A French hotel operator which manages only hotels devoted to the MICE sector (Meetings, Incentives, Conventions, Exhibitions) let in August 2017 (term 2029) a 5-star hotel very close to Barcelona, located in the middle of a 6 Ha large golf course belonging to a Hong Kong listed hotel fund.

• The lease states that the operator will mainlydevote the hotel to MICE activities (formerly, during many years, the hotel had been regularly used by the golf players, individuals non related to MICE events and for weddings).
• The lease did not lay down a mathematical relation/proportion between hotel's rental income and level of rent to be paid by the operator.
• The lease, furthermore, provides for a fix -rather discrete- minimum rent and a variable rent amounting to 20% of the operator's EBITDA.
• The lease also granted to the operator two break options in years 6 and 9 (2023 and 2026).

Due to the COVID pandemics the operator saw its turnover curtailed to appr. 35% of its former rental income (no companies dared to organize corporate events due to the Covid spread hazard), but refused to accept golf players, any non-corporate individuals or to organize weddings which all would have taken advantage of the large and free air spaces offered by the hotel's 5 Ha surface. The hotel operator invoked the hardship clause in view of its massive losses, claiming from the court a 35% reduction of the contractually agreed rental income.

Try to briefly answer if, in your opinion, the operator should succeed with its claim. Thereby please also bear in mind a civil law principle ordering the party enduring damages to mitigate them as much as it can. Remember that the hardship clause can only be resorted to if the original proportion between each party's obligations happens to later be distorted in a sudden, lingering and non-culpableway.

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In this scenario it appears the hotel operators claim for a 35 reduction of the contractually agr... View the full answer