Publication
Background
Most commercial lease agreements contain what are known as indexation clauses. These link the rent to the German Consumer Price Index (Verbraucherpreisindex, VPI).
Such clauses fall under the German Act on the Prohibition of Price Escalation Clauses in Monetary Obligations (Preisklauselgesetz – PrKG). They are only permitted in long-term lease agreements and only if the rent can be determined by reference to an official price index published by the Federal Statistical Office, such as the Consumer Price Index.
If a clause does not comply with these statutory requirements, it does not automatically become invalid. Instead, it is deemed ineffective only from the time a court finds a breach. As a result, tenants cannot claim back rent increases retrospectively in such cases.
In a recent decision1[judgment of 5 June 2025 – I-10 U 146/24], the Higher Regional Court of Düsseldorf (OLG Düsseldorf) had to decide whether an indexation clause can also be reviewed under the rules governing standard contract terms (Allgemeine Geschäftsbedingungen – AGB). If that were the case, the clause could be invalid from the outset, and the tenant would be entitled to reclaim past rent increases. The Federal Court of Justice (BGH) has not yet ruled on this issue.
The Decision
The OLG Düsseldorf held that indexation clauses in commercial leases are subject to full AGB review. If they fail this review, they are invalid from the beginning.
The court first examined whether the PrKG, as a special statute, overrides AGB rules. It concluded that both sets of rules apply independently, since they serve different purposes: AGB rules protect tenants against one-sided contract terms, while the PrKG safeguards the public interest against inflationary effects. The wording of the PrKG does not exclude an additional AGB review.
The court then found the specific clause invalid because it placed the tenant at an unreasonable disadvantage and violated the transparency requirement. The clause referred to an index level that was more than two years old at the time the lease commenced. It was also unclear whether rent adjustments should take effect automatically or only after the landlord gave notice.
As a result, the indexation clause was invalid from the outset, and the tenant is entitled to reclaim all rent increases paid. The court allowed an appeal to the Federal Court of Justice to obtain a final ruling on this fundamental question.
Practical Implications
Commercial landlords can no longer rely on the assumption that an indexation clause remains valid until a court rules otherwise. Following the OLG Düsseldorf decision, tenants may reclaim rent paid under invalid clauses if the clause fails the AGB test.
Landlords should therefore ensure that indexation clauses in their standard lease agreements are clearly drafted and withstand judicial scrutiny. Until the Federal Court of Justice issues a final ruling, uncertainty remains – but the Düsseldorf decision is a clear warning signal for landlords
