On June 24, 2021, the Polish Parliament adopted the Act (the “Amending Act”) amending the Law of March 2, 2020 on special arrangements for preventing and combating COVID-19, other infectious diseases and the crisis situations caused thereby (the “COVID-19 Act”).

The Amending Act has been already signed by the Polish President, announced in the Journal of Laws, and will come into force as of July 23, 2021.

The Amending Act introduces two major changes to current legislation, related to mutual obligations of parties to lease agreements or other similar agreements, on the use of commercial space (the “Agreements”). Firstly, it revokes Article 15ze of the COVID-19 Act (“Current Provision”) and replaces it with a new Article 15ze¹ (“New Provision”). The Current Provision provides for temporary expiration of mutual obligations arising from Agreements (in particular, concerning the payment of rent and service charges) during any trading bans applicable to shopping malls, if the entity entitled to use them (the “Tenant”) submits an unconditional and binding offer to the landlord to extend the lease term by the length of the ban on trading in commercial facilities exceeding 2,000 sq. m. plus an additional 6 months (the “Offer”). The Amending Act repeals the Current Provision and, therefore, once the New Provision comes into force, the Offers will no longer be validly submitted by Tenants.

The New Provision applies only to Agreements concluded before March 14, 2020 for retail premises in commercial facilities exceeding 2,000 sq. m. of sales area, regardless of the activity conducted in those premises (in particular, the sale of goods, services and catering).

Under the New Provision, all payments due to the landlord leasing the commercial space in commercial facilities exceeding 2,000 sq. m. made by the Tenants under the Agreements will be reduced to:

1. 20% of the initial payments due before March 14, 2020 – within the period of prohibition on conducting business activity; and
2. 50% of the initial payments due before March 14, 2020 – within three months of the lifting of each prohibition.

Under the Amending Act, the said reductions apply to all receivables under Agreements, meaning rent, service charges, marketing fees and other fees due to the landlord. It is questionable, however, whether the service charge should be considered to be "owed to the landlord", as it serves to cover external costs as well as the costs of utilities consumed by the Tenant in connection with the use of the premises; therefore, even if paid to the landlord, it is not "owed" to the landlord.

If the reduction is not justified under Article 357¹ of the Civil Code, either party may ask the court to determine the amount of the reduction. After considering the interests of the parties, under the principles of social co-existence (good practice), the court may determine the amount and period of the reduction in payments, as well as the manner in which the payments should be made. It will be the initiating party’s (the plaintiff’s) obligation to prove the unjustifiability of the change in amounts arising out of the New Provision.

In Article 7 of the Amending Act, the Tenant who submitted an Offer may submit, within 14 days of the date of entry into force of the Amending Act, a declaration of will to revoke the legal effects of the Offer to extend the term of the Lease (the "Declaration").

The Declaration, in accordance with the rules of Polish civil law on the revocation of the legal effects of a declaration of intent, takes effect retroactively. However, Article 7 of the Amending Act indicates that the Declaration does not cover the termination of mutual obligations of the parties under Agreement on the basis of the Current Provision and the extension of the agreement for the period that expired on the day preceding the submission of the Declaration. We understand, therefore, that the legislature provides for an unusual effect for the Declaration - only for the future - from the moment the Declaration is submitted to the landlord. Considerable doubts arise as to whether such an effect is reconcilable with the applicable principles of civil law.

The literal wording of Article 7 states that this provision applies to all Offers that were to be submitted by tenants under the Current Regulations after 31 December 2020.

The Amending Act will enter into force before the expiry of the 3-month period following the last lockdown. The issue of whether the Tenants are entitled to a 50% reduction in the amount of rent due during the currently pending 3-month period from the end of the last lockdown, will certainly raise numerous doubts. The explanatory memorandum to the Amending Act indicates that the legislator’s intention was to regulate rent rebates "(in) all subsequent lockdown periods”. In our view, there are arguments that the 50% reduction will not apply to claims arising during the current 3-month period following the lifting of the last lockdown, as the entitlement to a 50% reduction for the 3-month period following the lifting of the operating ban is provided for in the same provision as the entitlement to an 80% reduction for the duration of the ban. In our view, it should therefore be assumed that these two types of discounts are inextricably linked and the application of the 50% reduction should be possible when the 80% reduction has previously been applied.

Should you have any further questions regarding the regulations, please do not hesitate to contact us.