17.03.2020

Corona lockdown and compensation for plant closures

Background

Germany is in the tight grip of COVID-19 by now. Schools and daycare centres are being closed, as are non-food retail stores. Events are to be cancelled, social contacts should be avoided as far as possible. Public life is increasingly coming to a standstill. For companies, the official measures mean massive economic losses, some of which are already threatening the existence of companies. The question therefore quickly arises whether and, if so, who will pay for the damage caused and what further steps must be taken by those affected.

I. Legal basis

Official measures with regard to the coronavirus are based on the regulations of the German Protection against Infection Act (Infektionsschutzgesetz, IfSG). The control of an infectious disease is the responsibility of the authorities responsible under the law of the individual federal states (often the local authorities responsible for law and order). In accordance with the general clause under German infection protection law of Section 28 (1) IfSG, they take the necessary protective measures to the extent and for as long as necessary to prevent the spread of communicable diseases. The public authorities have a wide discretion in the choice of the measures required. This general clause is currently used, for example, for bans on events, the ordering of closures in the retail trade and in catering. Guidelines of the Federal Government are not legally binding. However, they may be taken into account in the exercise of discretion at local level.

II. Claims for compensation

The infection protection law provides for separate compensation claims for special cases. These claims are subject to official orders. Voluntary protective measures are not covered by this.

  • According to Section 56 IfSG, compensation is in principle granted to those against whom quarantine measures are ordered due to a suspected or confirmed infection. Anyone who is therefore no longer able to pursue his or her profession is entitled to compensation for loss of earnings. Companies and tradesmen affected by the current general closure orders and business restrictions do regularly not fall within the scope of application of this regulation.
  • At present, it is not possible to assess with certainty whether compensation on the basis of Section 65 (1) IfSG is possible for these persons concerned, due to the lack of relevant precedents. Under this provision, compensation shall be granted if, as a result of a measure under Sections 16 and 17 of the IfSG, objects are destroyed, damaged or otherwise reduced in value, or if another not merely insignificant pecuniary loss is caused. The current lockdown could be a case of the fourth alternative (causing not merely insignificant pecuniary loss), although the general clause of Section 28 (1) IfSG is not explicitly mentioned.

In addition, claims for compensation under the law of the federal states may exist in accordance with the respective law on emergency response. The police and public order laws consistently provide for compensation in the event someone suffers a damage or loss in case of a breach of peace without being responsible for it (non-peacebreaker). In North Rhine-Westphalia, for example, this is regulated by Section 39 (1) of the Act on the organisation and powers of authorities responsible for law and order (Ordnungsbehördengesetz, OBG). Accordingly, the damage that the non-peacebreaker has suffered as a result of the authorities making use of his assets lawfully, will be compensated. The same applies in the case of illegal measures by the public law and order authorities.

However, it has not yet been clarified whether recourse can be made to the general compensation provisions of the federal states under emergency response law in the field of application of the special infection protection law. In the swine fever cases, the Federal Court of Justice rejected such recourse, but the legal basis was different there. However, we consider state compensation to be necessary, taking into account the special sacrifice made by the companies concerned for the maintenance of the health of others. The state community must not be allowed to escape its responsibility for the damage caused by the pandemic measures by referring to special guarantee and loan programmes.

There may also exist liability claims for breach of official duty according to Section 839 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) in conjunction with Article 34 of the German Basic Law (Grundgesetz, GG). However, these require unlawful and culpable breaches of official duties. This may be the case if measures are taken where there is a manifest error of assessment - or under certain circumstances also in case official closure orders are not issued in order to avoid claims for compensation under emergency response law. Finally, in the case of unlawful impairments of property, claims for intervention equivalent to expropriation can also be considered.

III. Defence against violation of a right has priority

In principle, the fact that the defence against the violation of a right takes priority will have to be observed in all cases where damages come into question: If measures are unlawful, the person affected must first attempt to defend them (in court). However, this only applies to the extent that such legal protection efforts are reasonable. Obviously futile legal remedies need not be taken.

It will not be possible to make any general statements as to whether rescissory actions and summary proceedings currently have a chance of success. The federal decision-making structure, with responsibility primarily vested in the local law and order authorities, requires an examination of each individual measure. First experiences show a very diverse picture: There is the well-founded and comprehensible general ordinance as well as the obviously illegal individual order to close a particular shop. Moreover, the longer the pandemic lasts, the more important will the question become, how applications for exemptions will be dealt with.

Author
Dr Stefan Altenschmidt, LL.M. (Nottingham)

Dr Stefan Altenschmidt, LL.M. (Nottingham)
Partner
Dusseldorf
stefan.altenschmidt@luther-lawfirm.com
+49 211 5660 18737