German Federal Court of Justice: New ruling on a clause regarding remote deactivation of an e-car battery

In a decision dated 26 October 2022 (Ref. XII ZR 89/21), the German Federal Court of Justice ruled on the validity of a clause regarding remotely deactivating car batteries that was included in the general terms and conditions of a lease and declared it invalid, at least in relation to consumers.

Facts

In this case, a consumer protection association had sought injunctive relief against a French bank as the lessor of an e-car battery with regard to the use of a clause in its general terms and conditions. Under the clause at issue, if the lease were terminated without notice for cause, the bank, as the lessor of an e-car battery, was allowed to remotely deactivate the charging function of the car battery. The cars in question were not provided by the lessor but were purchased separately by the lessees.

Decision

The Federal Court of Justice confirmed the legal opinion held by the lower courts, i.e. that the clause was invalid due to a breach of section 307(1) and (2) of the German Civil Code on the grounds stated below. The clause constituted an unreasonable disadvantage to the lessee. According to the Federal Court of Justice, the burden of securing further use of the leased property in the event of a valid lease was inadmissibly shifted to the lessee. Moreover, a lessee who asserted a right to reduce or withhold lease payments would always be exposed to the risk that the lessor could terminate the lease and exercise its deactivation right. The clause also deviated in an inadmissible way from the legal distribution of risk. In principle, it was, in the Court’s opinion, the lessor’s risk that the leased property would continue to be used without permission after the expiry of the lease term and would thus also be subject to wear and tear. According to section 546a of the German Civil Code, in such a case, the lessor could demand compensation from the lessee or require a deposit at the beginning of the contractual relationship.

The Federal Court of Justice argued further that the bank’s ability to unilaterally access and deactivate the battery constituted an unjustified disadvantage for the lessee, in particular if the e-car was acquired independently of the battery rental, as was the case here. If the battery was prevented from being charged, the e-vehicle, i.e. a much more valuable asset for the customer, would generally also become unusable. The background was that the battery was manufacturer-specific and linked to the e-vehicle, which generally gave the lessee no reasonable option to replace the deactivated battery with another make in order to be able to continue operating the e-car.

Conclusion/Outlook

The Federal Court of Justice rejected the lessor’s understandable desire to protect itself from unauthorised use of an e-car battery after a lease ends. Even lessors that are technically able to prevent unauthorised use will continue to have only the “established” options of asserting a compensation claim or including a clause requiring a deposit in the lease.