Just recently, the Constitutional Court (VfGH) confirmed the constitutionality of section 6 para 2 no 4 of the KSchG. In our blog post „Constitutional Court ruling on value protection clauses in rental agreements – much ado about little news“ we explained that although the Constitutional Court ruling attracted a great deal of media attention, it did not bring any significant changes for landlords and tenants in terms of content. This is in stark contrast to the current Supreme Court (OGH) ruling of July 30, 2025 (10 Ob 15/25s), in which the Supreme Court dealt in detail for the first time with the provision of section 6 para 2 no 4 KSchG, the scope of application of this provision, and the (quite very critical) literature on the subject, and arrived at landmark conclusions: The provision of section 6 para 2 no 4 KSchG is not applicable to long-term rental agreements. We explain how this remarkable change of direction came about in our blog post:

Previous decisions of the Supreme Court

The Supreme Court rulings in the recent years (in particular 2 Ob 36/23t, 8 Ob 37/23h and 8 Ob 6/24a) and the (partly implicit, partly explicit) affirmation therein of the applicability of section 6 para 2 no 4 KSchG to value protection clauses in rental agreements has received considerable media attention and has caused uncertainty among landlords and tenants alike. The latest rulings of the Austrian Supreme Court have suggested that, within the meaning of section 6 para 2 no 4 KSchG, inadmissible value protection clauses are to be omitted in their entirety. This would mean that the tenancy agreement would continue without a value adjustment clause and the tenant would be entitled to reclaim any amounts paid as a result of value adjustments under the law of unjust enrichment.

In its recent ruling 10 Ob 15/25s, the Supreme Court has now reversed its position:

Reference to previous Supreme Court rulings and discussion of critical opinions in the literature

The Supreme Court first notes that previous Supreme Court case law on the applicability of section 6 para 2 no 4 KSchG to value protection clauses in rental agreements was strongly influenced by incidental legal opinions, implicit assumptions, and decisions to dismiss, and that a "close examination" of section 6 para 2 no 4 KSchG in the case of longer-term contracts or other long-term continuing obligations. At the same time, it is stated that precisely for this reason, no established, consistent case law can be assumed to date and that a "reinforced senate" was therefore not necessary in the present decision, even if the outcome of this decision is indeed at odds with earlier decisions of the Supreme Court.

In its recent decision 10 Ob 15/25s, the Supreme Court has now dealt for the first time with the literature and doctrines that have been critical of the previous OGH case law (in particular 2 Ob 36/23t, 8 Ob 37/23h, and 8 Ob 6/24a) and its affirmation of the applicability of section 6 para 2 no 4 KSchG to value protection clauses in rental agreements (which have been common practice for decades) is criticized.

The Supreme Court adopts key points of criticism from the literature and makes groundbreaking statements:

Section 6 para 2 no 4 KSchG does not apply to long-term rental agreements

According to section 6 para 2 no 4 KSchG, a clause is inadmissible if it entitles the entrepreneur, at his request, to a higher remuneration than that originally agreed for services to be provided within two months of the conclusion of the contract, unless the clause has been individually negotiated. The requirement for a "negotiated agreement" is intended to protect consumers who do not typically expect a particularly short-term increase in fees from surprises. According to the Supreme Court, the purpose of the provision is limited to preventing this element of surprise. Section 6 para 2 no 4 KSchG therefore, by its very nature, only applies to contracts that must be performed in full by the entrepreneur within a relatively short period of time. The rule in section 6 para 2 no 4 KSchG therefore applies (only) to contracts that must be performed immediately or very quickly (within two months).

The Supreme Court clarifies that the applicability of the provision to continuing obligations is not generally excluded. The dividing line with regard to applicability is not to be drawn between target and continuing obligations, but rather between whether or not the contractor's performance must be rendered in full within a performance period of two months as stipulated in the contract. This is generally not the case with traditional contracts for apartments or business premises (unlike contracts for rental cars, vacation accommodations, or tennis courts). Long-term contracts are not "to be performed immediately or very quickly."

