New BGH ruling on long-term land securing for renewable energy

Long-term land securing is crucial for the success of wind and solar parks. It is particularly important that ordinary termination by landowners is excluded for periods of 20 to 25 years. For this to be possible, the agreement on the contract duration must include an effective term for this period. This is because lease agreements without such an effective term can be terminated at any time (§ 542 BGB). A recent decision by the Federal Court of Justice (BGH) on March 12, 2025, provides clarity on this matter.

Unclear regulations can lead to terminability.

We explain the requirements set by the case law for an effective term of contract duration in land use agreements for renewable energy installations.

Clear regulation of contract duration

It has proven to be an unproblematic and clear regulation when the start and end of the contract duration are clearly defined.

"The contract begins to run upon signature by both parties and ends 30 years after the start of the contract."

The contract start is precisely determinable by the day of the last signature, and the end is clearly calculable – 30 years after this point.

Problematic regulation of contract duration

The start and end of the contract duration become unclear and thus harder to determine in cases linked to a future event, where it is not yet certain at the time of signing whether and when the event will occur.

"The contract begins to run upon signature by both parties and ends 25 years after the commissioning of the installation on the property."

This regulation is often used in wind and solar projects when the commissioning date is uncertain. The problem is that at the time of contract conclusion, it is unclear when or if the installation will even be built.

The legal situation is as follows: If the contract duration is linked to an uncertain event, the contract duration is considered indefinite, and the contract can be terminated at any time. The occurrence of the (uncertain) event then acts like a terminating condition for the indefinite contract duration, and only from that moment, i.e., when the event occurs, is the contract considered to be for a fixed term.

Specifically, this means for the clause: Until commissioning, the contract can be terminated by ordinary notice at any time. At the same time, the project developer naturally wants to prevent the owner from exercising this right of termination.

BGH ruling and its implications

In a landmark decision, the BGH dealt with the question of whether and under what conditions ordinary termination can be excluded in general terms and conditions (AGB) and whether an implied exclusion can result from individual contractual agreements. Prior to this, various higher regional courts had made different rulings on this issue.

Express exclusion of the right to ordinary termination is permissible

The BGH concludes that the exclusion of the right to ordinary termination is generally permissible. However, the court sets requirements for this, which we have outlined below.

No reclassification of the right of withdrawal into the right of termination

 

Here, the BGH contradicts the ruling of the OLG Brandenburg (judgment of March 30, 2011 – 3 U 113/10), which had assumed a contractual exclusion of termination despite the contract only containing a right of withdrawal. According to the BGH, 'withdrawal' and 'termination' are independent, legally clearly defined concepts that cannot be easily equated. Therefore, an agreed right of withdrawal does not automatically lead to the exclusion of ordinary termination, as this contradicts the clear wording. This had also been the decision of the OLG Hamm (judgment of November 26, 2020 – 5 U 112/19).

Implied exclusion of termination

However, the BGH acknowledges the possibility of an implied exclusion of the right to terminate, especially when the termination rights are exhaustively regulated in the contract. Furthermore, the right of withdrawal in the contract would be undermined if ordinary termination were possible within the same period.

In addition, the BGH supports its decision by considering the interests of the facility operator. The construction and operation of a facility – for example, in the field of renewable energy – involve significant planning efforts and long-term investment. A right to ordinary termination exercisable at any time would severely impair this planning security and could jeopardize the economic viability of the entire project.

Permissibility of the exclusion of termination

The BGH addresses the argument of the OLG Hamm (judgment of November 26, 2020 – 5 U 112/19), according to which an exclusion of the right to ordinary termination could unduly disadvantage the landowner – for example, because they provide the land free of charge until the start of construction or commissioning.

However, the BGH does not share this view. Rather, the court clarifies that the landowner still has options for use: either through actual use or by selling the property. An undue disadvantage to the owner is particularly not present if the period without compensation is limited to five years. In this respect, it also confirmed the judgment of the OLG Karlsruhe (judgment of April 25, 2018 – 14 U 217/17).

Conclusion and recommendations for contract drafting

For project developers in the field of renewable energy, it is crucial to secure long-term land use in a legally sound and project-friendly manner. Therefore, consider the following recommendations:

1. Clear and robust contract duration

   Define the contract duration precisely, with clear provisions regarding the start and end. Such a clause provides you with planning security and minimizes legal risks.

   
   

2. Security during the preparation phase

   If you opt for an indefinite period until construction or commissioning, ensure that an exclusion of the right to ordinary termination for up to five years is included in the contract. This provision protects your investments and plans during the critical preparation phase and complies with the legal requirements set by the BGH.

   
   

3. Consider the interests of the landowner

   Although the focus is on securing your projects, it is important that the exclusion of the termination right does not unduly limit the rights of the landowners. By leaving the owner with economically sensible usage options until the start of construction, you ensure the sufficient fairness of the general terms and conditions clause.

   
   

4. Precise formulation of the right of withdrawal and termination

   Ensure careful wording of these rights to avoid misunderstandings. The distinction between withdrawal and termination is crucial to protect your contractual objectives.

If you have any questions about the topics mentioned above, feel free to contact us – we look forward to hearing from you.