Building law and regulation in Monaco during Covid-19

1. Is there construction-relevant COVID-19 regulation?

During the period of the COVID-19 Coronavirus epidemic, the Prince's Government of Monaco has adopted, in addition to other measures that may impact on construction activity (1.2), a Ministerial Decree setting out health safety measures specific to the construction activities (1.1).

1.1 Ministerial Decree no. 2020-279 of 8 April 2020 setting out health safety measures for construction activities

On 10 April 2020, the Government of Monaco published Ministerial Decree No. 2020-279 of 8 April 2020 on health security measures for construction activities during the COVID-19 coronavirus epidemic. This Decree came into force the same day.

This text concerns all those who are called upon to intervene in offices, workshops, warehouses or construction sites and other places, and is opposable to both building activities and public works.

In order to ensure compliance with health measures, before any work is resumed or undertaken, the project owner, in agreement with the intervening companies, must submit to the Department of Forward Studies, Urban Planning and Mobility (the authority in charge of the Principality's urban development policy), a file containing :

  • the measures envisaged,
  • an explanatory plan showing how the site accommodation is organise,
  • a detailed list of all personnel and their origin,

The sanitary measures concern the requirements prior to any construction activity, general and specific instructions, as detailed in a document annexed to the Ministerial Decree No.2020-279 of 8 April 2020.

Requirements prior to any construction activity

With regard to these requirements, it is stipulated that the project owner must systematically obtain the prior agreement of the clients.

Thus, for each operation, the project owner must formalise a list of sanitary conditions in order to ensure that the various actors can implement and comply with the general sanitary directives and the additional instructions issued.

The document annexed to the Ministerial Decree specifies that the proposed organisation must aim at limiting coactivity and that the project owner must designate a COVID-19 referent responsible for coordinating and controlling the measures to be implemented and having the authority to stop the activity.

For private clients, it is advisable that they accept the general conditions of intervention, and in particular the specific conditions of hygiene and sanitary rules.

In order to limit travel, it is also provided that businesses may not employ staff on long journeys, unless there is an overriding need, subject to the assessment of the Monegasque authorities. It is also requested that apprentices, trainees and temporary workers should not be allowed to visit building sites and workshops.

Measures relating to general instructions

These measures mainly concern :

  • The strict observance of barrier gestures (in particular, the respect of distances of one meter, hand washing with access to a water and soap point, reminding the staff of the conditions...);
  • The prohibition of staff groupings;
  • The obligation, in certain cases, to wear a mask;
  • The control of the access of the employees and other intervening parties in the company and on site (taking of temperature, symptoms...);
  • Information and communication with personnel on the risk and their rights;
  • The designation of a Covid-19 referent;
  • The supply of the necessary equipment (disinfectant, soap, dustbin, gloves, masks...).
Special instructions adapted to the location of the construction activity

These measures concern in particular :

  • For offices, depots and workshops: the prohibition of teleworking or the respect of information measures, posting of instructions and cleaning;
  • For vehicles and equipment: the recommendation to give priority to individual modes of transport or, failing that, to provide protective measures;
  • For living quarters and site bungalows: the posting of instructions, the respect of a distance of distance and hygiene measures.
  • For work activities: the prescription of an operating procedure such as limiting the number of people to reduce the risks of meeting and contact, limiting coactivity, allocating individual tools, setting up a traffic plan and restricted use of equipment or presenting the work organisation. If this cannot be complied with the distance of at least one meter, staff must wear glasses and surgical type II-R masks. Above all, the activity must be stopped if it is impossible to carry out these measures.
  • For activities carried out on client premises: it is the project owner's duty to check with the customer, beforehand, the operating conditions that make it possible to comply with the health instructions. In addition, hygiene measures and distance from the occupants are provided for.
  • For activities carried out in private homes: measures similar to those to be taken by the client for activities carried out on the client's premises are provided for. In addition, it is foreseen that only an indispensable and urgent intervention in the home of a person at risk or ill can be carried out, following a particular protocol.

The document listing the sanitary measures includes in annex guidance sheets for the project owner and in particular :

  • A questionnaire to check the employee's health
  • Procedure for declaring persons at risk
  • DASA Tip Sheets
  • Help with site preparation (checklist for private and professional clients)
  • Intervention protocol for an individual at health high risk
  • Intervention protocol in an individual with Covid-19 disease
  • Intervention protocol for an individual
  • Tip sheet "What to do in the presence of a sick person?"

These measures may be revised and updated taking into account the developments of the pandemic and the recommendations issued by the Monegasque authorities.

1.2 Measures limiting the movement, particularly professional movement, of persons who are liable to be held liable against participants in the construction sector

In addition, the Government of Monaco has taken measures to limit the movement of persons, including professional travel, which are thus opposable to those working in the construction sector.

