Unable To Perform Business Activity Due To Covid-19- Can You Claim Reduction In Rent?

World News

The force with which the global pandemic is flaring up and the reaction to it has heightened the concerns or disputes between the lessor and lessee in UAE.

It is protected to state that landowners and occupants will from now on carefully review certain critical, yet not generally used in most circumstances such as force majeure. At this moment however, the COVID-19 pandemic’s effect on organizations and business activities is raising vulnerability under business rents about issues best tended to with proactive evaluation from occupants and proprietors in regards to their rent commitments.One of this situation was recently dealt by Rental Dispute Committee in Dubai and is elaborately discussed by Property Lawyers of Dubai.

In a recent judgment of Rental Dispute Committee under case number 2020/04006/02 and the counter case 2020/04604/02, the court examined the situation of Coronavirus being a force majeure and issued a judgment assisting the tenant in unexpected circumstances.

Case of the Plaintiff

Plaintiff (tenant) registered the case against the defendant (landlord) under a commercial lease to decrease the rental amount from AED 1.7 million to AED 1.1 million per annum from 01/03/2020 till the authorities allow to reuse the commercial property (which was temporarily shut by the order of Ministry of Economy as a preventive measure in COVID-19) and requested the court to order the other party to return the rental cheque for such time.

The Case of the Defendant

The Defendant (Landlord) on the other hand requested the court to order the plaintiff to pay AED 875,000 as pending rental amount and to pay 9% interest from the date of delay in payment to fulfill its contractual obligations under the Lease Agreement.

The rationale behind plaintiff’s claim

 

 

 

JUDGMENT

Decrease in Rent

The court held that as per the documents submitted by both the parties that the rental contract is valid until October 2020 and the plaintiff does not have the right to decrease the rent amount during the continuity of the contract. However, she can seek for decrease in rent 90 days before the expiry of the contract. Therefore, the court rejects plaintiffs request to decrease the rent.

Claiming the Post-Dated Cheque

The court herein confirmed that due to the current situation and temporary closure of business of the plaintiff whose activity as per the trading license deals in sports (as per the order of Ministry of Economy to shut all sports activities from 15 March 2020) the plaintiff has been effected by the impact of such regulation. Therefore, the court accepted the plea of plaintiff and offered relaxation on the rent for the said period (wherein the activities were closed by the government).

Importantly, the court ordered the other party to return the cheque to the plaintiff.

The present circumstances of the case, represented well by the Legal Consultants allowed the Plaintiff to seek a relaxation in the rent from the time the commercial property was temporarily shut upon government order. Importantly, if you find yourself in such similar situationFree Articles, it is better to seek assistance of Best Lawyers in Dubai to understand the critical boilerplates in your lease agreement to receive a favorable judgment.