Defense Against Orders to Cease Operations and Seal Premises

The need to establish a more flexible model for the administrative oversight of economic activities has made the “declaración responsable” (self-certification declaration) the administrative instrument of choice for years, replacing the traditional license.

The “declaración responsable” allows an activity to be carried out from the moment it is submitted, subject to subsequent administrative verification of compliance with the contents of the declaration and applicable regulations.

It is relatively common for these subsequent inspections to yield unfavorable results, leading to the revocation of the effectiveness of the submitted declaration and an order to cease the activity following the inspection of the premises.

The cessation order is immediately enforceable, meaning it takes effect as soon as it is notified. Failure to comply may result in sanctions for carrying out the activity without the required authorisation, and the competent city council may issue a closure order to forcibly enforce the cessation.

Under these circumstances, the business owner faces a difficult situation. With no income and ongoing fixed costs for a closed premises, they must decide whether to challenge the municipal decision—if the city council is mistaken regarding the reasons for the ineffectiveness of the submitted declaration—or to submit a new sworn statement to address the issues that caused the ineffectiveness of the initial declaration.

If the business owner ultimately decides to challenge the decision, they must bear in mind that the judicial process will not, by itself, suspend the effects of the cessation and sealing orders, and the premises must remain closed unless the competent court hearing the challenge grants a precautionary measure suspending the effects of both orders.

Obtaining interim relief against any administrative act is always a complex challenge, as it requires persuading the judge to provisionally protect the litigant’s individual interest against the immediate enforceability of the administrative act for reasons of public interest.

To obtain interim relief in the contentious-administrative jurisdiction, the execution of the administrative act must cause harm that is difficult or impossible to repair, which would render a future judgment ineffective (periculum in mora), and its suspension must not cause serious harm to the public interest or to third parties (moderate or potential harm may be secured by a bond).

In the specific case of cessation and closure orders, our courts are very reluctant to grant interim relief because, in a sense, it would amount to authorising an activity to continue operating without a licence, posing a risk to public safety. Despite the potential harm caused by the enforcement of the closure, interim relief is usually denied in almost all cases.

Nevertheless, there are two situations in which interim relief may be granted: first, when the cessation order is suspended at the time the closure order is issued; and second, when the closure order is notified despite the prior cessation order having been improperly served. In these cases, the courts usually grant suspension based on the appearance of a valid right, given that an order is being enforced before it has actually taken effect.

For example, if the business owner files a reconsideration appeal against the cessation order and requests its suspension, the order will be suspended if the City Council does not respond otherwise within one month. If the suspension is thus granted, and a closure order is issued before the appeal is resolved, an interim measure can be requested with a higher likelihood of success. The same applies if the closure order is served unexpectedly (without prior notification of the cessation order) or without a valid prior notification of the cessation order.

At this stage, particular care must be taken to correct the deficiencies identified by the Administration, avoiding the temptation to submit a new responsible declaration solely to keep the activity running until the next inspection, knowing it will not be approved. Submitting responsible declarations with inaccurate information can result in financial penalties and a prohibition on submitting future declarations, which would consequently require undergoing a lengthy and cumbersome licensing process for the premises.

In any scenario, it is essential for the entrepreneur to have highly specialised advice in this area. A hasty decision or one based on incorrect guidance can make the difference between a brief pause and the definitive frustration of the business project.

Jesús Redondo Martín, Director Real Estate, act legal Spain.

Published in Cinco Días.