Indeed, by a Ministerial Decision of 17th March 2020, amended by a Decision of 10th April 2020, the Monegasque authorities have prohibited professional travel, from 18th March to 3rd May 2020, with the exception of travel between home and the place(s) of professional activity:

  • essential for the exercise of activities that cannot be organised in the form of teleworking,
  • or cannot be postponed.

Travel in the context of a professional construction activity is therefore authorised in Monaco subject to meeting these conditions.

In such cases, it is specified that the employer must provide each employee concerned with proof of the need for the business trip in accordance with a model established by the Government. The same applies when the business trip cannot be postponed.

Employees wishing to benefit from such an exception must provide their proof of business travel.

2. Subsidies and other government support for employer, contractor and other involved parties? (generic, high level only).

The Government of Monaco has put in place exceptional measures to help Monegasque companies facing economic difficulties due to the COVID-19 coronavirus epidemic.

These measures are presented in a practical guide to economic, fiscal and social measures aimed at companies impacted by the health crisis established by the Government of Monaco.

2.1 Temporary suspension or reduction of the activity of its employees with compensation during the period of inactivity

In addition to the possibility of taking certain measures for the organisation of telework, it is provided that the employer may temporarily suspend or reduce the activity of his employees by providing them with compensation during their period of inactivity without the employee being able to object.

In this case, the employer pays the employees a partial activity indemnity for the hours off work amounting to 70% of the gross hourly wage. If the employer wishes to pay the additional 20% in order to maintain 100% of the salary, the State will exempt the employer from social security contributions on this additional part.

Subject to having carried out the preliminary formalities with its employees on the one hand, and with the Labour Inspectorate on the other hand, the employer obtains from the State a reimbursement of 100% of the partial activity allowance paid to its employees up to a ceiling of 4.5 times the minimum wage for high salaries.

Finally, a protective measure concerning the lowest wages is issued by the Government of Monaco: employees who usually have a gross basic salary of less than or equal to 2,075.16 € for 169 hours per month will not suffer any loss of income as a result of an increased contribution by the State of Monaco.

2.2 Financial assistance measures for companies

The first concerns the system of subsidies on loans taken out with credit institutions in the Principality which may be granted by the State as aid to companies established in Monaco, whatever their legal form. Indeed, the Prince's Government has decided to extend this scheme to cash loans requested by companies in the Principality, in recognition of the specific and exceptional economic situation linked to the COVID-19 health crisis.

In addition, the Government of Monaco has set up a procedure for recourse to the Monegasque Guarantee Fund enabling the State to fully cover the interest rate on the cash loan. To this end, the State has allocated an additional EUR 50 million to the Monegasque Credit Guarantee Fund and increase in the guarantee quota from 65% to 100% for eligible credits in the event of default. The stated objective is to enable defaulting Monegasque professionals to benefit from the State’s counter-guarantee from credit institutions for the repayment of their credits.

Lastly, the guide provides for the possibility of referring the matter to the Committee for Assistance to Businesses in Difficulty (Commission d’Assistance aux Entreprises en Difficulté or « COMED ») which is intended to help firms in difficulty.

  • The Prince's Government has also taken measures relating to state-owned premises for industrial or office use and more particularly measures exempting traders from the payment of the annual flat-rate charge for certain professional activities carried out at home and from rents and rental charges. The system could be generalised to all companies impacted by the COVID-19 coronavirus crisis. In addition, the Prince's Government has launched an appeal to private landlords asking them to show civic-mindedness by adapting and/or spreading out the payments due by their tenants.
  • The guide specifies that companies and self-employed workers may defer payment of Value Added Tax for a period of three months.
  • It also provides for the possibility of staggering the payment of social security contributions to the Monegasque Caisses and Social Organisations upon request by employers and self-employed workers and justification of the nature of the difficulties encountered in relation to the epidemic situation.
  • With regard to related charges, the guide specifies that companies and self-employed workers whose activity is impacted by the COVID-19 coronavirus epidemic may request by e-mail to stagger the payment of their contributions to the Société Monégasque de l'Electricité et du Gaz and the company Monaco Telecom.

Finally, special measures for the self-employed have been taken. Thus, the Government of Monaco has created an extraordinary minimum income and the possibility of obtaining compensation for sick leave in the event of childcare at home.

In Monegasque law, force majeure is characterized when three conditions are met: 1 Court of Revision, Monaco, 16 March 2012, Mme C N de F. c/ Mme N L épouse C. et Mme N C. ; court of appeal 29 September 2015

  • The event constituting force majeure was unforeseeable at the time the contract was formed.
  • The event is external to the parties,
  • The event is irresistible (in the sense that it is not possible to overcome the obstacle to performance that the event constitutes).

These conditions can be modified contractually by the parties. Thus, it is possible to provide for a clause that would define the cases in which force majeure is constituted and that would stipulate, for example, that the occurrence of an epidemic is a case of force majeure justifying non-performance.

