances that served as the basis of the contract have changed in an extraordinary and unpredictable way during its execution, so that it has become excessively onerous for one of the parties or the end of the contract has been frustrated, the contractor who, given the circumstances of the case and especially the contractual or legal distribution of risks, is not reasonably required to remain subject to the contract, may request its revision, and if this is not possible or cannot be imposed on one of the parties, the former may request its resolution. The claim for resolution may only be upheld when it is not possible to obtain from the proposal or proposals for revision offered by each of the parties a solution that restores the reciprocity of interests of the contract. ”
• 1182 : “The obligation that consists in delivering a certain thing will be extinguished when it is lost or destroyed without fault of the debtor and before it has become delinquent. ”.
• 1184 : “The debtor will also be released from the obligations to do when the provision is legally or physically impossible”.

What can collide with article 1105: “Outside of the cases expressly mentioned in the Law, and those that are so declared by the obligation, no one will be responsible for those events that had not could have been foreseen, or that, foreseen, were unavoidable "; that is to say, the cases of fortuitous event or force majeure.

But understanding these effects alone that the coronavirus epidemic as an unpredictable, unforeseen and inevitable event, the Supreme Court in judgment of March 14, 2021 (curiously the same day and month that the declaration of the state of alarm) declares that “the appreciation or not of a fortuitous event or force majeure comes to be redirected to the determination of what standard of diligence was required of the concrete required in each case ... possibly as a consequence of everything above has declared that the so-called exorbitant benefit cannot be demanded to prevent damage or overcome difficulties that would have required absolutely disproportionate sacrifices ”.

In this way, the Firm will pursue the suspension of the rent payment in application of the rebus sic stantibus clause due to the closure or reduction of the activity given that there has been a substantial and extraordinary alteration of the contract conditions ; in particular when unforeseeable supervening circumstances occur that cause an exorbitant disproportion out of any calculation between the benefits of each of the parties, since the business does not obtain performance and it is about allowing the situation to be overcome and the contract to fulfill the duration that was granted.

And, if there is an insurance policy with coverage for loss of income or loss of profits, they would propose to claim the contracted amount from the insured if it has not been singularly excluded and signed , as a court has already had occasion to pronounce itself.

Having said all of the above, it should be noted that on March 14, 2020, the statute of limitations for the claim to be filed should be interrupted, since it would be one year from the first declaration of the state of alarm and the first confinement but not, as we understand it, to formally claim before the Courts because we advise waiting to know the result that other claims already in progress have and thus act on insurance.

Action that, as at the beginning, we indicated we would seek in two different ways: a) violation of the fundamental right to work and equality, among others; and b) claim for damage caused by the actions of the Administration . And this because the damage is effective, economically assessable and individualized.

In the first case, the right would be defended , as the toilets rightly did with regard to the lack of sanitary materials to carry out their work , without the need to file a prior claim and with preferential and fast processing.

And in the second, with defense of the unlawful act of the Administration justifying the damage and the causal relationship with that act, demanding the payment of the amount that expertly determines and that our Firm focuses on the loss of complete billing in confinement and partial due to capacity limitations .

To do this, we would be based on the following precepts:

• Article 106.2 of the Spanish Constitution : “Individuals, in the terms established by law, will have the right to be compensated for any injury they suffer in any of their goods and rights, except in cases of force majeure, provided that the injury is a consequence of the operation of public services ”.
• Article 3.2 of Organic Law 4/1981 , which regulates states of alarm, exception and siege: “those who suffer, directly, or in their person, rights or property, damages or losses for acts that are not attributable to them, they will have the right to be compensated in accordance with the provisions of the law. "

It is known to all that the pandemic was unpredictable and that the Administration will surely defend against this claim that it is a case of force majeure and that the measures taken are administrative activities of general interest and, therefore, within the normal operation of the Administration ( how can the Administration be required to act when it is not imposed by law? ).

In this way, the origin of the claims for patrimonial liability that we have exposed could be doubted. But this is not the case, since we can speak of unlawfulness, which is what allows us to demand patrimonial responsibility when no legal or other rule has been violated. Unlawfulness, which is then defined as that which produces damage that the individual does not have the legal duty to bear in accordance with the law; therefore, what is unlawful does not appear to be an administrative action contrary to the law, but rather one that causes damage.

But even more, the responsibility to demand is not so much that derived from the pandemic but rather of the administrative measures taken as a consequence of it that have caused damage, in particular, to certain sectors and not always in all territories, much less all the activity or balanced percentages, having demonstrated in sectors that have not had the same limitations, the least economic impact and with it a different distribution of public charges that violates the principle of equality.

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