16
ALRAQABA . ISSUE 15
Legislations
Fahad AL Azemi
Associate Auditor at the Oil Entities Marketing and Investment Audit Department
Legal Impact of COVID-19 on Lease Agreements and
the Role of the Kuwaiti Legislature in this Regard
As you are aware, the pandemic of COVID-19, which was first emerged in December 2019, has
severely affected every country across the world. The considerable impacts of the COVID-19
pandemic are not limited to health dimensions only. Yet, the pandemic has massive implications on
the economics of the countries as well as the companies at the international level. In general, the
majority of leases were also affected by this crisis. Therefore, most countries decided to consider the
CVOID-19 pandemic a force majeure event, under which the contracting parties would be released
from the performance of their contractual obligations towards the other parties. By invoking a force
majeure event, the contracting parties would also be relieved from paying fees or compensation for
the out-of-control delays in meeting their obligations.
Under their efforts in safeguarding
public health, many countries,
including the State of Kuwait, have
taken precautions towards containing
the outbreak of the virus in the
community as a whole. This includes
shutting down certain commercial activities,
imposing lockdown and partial curfew, and
disrupting or suspending work in many
entities of the private sector. Those preventive
measures, which have been undertaken for the
public interest, are definitely to have many legal
consequences and shall directly impact the
concluded contracts, as well.
Given that lease agreements are one of the
most common contracts in the world, the Kuwaiti
legislature granted considerable attention to this
particular type of contract. Leases are regulated
under the Kuwaiti Civil Code and the Real
Estate Leasing Law. The legislature also aims to
strike a balance in the contractual relationship
between the lessor and the lessee/tenant, taking
into account the rule of pacta sunt servanda
(Latin for “agreements must be kept”) and the
other legal principles. Mainly the autonomy of
will principle, the principle of good faith and
respecting contractual rights, and the stability of
transactions principle.
These principles require that the judiciary and
both contracting parties respect the content
of the contract. Terms of the contract may
neither be amended nor revoked except by the
agreement of both parties or by a provision of
the law. However, the outbreak of COVID-19
had altered the balance between the
contractual relationships in legal terms.
In this sense, the law has embraced and
safeguarded these contractual relationships
using two theories, namely, the theory of
force majeure and the theory of emergency
circumstances. These two theories were built on
the notion that no one could be expected to do
the impossible.