In the absence of a specific contractual stipulation, the assessment of force majeure will remain subject to the discretion of judges on a case-by-case basis.

A contract may also provide for the consequences of a case of force majeure. For example, the parties may provide for clauses on the absence of liability, termination of the contract or suspension of performance. Conversely, it is possible to provide for a liability clause even in cases of force majeure.

In any event, Article 1003 of the Monegasque Civil Code provides that no damages are payable when, as a result of force majeure, the debtor has been prevented from giving or doing what he was obliged to do, or has done what he was forbidden to do.

4. Does the Epidemic give rise to termination rights to either party?

Contract termination clauses should first be analysed to determine whether the COVID-19 outbreak may result in the termination of the contract.

For example, a contract may provide for a right of termination in the event of an unexpected change in circumstances that has a substantial impact on the performance of the parties' obligations.

On the other hand, in the absence of a specific contractual stipulation, the Monegasque Civil Code does not provide for a right of termination for either party in the event of an epidemic. On this point, it should be noted that, even in the event that the COVID-19 epidemic is considered a case of force majeure, the Civil Code does not provide for a right of termination.

5. Do the measures currently being taken in relation to the Epidemic amount to change in law? What are the price and time consequences?

Several measures have been taken by the Prince's Government to deal with the COVID-19 epidemic can be assimilated to a "change of law" giving entitlement to an extension of time and an adjustment of the contract price.

Firstly, sovereign Order No. 8.019 of 26th March 2020 suspending the time limits for appeals and proceedings before the Supreme Court to deal with the consequences of the measures taken to combat the COVID-19 virus pandemic, provides for the suspension, for a period of two months, of all time limits:

  • of administrative appeals;
  • Litigation appeals;
  • of procedure provided for by Sovereign Order No. 2.984 of 16 April 1963 on the organisation and functioning of the Supreme Court, as amended, with the exception of those implied by the exercise of the emergency procedure set out in article 41 of this Order.

This text is applicable immediately and retroactively to 16 March 2020.

In addition to this order, law No. 1.486 of 9 April 2020 on justice to deal with the COVID-2019 pandemic, published on 17 April 2020, prescribed suspension for a period of a period of two months, also starting on 16 March:

  • of all time limits for proceedings in civil, commercial, social and administrative matters, including, in particular, those inherent in ordinary and extraordinary remedies, in addition to those of foreclosure provided for by special codes or laws; and,
  • time limits for hearings, as well as those after which a magistrate must have ruled, provided for by special codes or laws, with the exception of those relating to pre-trial detention.

These provisions, in so far as they suspend the time limits for litigation, may have a temporal and financial impact on construction contracts.

Secondly, law No. 1.485 of 9 April 2020 suspending the administrative deadlines for dealing with the COVID-2019 virus pandemic, published on 17 April 2020, is likely to have a temporal and financial impact on contracts in that it suspends for an extendable period of two months, from 18 March to 18 May, all administrative deadlines applicable in the relations between Monegasque public services and users.

6. Are there any other issues relevant to COVID-19 the construction industry should be aware of?

In addition to the measures taken by the Prince's Government concerning health measures specific to the construction sector and professional travel (cf. point 1 above) and the suspension of legal and administrative deadlines (cf. point 2 above), mention should be made of the draft law No. 249 prohibiting unfair dismissals, making teleworking obligatory in jobs that allow it and other measures related to the COVID-19 crisis.

Firstly, this proposal, in that it provides for the suspension of certain clauses aimed at sanctioning the non-performance of an obligation within a specified period, may have an impact on construction contracts.

More specifically, it is provided that periodic penalty payments, penalty clauses, resolutory clauses and conditions, whether express or implied, as well as clauses providing for forfeiture, when their purpose is to sanction the non-performance of an obligation within a specified period, as well as time limits which affect the fulfilment of the suspensive conditions, are deemed not to have taken effect or to have taken effect, if that period has expired during the period of suspension referred to in the law suspending administrative time limits to deal with the COVID-19 pandemic.

Such periodic penalty payments shall take effect and such clauses, conditions and time limits shall produce their effects at the end of the period of suspension provided for in the aforementioned law, if the debtor has not performed his obligation before that time. The rate of periodic penalty payments and the application of penalty clauses which took effect before 18 March 2020 shall be suspended during the said period.

However, these provisions are not applicable to public contracts of the State, the Commune and public institutions.

In addition, the draft law provides for measures specific to the contract of sale and provision of services that cannot be executed during the suspension period referred to in the law suspending the administrative time limits for dealing with the COVID-19 virus pandemic or after the said suspension period for a reason related to the COVID-19 virus pandemic.

In such a case, it is provided that the Provider may:

  • either offer a credit note to its co-contractor, if the sale or service can be postponed within a maximum period of eighteen months,
  • or to reimburse all payments made by the co-contractor, if necessary, by staggering payments.

This provision may therefore be of interest to stakeholders in the construction sector.