Compensation for COVID-19 closures?

Second known decision on this complex of issues which has become highly relevant for many companies

In its ruling of 13 October 2020, the 2nd Civil Chamber of the Regional Court of Berlin dismissed the action brought by a barkeeper against the Federal State of Berlin for the forced closure of his pub, thus adopting a position on "COVID-19 compensation" for the first time (file no. 2 O 247/20).

Following a ruling by the Regional Court of Hanover in the summer, this is only the second known decision on this complex of issues which has become highly relevant for many companies. In the first proceedings, the court in Hanover also dismissed the complaint as a result; the judgement has become legally binding (judgement of 9 July 2020, file no. 8 O 2/20).

The background to both proceedings is that the COVID-19 pandemic is fundamentally changing public life, the professional world and even simple interpersonal interactions such as handshakes and conversations. Many of these changes are due to drastic state restrictions – such as the closure of schools, shops, pubs and cultural institutions. These measures have triggered controversial discussions about their legality and possible compensation consequences for those affected. The courts have already answered the question of the legality of measures ordered by state law in many cases – although inconsistently (most recently the Bavarian Administrative Appeals Court and the Hamburg Administrative Court repealed the forced closure of gyms). In the meantime, decisions on compensation issues remain scarce.

As a result, both the Regional Court of Hanover and, more recently, the Regional Court of Berlin have so far unanimously qualified the respective state ordered business restrictions as lawful. As a result, claims for state liability had to be ruled out.

Both courts also rejected compensation claims in direct or analogous application of Sections 56 and 65 of the German Infection Protection Act (Infektionsschutzgesetz): The Regional Court of Hanover explained in detail that there was no unintended gap in the statutes that could justify an analogous application of the – directly non-applicable – compensation regulations. In passing, the Regional Court of Berlin conceded that compensation was at least conceivable in the case of particularly far-reaching and specifically targeted restrictions.

The courts also rejected claims based on an expropriating interference. The barkeepers had not made any special sacrifice (Sonderopfer) for the benefit of the general public, since the measures were addressed at the wider public. Finally, the courts rejected compensation under state police law for restrictions targeting non-responsible persons (Nichtstörer) on various grounds: the Regional Court of Hanover considered the Infektionsschutzgesetz to be conclusive, therefore barring the application of state police law. The Berlin Regional Court, instead, even rejected the assumption that the barkeeper was the addressee of the pertinent state restrictions. The court held that the restrictions were, in fact, directed against the general public, which was prohibited from entering or staying in pubs.

The last word in the matter of COVID-19 compensation is thus far from spoken. It is to be expected that courts will also find that that the companies concerned made special sacrifices, and therefore rule in favour of plaintiffs. In these cases, however, the plaintiffs will have to demonstrate their inability to mitigate their losses: this will not only involve the utilisation of COVID-19 emergency aid, but also claims for insurance benefits, contract adjustment claims against contractual parties of the affected companies (e.g. against commercial landlords) and pandemic-compliant alternative sources of income.

Chatham Partners is specialized in complex issues of constitutional and administrative law, and has been advising and representing companies with related claims against local, state and federal authorities for years. Please feel free to contact us to find out how we can support you if necessary.

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