Conclusion: Section 6 para 2 no 4 KSchG does not apply to continuing obligations (such as existing contracts) where the contractor's (landlord's) performance is not to be rendered in full within two months of the conclusion of the contract.

Severability of clauses

The Supreme Court confirms that (value protection) clauses can be severable: the invalidity of individual provisions, such as a substitute index clause, does not necessarily lead to the entire value protection becoming invalid. This view allows for a more differentiated legal assessment and prevents excessive legal consequences in the case of only isolated contractual provisions that are flawed.

In this context, the OGH also refers to the case law of the ECJ, according to which an unfair term is completely invalid in individual proceedings. For existing tenancies, the application of section 6 para 2 no 4 KSchG to long-term rental agreements would result in enormous injustices because, due to the case law of the ECJ on the Unfair Terms Directive, there would be a risk that the tenancy would continue without a value adjustment clause and the tenant could reclaim amounts paid on the basis of value adjustments under the law of unjust enrichment. This is particularly disproportionate in the case of a permanent tenancy agreement that is protected against termination. The legislature cannot be assumed to have intended section 6 para 2 no 4 KSchG to apply indiscriminately to (all) continuing obligations even if it was aware of this legal consequence. Even objectively, this application would be difficult to justify due to the legal consequences exceeding the degree of wrongdoing, according to the Supreme Court.

No contradiction to the ruling of the Constitutional Court?

In view of the recent ruling of the Constitutional Court on value protection clauses in rental agreements (see our blog post „Constitutional Court ruling on value protection clauses in rental agreements – much ado about little news“), the Supreme Court apparently feels obliged to comment on the compatibility of its decision with the latest ruling. The Supreme Court held that the Constitutional Court's reference to the applicability of section 6 para 2 no 4 KSchG to continuing obligations did not contradict the conclusion reached by the Supreme Court. This is primarily because some of the decisions cited in the ruling of the Constitutional Court (4 Ob 28/01y; 3 Ob 12/09z; 5 Ob 159/09g) do not contain any statement by the Supreme Court on the question of whether section 6 para 2 no 4 KSchG is applicable to continuing obligations at all.

The starting month for the value protection

In its ruling, the Supreme Court also states that a value protection agreement linked to the most recently published index figure is entirely customary in the industry and therefore not objectively unusual within the meaning of section 864a ABGB. There would also be no objections to such a clause in light of the requirement of objectivity under section 6 para 1 no 5 KSchG. Furthermore, basing the calculation on the last published index figure does not appear to be problematic in view of section 16 no 6 sentence 3 MRG, which provides for the same result with regard to the statutory indexation of category and reference interest rates, according to the Supreme Court.

Conclusion: Linking to the index last announced before the contract was concluded is therefore permissible, customary in the industry, and objectively justified. Even if an older base month (in this case, May 2017) was mistakenly stated in the contract, a correction can be made through practical handling (e.g., change to December 2020) and implied consent of the parties. This clarification removes doubts that frequently led to disputes in practice.

Value protection "no increase in fees"

The Supreme Court also states that by agreeing on a value-secured existing interest rate, the lessee is not required to pay more (in the event of inflation) or less (in the event of deflation) than was agreed at the time the contract was concluded, even if the nominal amount of money changes. A value protection clause clearly defined by the relevant circumstances in a lease agreement is, by definition, not a unilateral increase in remuneration and does not (even in the most customer-unfriendly interpretation) fulfill the requirements of section 6 para 2 no 4 KSchG. Furthermore, the interpretation of contractual provisions in individual proceedings should not be carried out "in the most customer-unfriendly sense," but rather in accordance with the principles of sections 914 and 915 ABGB.

Practical implications

The Supreme Court ruling ends a period of uncertainty and creates a clear basis for assessing value protection clauses in rental agreements. It shows that legal developments can also take place in small steps: While the ruling of the Constitutional Court of June 2025 confirmed the constitutionality of section 6 para 2 no 4 KSchG, the Supreme Court has now ruled that this provision is not applicable to long-term leases from the outset.

The result is greater legal certainty for landlords, tenants, and investors, and a reduction in unnecessary legal disputes. This brings an end to a period of considerable uncertainty and enables a return to stable contract drafting practices.