Energy customers cannot lose protection from an unfair price-adjustment clause simply because they waited more than three years to challenge the resulting increases, the EU’s highest court has ruled. The judgment could affect similar disputes over long-term heating and energy contracts across the bloc.
“The three-year rule effectively maintains the effects of the unfair term to the detriment of the consumer,” the Court of Justice of the European Union said on Thursday.
The case concerned a German district-heating contract concluded in 2012 between energy supplier SVB and a customer, a civil law company known as Glarner, which was treated as a consumer under German law. SVB adjusted the consumption charge annually between 2015 and 2020 and unilaterally changed the pricing formula in 2019.
Glarner challenged the changes and demanded repayment of money collected through the higher prices. A Berlin court concluded that the original price-adjustment clause was unfair and therefore not binding on the customer.
The three-year rule effectively maintains the effects of the unfair term to the detriment of the consumer. — Court of Justice of the European Union
The dispute reached the EU court because German case law could still allow part of the increases to stand. The judges were asked whether consumer-protection rules permitted an unfair clause to retain financial consequences when the customer had not objected quickly enough.
Waiting three years does not remove consumer protection
Under Germany’s “three-year solution”, customers had to challenge a price rise within three years of receiving the first annual bill containing it. If they failed to do so, the higher amount could become the reference price used to calculate any subsequent reimbursement.
The Berlin court asked the EU judges whether this approach complied with the Unfair Contract Terms Directive. The Court ruled that it did not because it preserved the effects of an unfair contractual term at the consumer’s expense.
A national court may replace an unfair clause with a mandatory domestic provision. It may do so when cancelling the contract would harm the consumer. However, Germany’s three-year solution relied on general rules and could not be used to preserve the disputed increases.
The Court also said suppliers could not repair an unfair price-adjustment clause by changing it unilaterally. National judges must generally disregard unfair terms rather than rewrite them.
The Berlin court must now decide whether Glarner should receive repayment. However, the EU court’s interpretation will bind national courts dealing with comparable unfair contract terms.
