Publicado em 08/05/2020

Covid-19 | Shopping mall must comply with minimum payment for electricity set forth in agreement

In a ruling issued on 5/4/2020, the 2nd Court of Business Law and Arbitration Conflicts of São Paulo/SP denied an injunction requested by a Shopping Mall which, due to the Covid-19 pandemic, requested the Court to set aside a contractual obligation of minimum payment for electricity in order to pay only the amount actually consumed. The full wording of the ruling in Portuguese is available here.

The parties entered into a power purchase agreement with a take or pay clause which, according to the Shopping Mall, would not be met in several months due to the closure of its physical activities as a measure to fight the Covid-10 pandemic.

Upon denying the request, the ruling stated that both parties suffer economic losses due to the pandemic and applying force majeure to benefit one party “would disregard the entire context that led the parties to opt for the model of electricity supply in the incentive modality”, thus harming the logic of the agreement built based on the “take or pay” provision.

This is a controversial matter and the very 2nd Court of Business Law and Arbitration Conflicts of São Paulo/SP, in a ruling issued by another Judge (full wording here), granted a similar injunction request on 4/7/2020, setting aside the take or pay provision to authorize another shopping mall to pay only the electricity actually consumed in that case.