Background
Glarner Straße 5 GbR entered into SVB’s standard-form district-heating contract in 2012 for a minimum term of ten years. The contract contained separate clauses permitting adjustments to supply and metering charges and to the consumption charge. SVB adjusted the consumption charge annually from 2015 through 2020 and unilaterally replaced the relevant adjustment clause in 2019.
Glarner sought reimbursement of alleged overpayments and a declaration that the adjustment clauses were void. The Berlin Regional Court agreed and held that billing should have remained based on the 2012 prices. On SVB’s appeal, the Higher Regional Court, Berlin found the consumption-charge clause insufficiently transparent but referred questions concerning the consequences of that invalidity under Directive 93/13. Those questions implicated German courts’ “three-year rule,” under which an unchallenged increase effectively becomes the contractual price after three years, and a purported right of district-heating suppliers to replace invalid adjustment clauses unilaterally.
Although Glarner is a civil-law company rather than a natural person, the CJEU proceeded on the basis that German law and case law extend Directive 93/13’s protections to such entities when they act for non-commercial purposes. The preliminary ruling left application of the governing principles and resolution of the underlying reimbursement dispute to the referring court.
The Court’s Holding
The Court held that Articles 6(1) and 7(1) of Directive 93/13 preclude the German three-year approach described by the referring court. An unfair term ordinarily must be removed, leaving the contract otherwise unchanged if it can objectively continue. General rules of contractual interpretation may not be used to preserve the effects of an unfair price-adjustment clause by preventing consumers from contesting increases that they did not challenge within three years.
A court may replace an unfair term with a supplementary rule of national law, or a rule applicable by agreement, only where invalidating the entire contract would expose the consumer to particularly harmful consequences. General principles concerning intent, good faith, or customary practice do not qualify merely because they permit supplementary interpretation. The national court must objectively assess whether the contract can continue and consider the consumer’s wishes when evaluating the consequences of annulment; one party’s interests cannot alone determine the contract’s fate.
The Court also held that Directive 93/13 precludes national law or judicial practice permitting or requiring an energy supplier to replace an unfair price-adjustment clause unilaterally for the future. Subject to the referring court’s verification, the German regulation prescribing general requirements for district-heating adjustment clauses neither required adjustment after a clause was invalidated nor appeared to supply a mandatory regulatory rule exempt from review under Article 1(2).
Key Takeaways
- A national court cannot preserve older price increases made under an unfair clause merely because the consumer failed to challenge them within three years.
- An unfair term generally must be deleted without judicial revision; replacement is narrowly available when complete invalidation would cause the consumer particularly harmful consequences.
- An energy supplier may not unilaterally substitute a new prospective price-adjustment clause for one invalidated as unfair.
Why It Matters
The judgment reinforces both the remedial and deterrent functions of EU unfair-terms law. National doctrines cannot leave consumers bound by the economic effects of an invalid clause or protect suppliers through judicial reconstruction of the bargain.
For long-term energy contracts, the ruling limits suppliers’ ability to retain historic increases or cure defective pricing mechanisms without consumer agreement. National courts must instead examine objectively whether the contract can survive deletion of the clause and must preserve the consumer’s ability to obtain the legal and financial position that would have existed without it.