German Federal Court of Justice

Judgment of 12 January 2022

Facts

The lessee had been forced to close his business owing to government action taken to combat the
Covid-19 pandemic.

- Is the lessee entitled not to pay the rent?

- If the lessee has to pay the rent, can it be reduced? By how much?

Judgment

The business basis of commercial lease agreements concluded before the Covid-19 pandemic has
substantially changed as a result of the far-reaching restrictions on social and economic life the
pandemic has entailed.
In the absence of evidence to the contrary, moreover, it can be assumed that the parties would have
concluded the lease agreement with different content had they anticipated the possibility of a
pandemic and the ensuing risk of business closures by the government at the time they concluded
the agreement. It could be assumed, the Federal Court of Justice argued, that reasonable contracting
parties would not impose the entire economic risks involved on the lessee but would instead have
provided for a rent adjustment option.
This does not mean that affected lessees can always demand that their rent be adjusted over the
period of closure. Such a one-size-fits-all approach is not permissible, the Federal Court of Justice
stated. Lessees cannot, therefore, simply halve their rents for the period during which their
businesses are closed.
Having set out why individual circumstances must be weighed up, the Court then specified the
following aspects as being of particular relevance:
- The first important aspect is what disadvantages lessees have suffered from business
closures and the duration of such closures. Loss of sales in the specific leased premises
affected need to be considered here, the Federal Court of Justice stated. A further decisive
point might be what measures the lessees took or could have taken to reduce imminent
losses.

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 - On the other side of the equation, it is necessary to consider the financial benefits lessees
have enjoyed from state compensation payments for disadvantages incurred through the
pandemic, or payments from insurers with liability for claims. State support measures such
as loans, however, must be excluded, as they do not constitute final and definitive
compensation for loss of sales.
- Finally, the lessor’s interests also need to be taken into account when weighing up the
various factors.
As a general principle, a lessee demanding amendment of the agreement bears the burden of
presenting and proving that abiding by the unchanged agreement would be unreasonable. Should
the respective lessor object that the alleged losses do not derive from the Covid-19 pandemic,
however, the lessor will bear the burden of presenting and proving this.