Shutdown of business operations in Germany

In the course of the COVID-19-Crisis, the below article shall provide high-level guidance on a potential “shutdown" in Germany which might be ordered by state authorities as well as the respective national rules and exceptions relating to such shutdown. This article is specific to Germany and is based on the legal situation applicable at the time of the publication of the article. Any reforms adopted after publication of the article are not taken into account.

What regulations exist in Germany to order a nationwide “shutdown” and who is competent to instruct such shutdown?

A nationwide shutdown can neither be ordered by the German parliament nor by the federal government as the federal states are entitled to order specific measures according to the Infection Protection Act (“IfSG”).

The respective federal state governments are authorised to issue orders and prohibitions according to §§ 28 to 31 by statutory orders (§ 32 IfSG) or to transfer this authorisation to other bodies (often to the respective state ministries of health). This varies from one federal state to another.

The issued orders are often implemented by the respective competent district (Kreise or kreisfreie Städte) authorities but, depending on the order of the competent state ministry, the order may also be directly applicable. The IfSG grants different executive powers of which the main ones shall be briefly explained:

Pursuant to § 28 (1) IfSG, the competent authority shall take all necessary protective measures to the extent and for as long as is necessary to prevent the spread of infectious diseases. In particular, the competent authority may restrict or prohibit all kinds of events or gatherings of people. The scope of executive powers is very wide and hardly subject to any restrictions.

§ 29 IfSG states that sick persons, suspected sick persons and suspected infectious persons may be subjected to observation.

§ 30 IfSG states that infected persons may be placed in quarantine. § 31 IfSG allows the competent authority to prohibit persons being infected (or being suspected of being infected) from exercising certain professional occupations in whole or in part.

§ 32 IfSG empowers the federal state governments to issue corresponding orders and prohibitions to combat infectious diseases by means of ordinances. The scope of such ordinances is limited to the measures outlined above.

Which measure is "necessary" according to the IfSG and therefore legitimate can only be assessed on a case-by-case basis. However, infringements are expected to be punished strictly with imprisonment up to 5 years or severe fines up to a maximum amount of €25,000 per case.

In order to avoid a lack of clarity, the federal states are trying to agree on uniform regulations together with the federal government. The federal government and the respective state governments are coordinating their measures and new rules shall be introduced soon. Thus, the Bavarian state parliament already passed the Bavarian Infection Protection Act (“BayIfSG”) on 25.03.2020.

Who is the addressee of such shutdown order?

This is at the disposal of the respective competent authority. It may impose measures against anyone or limited to sectors or specific companies. Eg the state of Bavaria explicitly ordered restaurants to shut down as of 20 March 2020. In essence, various kinds of orders are possible here.

Are there any exceptions to a "shutdown" order and to whom do they apply?

The IfSG does not provide for explicit exceptions. Depending on the individual case, all necessary measures could be taken which the respective state authority considers to be necessary and appropriate.

It can be assumed that the respective state authorities may refuse to shut down industrial businesses that are considered as “Critical Infrastructure” (CRITIS) according to the Regulation for the Determination of Critical Infrastructure and the paper of the Federal Office for Civil Protection and Disaster Relief and the Federal Office for Security and Information Technology. CRITIS are companies, organisations or institutions with important significance for the state community, whose failure or impairment would result in lasting supply bottlenecks, significant disruption to public security or other dramatic consequences. It should be assessed on a case-by-case basis whether a specific factory or business operation may qualify as critical infrastructure. This includes in particular the areas of energy supply, information technology and telecommunications, transport and traffic, health, water, nutrition, finance and insurance, government and administration as well as media and culture.

In case of uncertainty, companies should seek the consultation of the competent authority. An exception may be made by the authority if a CRITIS-related sector is affected, even though the concrete decision on the potential exception is always subject to the competent authority in the first place.

See our coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.