ECJ overturns “three-year rule” for energy supply contracts with consumers

 

If courts deem a price adjustment clause to be invalid years after the contract was entered into, price adjustments made, for example, on the basis of increased production costs are in principle invalid. The Federal Court of Justice (Bundesgerichtshof, BGH) regarded this legal consequence as unfair in long-term energy supply contracts, treating price changes as valid if the customer did not object to the new price within three years of the first invoice (BGH, VIII ZR 113/11 (judgments in German only)) (known as the “three-year rule”). The Federal Court of Justice also granted energy suppliers the right to unilaterally replace invalid price adjustment clauses with valid clauses (BGH, VIII ZR 175/19). While the Federal Court of Justice believed that the three-year rule was clearly compatible with Directive 93/13/EEC (the Unfair Terms Directive) the appeal court, Berlin Higher Regional Court (Kammergericht), had doubts about this and referred the case law for review by requesting a preliminary ruling (Case No. 9 U 1087/20).

I. ECJ’s decision

Berlin Higher Regional Court’s doubts were well-founded. In its judgment of 24 September 2026, the Court of Justice of the European Union ruled in Case C-900/24 (SVB) that the case law of the Federal Court of Justice infringes Articles 6 and 7 of the Unfair Terms Directive.

• No binding effect of invalid price adjustment clauses and price adjustments: The ECJ makes it clear that invalid price adjustment clauses are not binding on consumers. However, the three-year rule had precisely this effect since price adjustments became binding after three years had elapsed unless the consumer objected. In this context, the ECJ also rejects the German courts’ practice of supplementary contract interpretation (sections 133 and 157 of the German Civil Code (Bürgerliches Gesetzbuch)).
• No unilateral right of energy suppliers to replace clauses: The ECJ in principle also rejects an energy supplier’s right to unilaterally replace an invalid price adjustment clause with a valid one. An exception applies where such a right is provided for in a “mandatory statutory or regulatory provision”. In the ECJ’s view, based on the questions referred and the description of the facts provided by Berlin Higher Regional Court, section 24(4) of the German Regulation on General Terms and Conditions for the Supply of District Heating (Verordnung über Allgemeine Bedingungen für die Versorgung mit Fernwärme) is not such a provision. However, the ECJ also emphasises that it is up to the referring court to carry out the necessary assessment of the energy supply contract in question within its factual and legal context.

II. Assessment of the ECJ’s judgment

The ECJ’s judgment marks a turning point in the existing case law on the legal consequences of invalid price adjustment clauses in long-term energy supply contracts with consumers. As the Unfair Terms Directive does not apply in the B2B sector, energy suppliers may continue to rely on the three-year rule in their business-to-business transactions.

The ECJ judgment does not address the question of whether the contracts concerned are entirely void and whether consumers are entitled to restitution. These issues will have to be clarified by the German courts taking into account the nuanced and not always consistent case law of the ECJ on the Unfair Terms Directive. However, there are grounds for doubts here, as energy suppliers are in any case entitled to claims for unjust enrichment and any excess claims by consumers may be time-barred.

III. How Noerr can help

Noerr provides legal advice on both, contract revision and defending against mass claims. We have many years’ experience in assisting clients with contract amendments resulting from changes in legislation or case law and providing the associated strategic advice on dealing with customer enquiries, claims for restitution and representative actions by consumer associations.