As we exposed recently, the clause rebus sic stantibus, constitutes a mechanism by which the revision of the contractual conditions is allowed when, due to an unpredictable and substantial change in the circumstances existing at the time of contracting, a significant imbalance in the benefits of the parties has occurred, so that compliance becomes impossible or very burdensome for one of the parties.
It is, therefore, an exception to the principle of respect for what is agreed (pacta sunt servanda), based on an alteration that produces the frustration of the economic purpose of the contract and that seeks to restore the balance between the parties.
The recent STS, Civil Chamber nº 156/2020 (Rec. 2400/2017), dated March 6, 2020, even though it was prior to the declaration of a state of alarm, produced by Royal Decree 463/2020 and with effect from March 14, it has come at just the right time to serve as clarification or interpretative confirmation to apply to the multitude of Controversies that this crisis is already expected to generate in the fulfillment of successive contract contracts.
The Civil Chamber of the Supreme Court had already developed a modern jurisprudential doctrine on the requirements for the application of the clause rebus sic stantibus (already widely applied in the 2008 economic crisis). In summary, and referring to the jurisprudence collected, among many others, in the STS 455/2019, of July 18, the requirements are as follows:
- That unforeseeable circumstances occur (extraordinary alteration of the circumstances at the time of fulfilling the contract in relation to those present at the time of its conclusion)
- That there is a direct causality between this totally unpredictable circumstance and the impossibility or extraordinary difficulty of compliance for any of the contractors (purpose of reestablishing the contractual balance)
- That the intended effects are proportional (modifying effect of the contractual relationship)
In the words of the Judgment nº 333/2014, of June 30, to cite an example, the requirements are summarized in: changed circumstances; unpredictability; excessive onerousness and subsidiarity.
The effect, in principle and in general, will be the modification and readjustment of obligations derived from the contract for each party. Only exceptionally and in the event that such readjustment is impossible, would authorize the termination or resolution.
In any case, as we already informed you from Ribelles Abogados in a previous entry, in the absence of agreement, the scope of application of the clause rebus sic stantibus, will have to be determined by a Judge. To do this, good faith (articles 7 and 1258 of the CC), equity (art. 3.2 of the CC), and greater reciprocity of interests (art. 1289 of the CC), in each specific case, must be taken into account.
In accordance with the requirements of established jurisprudence, we can clearly start from considering the current situation derived from the pandemic caused by COVID-19 and the consequent declaration of a state of alarm, as an “extraordinary situation” and unpredictable. .
The Sentence of the TS, nº 156/2020 of March 6, 2020, adds to the consolidated jurisprudential line a consideration relative to the distinction between long-term contracts (which will generally be successive contract contracts, which generate synalagmatic obligations for both parties , continued over time) and short-term contracts.
The Supreme Court declares that the clause rebus sic stantibus will have a greater probability of application in long-term contracts, ordinarily of successive tracts. Not so in short-term contracts, in which something extraordinary can hardly happen that affects the basis of the contract and is not covered within the risk of that contract.
From Ribelles Abogados we are at your disposal to help you to focus on the friendly review of the contractual conditions whose compliance has been hampered by the crisis situation we are going through; or if not possible, assess the feasibility of reviewing them in application of the clause rebus sic stantibus.
