Indexation clause deemed unwritten: restitution of overpayment

Cabinet Gouache obtained a particularly important decision, in which a lessor had to return more than €15,000 in overpayments of rent, due to the indexation clause deemed unwritten. A decision that illustrates the importance of precise drafting of the clauses of the commercial lease.

Explanation of the indexing and revision mechanism

The law of commercial leases clearly distinguishes two mechanisms of rent evolution: automatic annual indexation and triennial revision on request.

Indexation is a mechanism that allows the lessor to automatically adjust the rent, at a fixed period, according to the evolution of a benchmark index (ILC – Commercial Rents Index or ILAT – Tertiary Activities Rents Index). This clause, also called “sliding scale clause”, applies automatically without any particular formality and mechanically follows the variations of the chosen index.

The triennial review, provided for in Article L. 145-38 of the Commercial Code, may only be requested after at least three years of execution of the lease, following an express request from the lessor by registered mail with acknowledgment of receipt.

In the absence of evidence of a material change in local commercial factors, which in itself led to a variation of more than 10% in the rental value, the rent may not be revised above a ceiling determined according to the variation in the indices.

These two mechanisms can be cumulative: a lease can provide for annual indexation and allow legal review. However, their conditions of application are strictly regulated by law, which is of public order.

Explanation of the decision of the Court of Valencia

In the case decided on 15 April 2025, the Court of Justice of Valencia had to decide a delicate question concerning the interpretation of a particularly ambiguous indexation clause.

A commercial lease concluded on 25 August 2014 included a clause entitled “INDEXATION” which provided for an annual review of the rent “in accordance with the provisions of Article L. 145-38 of the Commercial Code“.

Paradoxically, this same clause specified that it “is not a sliding scale clause“.

This wording created a clear contradiction. Article L. 145-38 of the Commercial Code only concerns the triennial revision, and not the annual indexation.

Moreover, to assert that an indexation clause “is not a sliding scale clause” was tantamount to denying its own legal nature.

As the court recalls, a sliding scale clause is an indexation clause.

Faced with this ambiguity, and following the means of the lessee, the magistrates applied Article 1190 of the Civil Code according to which “in doubt, the contract is interpreted against the creditor and in favor of the debtor“.

The court thus ruled that:

“In this case, if the title of the clause and the terms used concern the indexation of the rent, these are formally contradicted by the mention that it is not a sliding scale clause and expressly refers to the provisions of Article L145-38 of the Commercial Code applicable to the request for revision.

However, a sliding scale clause is an indexation clause.

It follows from the foregoing that the disputed clause must be interpreted in favour of the debtor, in this case Company X, and must be considered to be a revision clause and not an indexation clause, which has been expressly excluded. 

In addition, the court insists that, in the case of a revision clause, the request for revision should have been notified by registered mail with acknowledgment of receipt, as required by the provisions of Article L 145-37 of the Commercial Code.

Consequently, by applying an annual review without complying with the legal formalities of Articles L145-37 and L145-38 of the Commercial Code, the Lessor violated the provisions of public policy.

In this decision obtained by Gouache, the court therefore ruled that the clause was “deemed unwritten” and ordered the lessor to return the sum of €15,042.13 corresponding to overpayments of rent, to the tenant company.

This decision perfectly illustrates the importance of precise drafting of contractual clauses, as well as the financial consequences of ambiguous drafting.

For the lessees, this case law opens up interesting prospects for challenging indexation clauses subject to caution, with the key, rent refunds indexed over five years.

Lessees are invited to check the indexation clauses stipulated in their commercial leases.