1. Urgent legal measures requiring enforcement in the construction field
Having in view the constraints and economic implications expected to affect the construction field as a result of the current COVID-19 pandemic crisis, the Employers’ Federation of Building Companies – FPSC – has requested the Romanian Government to undertake urgent legal measures for the benefit of investors, developers and the construction workers such as fiscal indemnifications and exemptions, prolongation of loan payments and exemptions from the related interest throughout the duration of the crisis.
Moreover, the construction sector has to face de facto problems due to the restrictions imposed by the Romanian Government which are likely to impact the development of projects and also require urgent legal solutions, such as: (i) the impossibility to prolong the term of the building permits or to obtain the issuance of new permits due to the lack of a working personnel within relevant local authorities; (ii) the impossibility to guard the construction sites given that the authorized security companies may be unable to perform their contracts; (iii) additional costs that are to be incurred for conservation of works, and (iv) difficulties in obtaining funds to continue the development of the projects and perform the payments of their employees due to the economic context.
2. Tax relief measures. State of emergency certificate
The Romanian Government has enacted certain measures designated to either postpone the payment of certain taxes (e.g., land and buildings taxes) or to grant discounts in case of early payment of taxes.
Furthermore, additional measures (including fiscal facilities) are expected to be taken for the benefit of companies that obtain a “state of emergency certificate”. These facilities would include: postponement of rent payment for the premises representing registered offices and / or secondary establishments, postponement of payment of utilities, possibility to renegotiate certain contracts.
Also, force majeure clauses in contracts concluded by small-medium enterprises holding such state of emergency certificate may be activated only after the attempt to renegotiate the respective contract (aspect that has to be proven, including with electronic communications).
3. Certain legal and contractual instruments aimed at assisting parties during this period
A. Possibility to invoke force majeure in ongoing contracts (such as lease agreements)
COVID-19 pandemic may be analyzed as a force majeure event, with the possibility of being invoked, under certain conditions, by a party who is unable to observe its contractual obligations due to such event, in order to be exonerated of liability. Thus, if successfully activated under a contract, force majeure may be granting parties the suspension, postponement or discharge with respect to their contractual obligations which are subsequent to the occurrence of the force majeure and as long as such event lasts. However, if a party wishes to activate a force majeure clause under a contract or invoke a force majeure event, the said party must observe the conditions and procedure provided under the Civil Code and relevant contract (e.g., obtaining the certification issued in this respect by the Romanian Chamber of Commerce, ascertaining that an event invoked by a party is truly a force majeure event).
B. Possibility to invoke hardship
If still available (as parties usually waive the option to make use of such legal provision via express clauses under the contract), hardship is an useful tool for adapting a contract when the execution of such contract becomes excessively onerous due to exceptional circumstances which, however, are not determining the absolute impossibility to continue the execution of the contract (e.g., in cases where a tenant still has the possession over the leased premises, and, thus, is still forced to pay rent, although its commercial activity has diminished considerably).
Nonetheless, certain conditions provided under the law must be observed in order to successfully invoke hardship (e.g., the change of circumstances have taken place after the conclusion of the contract; the parties have tried, within a reasonable term and in good faith, to negotiate the reasonable and fair adaptation of the contract). However, should the parties not be in agreement with respect to the hardship, they may address a court of law in order to either (i) adapt the contract in order to balance the contractual obligations; or (ii) terminate the contract.