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New rules on rent for quarantine period

21 April, 2020 Newsletters

We continue a run of the newsletters related to the efforts of the legislator to regulate lease relations during the quarantine. Earlier we wrote about amendments to the Civil Code of Ukraine (“Rent payments are cancelled for the period of the quarantine: is it really so (Part 2)?”), however, a new legal provision has been adopted so far. This legal provision, included to the Law of Ukraine “On State Budget of Ukraine for 2020”, will replace the current one in “Final and Transitional Provisions” of the Civil Code of Ukraine. The wording is the following:

14. To establish, that during the relevant restrictive quarantine measures introduced by the Cabinet of Ministers of Ukraine aimed at preventing the spread of Coronavirus Disease (COVID-19) on the territory of Ukraine, the circumstances which the lessee shall not be responsible for in accordance with part two of Article 286 of the Commercial Code of Ukraine, part four and six of Article 762 of the Civil Code of Ukraine, shall also include measures introduced by public authorities, which prohibit certain types of economic activity using leased property, or measures prohibiting access of the third parties to this property”.

The new rule has by no means improved the provisions of Article 762 of the Civil Code of Ukraine: neither for the benefit of the lessees nor the lessors. Most would believe that it has specified the provisions of Article 762 of The Civil Code of Ukraine, but it is not the case. The new rule may only confuse participants of the lease relations.

Thus, it is being established that during the corresponding (not clear to what) restrictive quarantine measures two types of measures of the public authorities are also may be considered as circumstances which the lessee shall not be responsible for. However, why it is specified that it works only during the restrictive quarantine measures? And what interpretation should be chosen:

  • to consider the quoted above paragraph 14 of Section “Final and Transitional Provisions” of the Civil code of Ukraine as a clarification that is not actually affect Article 762 of the Civil Code of Ukraine;
  • to read “also” in this rule as episodic extension of the list of measures, which will be considered as circumstances (which the lessee shall not responsible for) under parts four and six of the Civil Code of Ukraine only during the restrictive quarantine measures.

By and large, we are to note that the new rule does not give us any certainty and, instead of creating preconditions for business unity in challenging situations, only lays the cornerstone for disputes between the business entities.

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

Kind regards,

© WTS Consulting LLC, 2020

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