Leaseholder’s Rights to Reduction of the Rent in Commercial Leases During COVID-19 in Luxembourg

Since the beginning of the pandemic in 2020, many commercial leaseholders have been facing financial difficulties, because of the general economic slowdown but also – more particularly – because of the measures taken by the Luxembourg authorities in order to try and limit the spread of the pandemic, such as the successive lockdowns and imposed temporary closures of retail stores.

In this context, some commercial leaseholders have requested, before Luxembourg courts, to be relieved (partially or completely) from their obligation to pay rent during pandemic-related lockdowns.

An analysis of all decisions rendered by Luxembourg courts since 2020 shows that leaseholders have been basing their requests on (one or more of) five different legal grounds:

An impossibility to perform the obligation to pay rent due to force majeure Unforeseen changes of circumstances that would call for a rent reduction (imprévision) Suspension of the performance of the obligation to pay rent based on the principle of lawful non-performance (exception d’inexécution) Relief of the leaseholder’s obligation to pay rent based on the theory of risks (théorie des risques) Obligation of the landlord to accept a reduction of the rent based on his obligation to perform the lease agreement in good faith (exécution de bonne foi)

This article, written by our experts Aurélien Latouche (Partner), Antoine Matter (Senior Associate), and Raphaël Schindler (Senior Associate), answers all questions that commercial leaseholders have and explores possibilities regarding rent payment.

Leaseholder’s Rights to Reduction of the Rent in Commercial Leases During COVID-19 in Luxembourg