And behold, on 23.4.2020, in a decision of the Honorable Judge Eichenstein, OM 25129-04-20 (Jerusalem) Ricochet 3000 Ltd. v. Shayish Ha’alonim, it was held that the bank guarantee that the property landlord sought to forfeit following non-payment of rent would not be forfeited. This decision demonstrates the tailwind that the tenants are receiving from the court. This important decision, which joins previous decisions handed down in the courts on the subject, will apparently set the court’s guiding line.
So if we summarize the various coronavirus claims that have reached the courts: OM 44237-03-20 (Tel Aviv) Isramarine Modular Construction Ltd. from the mouth of the Honorable Judge Shevach; OM 10815-04-20 (Jerusalem) Turai Caliber Ltd. v. D.J. Associates, Inc. et al. from the mouth of the Honorable Judge Yahalom — decisions bearing directly on the balance of power between the parties to a lease contract, with the scales tilting in favor of the tenants, together with a further decision that does not concern lease contracts but the immediate repayment of a loan, OM 55218-03-20 (Tel Aviv) Onot Model Ltd. v. Credit Cards, but which also deals with the matter of frustration of contract during the coronavirus period — we may assume that the court is granting protection while adopting a legal interpretation in favor of the weaker party, who has been so severely harmed during the coronavirus period.
The result of the lack of uniformity between the various courts will increase the uncertainty already prevailing during this period, and will cause an additional burden on the court system, and parties to a contract will try time and again to challenge the courts; and if the standing of the bank guarantee, which until now enjoyed the standing of the “best” security, has been shaken, we recommend thinking twice before running to court.
It should be emphasized that this is a decision concerning an interim remedy and not in the nature of a judgment. This means that the court did not rule on the issue on its merits, and on the question of whether this is force majeure or frustration of the lease contract owing to the inability to use the leased property.
After surveying the various rulings, we are of the opinion that the court did well in lending a listening ear and blocking the increase of harm to the tenants, and did not allow further harm to businesses that were injured, by limiting the independence of the bank guarantee.
These are troubled times, and we recommend that the parties, and especially the property owners, show grace toward the tenants while performing the contract in good faith, and leaving control in their hands — otherwise something else will have to determine their future.
If you encounter difficulties and are unable to obtain assistance from the landlord, you are welcome to contact our firm so that we can conduct the negotiations for you and examine how you do not pay for a service you did not receive.
