The Procurator General of the Supreme Court follows the ruling in the Swissôtel-case

On 30 September 2021, the Procurator General of the Supreme Court provided his advice in connection with the preliminary questions asked to the Supreme Court on rent reductions during the COVID-19 pandemic. The Procurator General confirms that COVID-19 can be considered as an unforeseen circumstance (and a defect) that justifies rent reduction. In his advice, the Procurator General notably follows the 14 September 2021 ruling of the Amsterdam Court of Appeal on how rent reductions should be calculated.

The Amsterdam Court of Appeal ordered Swissôtel as yet to pay most of its rent during the COVID-19 lockdown periods, even though the hotel was not operational at that time. Rent reductions have so far been determined by applying the so-called 50/50-formula based on the percentage of the decrease in turnover of a lessee (if for example a lessee's decrease in turnover is 100%, then the amount of the rent reduction would be 50% of the rent). The idea behind this being that neither party can be blamed for the pandemic and thus both parties must "share the pain".

The Amsterdam Court of Appeal deviated from previous court rulings in its recent judgement, particularly with respect to the use of the so-called Reimbursement Fixed Costs (in Dutch:  'Tegemoetkoming Vaste Lasten') or "TVL"). TVL is a government support specifically intended for business owners who have difficulty paying their fixed costs (such as rent) due to loss of turnover as a result of mandatory measures taken by the government. In previous rulings (including the ruling of the court in first instance in the Swissôtel-case), the TVL was considered as part of a lessee's turnover and was not taken into account as a compensation to cover fixed costs.

The Amsterdam Court of Appeal has now ruled that the TVL should not be considered as part of the turnover at all, but rather as governmental support intended to be used to pay fixed costs (and specifically rent). According to the Amsterdam Court of Appeal, if the TVL received by the lessee is sufficient to fully cover its fixed costs, the lessee is not entitled to any rent reduction. Only to the extent that part of the rent cannot be covered by the TVL, rent reduction should come into play.

This new approach, as reaffirmed by the Procurator General, appears to take better into account the purpose of TVL as intended by the government, as well as the actual financial situation of a lessee as a result of the pandemic. It is to be seen if the Supreme Court will also rule in line with the Procurator General's advice. Although the Procurator General's advice is authoritative, it remains at the Supreme Court's discretion to follow the advice.

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