Practice areas: Business and Commercial Law, Lease and Tenancy, Real Estate
The Court of Justice of the European Union (hereinafter: “CJEU”) held in its judgment of 1 October 2026 (Case C‑459/25) that even where an unfair costs clause has been annulled, the court may still order the consumer who loses the case to pay the costs of the proceedings on the basis of Article 237 of the Dutch Code of Civil Procedure (“Rv”).
This judgment follows a request for a preliminary ruling from the Dutch Supreme Court (Hoge Raad) in its judgment of 23 May 2025 (ECLI:NL:HR:2025:820). In that judgment, the Supreme Court held that a costs clause in an agreement with a consumer must, in general, be regarded as an unfair term. We wrote a blog about that judgment on 17 June 2025. In the same judgment, the Supreme Court referred the preliminary question of whether, after an unfair costs clause has been annulled, the court can still order the consumer who loses the case to pay the costs of proceedings on the basis of Article 237 Rv.
In this blog we discuss the Supreme Court’s preliminary question, the CJEU’s answer, and what this decision means for everyday practice.
Article 237(1) Rv provides that the party who loses the case by judgment is ordered to pay the costs of the proceedings.
Pursuant to Article 242(1) Rv, the court may of its own motion reduce amounts that can be deemed to have been agreed as compensation for costs of proceedings, but not below the amount of the costs of proceedings to be assessed on the basis of the law.
The case concerns a tenancy agreement for a parking space between housing association Stichting Woonstichting Lieven de Key (hereinafter: “LdK“) and a consumer-tenant (hereinafter: the “Consumer“).
Article 11.1 of the tenancy agreement concluded between LdK and the Consumer provides that all costs incurred for the performance of this agreement, including all costs of proceedings and extrajudicial costs incurred by the landlord, are to be borne by the tenant in the event of non-performance by the tenant of any provision of this agreement or of the law.
LdK claimed before the subdistrict court (kantonrechter), among other things, dissolution of the tenancy agreement, eviction, payment of extrajudicial costs and costs of proceedings.
The subdistrict court held that Article 11.1 of the tenancy agreement was unfair insofar as it related to the extrajudicial costs. For the part of the clause relating to the judicial costs (the costs clause), the subdistrict court referred preliminary questions to the Supreme Court.
By judgment of 23 May 2025 (ECLI:NL:HR:2025:820), the Supreme Court answered that the costs clause undermines the consumer’s position by removing the limitation inherent in the statutory system governing orders for costs of proceedings, and is therefore unfair.
With regard to the question whether, after the unfair costs clause has been struck out, an order for costs of proceedings can still be made on the basis of Article 237 Rv, the Supreme Court itself referred a preliminary question to the CJEU. The CJEU reformulated that question as follows:
“Where a seller includes an unfair legal costs clause in a contract and the contract is capable of continuing in existence after the deletion of the legal costs clause, must Articles 6(1), 7(1) and 8b of Directive 93/13 be interpreted as precluding a consumer who is unsuccessful in legal proceedings from being ordered to pay the seller’s legal costs in accordance with national procedural law, from which the unfair legal costs clause deviated to the detriment of the consumer?”
On 1 October 2026 (Case C‑459/25), the CJEU answered that the Unfair Contract Terms Directive does not preclude the court, even after an unfair costs clause has been annulled, from ordering the consumer who loses the case to pay the costs of proceedings in accordance with Article 237 Rv:
“Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, as amended by Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019, read in the light of the principle of effectiveness, must be interpreted as meaning that, where a contractual clause requiring a consumer to pay all the legal costs relating to proceedings resulting from his or her failure to fulfil one of his or her obligations arising under a lease agreement or imposed by law has been declared unfair and, consequently, void, but the agreement in question is nonetheless capable of continuing in existence without that clause, those provisions do not preclude that consumer, who is unsuccessful in judicial proceedings, from being ordered to pay the costs in accordance with the national procedural law governing the allocation and taxation of costs.”
The CJEU’s reasoning can be briefly summarised as follows.
The starting point is that the national court may not replace an unfair term with a national provision of supplementary law if the contract can continue to exist without that term. This prohibition on replacement is intended to safeguard the long-term objective of Article 7 of the Directive: maintaining the deterrent effect that results from unfair terms simply not being applied.
Article 237(1) Rv, together with the associated scale of costs (liquidatietarief), does not constitute a “national provision of supplementary law” within the meaning of the Directive. Article 237(1) Rv does not govern the relations between the parties to a contract, nor does it reflect the contractual balance; it is addressed exclusively to the national court. The prohibition on replacement therefore does not preclude the court from ordering the consumer to pay the costs of proceedings: the court is not replacing the unfair term with supplementary contract law, but is exercising its own procedural competence.
According to the CJEU, Article 237 Rv is not contrary to the principle of effectiveness, because it does not substantially discourage the consumer from exercising his rights.
This judgment is good news for landlords and other users of standard terms and conditions. Many tenancy agreements and sets of standard terms contain a costs clause. If the annulment of that clause were to result in the consumer no longer being ordered to pay the costs of proceedings, this would have major financial consequences for landlords and other users.
Do you have questions in response to the above, or would you like to have your standard terms and conditions reviewed for unfair terms? Please feel free to get in touch. We would be glad to assist you.
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