On 12 January 2022, the Federal Court of Justice (Bundesgerichtshof, BGH) ruled on the legal consequences of public closure orders to combat the COVID-19 pandemic for commercial leases, in this case for the first so-called lockdown in spring 2020 (BGH - XII ZR 8/21).

According to the BGH, lease agreements can in principle be adjusted due to a frustration of contract (Störung der Geschäftsgrundlage). In doing so, the court emphasised that a comprehensive consideration of all circumstances of the respective individual case was indispensable. A blanket adjustment of the rent payment obligation (e.g. in the sense of a 50/50 split between the parties) was legally erroneous.

The BGH overturned the decision of previous instance, the Higher Regional Court (Oberlandesgericht, OLG) of Dresden (5 U 1782/20) and referred it back for a new decision.

In this briefing, we provide an overview of the legal situation and analyse the new BGH ruling.