Minimum contract terms for end customer contracts – decisions by the ECJ and the Hamburg Higher Regional Court with consequences for practice

ECJ, judgment of February 13, 2025, C-612-23) and OLG Hamburg, judgment of December 19, 2024, 10 UKl 1/24

The European Court of Justice and the Hanseatic Higher Regional Court in Hamburg (OLG Hamburg) have each dealt with the contract terms of end customer contracts for telecommunications services in a ruling.

Both decisions have far-reaching consequences for the practice of telecommunications companies in dealing with end customer contracts.

The ECJ ruling

The ECJ has ruled that the minimum contract term for end-user contracts for telecommunications services is a maximum of 24 months. This applies regardless of whether it is a "new contract" concluded within the term of an existing contract. The maximum term of 24 months for the new contract does not begin with the expiry of the term of the first contract, but with the conclusion of the second contract. Any provisions to the contrary in general terms and conditions are invalid. In the present case, there was an end customer contract for a mobile phone connection and the customer had concluded a new contract within the statutory term of this contract of a maximum of 24 months in order to obtain a new end device. The new contract presented by the telecommunications company for conclusion contained a note that the term of the new contract of at least 24 months would only begin at the end of the term of the original first contract.

The dispute in the present case concerned the interpretation of Article 30 V of Directive 2002/22/EC of the European Parliament and of the Council of March 7, 2002, on universal service and user rights relating to electronic communications networks and services (Universal Service Directive), as amended by Directive 2009/136/EC of the European Parliament and of the Council of November 25, 2009. There was a long-standing dispute as to whether the provision meant that, when a new contract was concluded during the term of the initial contract, the new maximum contract term of 24 months began to run only at the end of the term of the first contract or already upon conclusion of the second contract if (as is usually the case) the telecommunications company's general terms and conditions contained corresponding provisions.

Until 2021, the regulations were implemented in the German Telecommunications Act (TKG) in Section 43b TKG (old) and are now contained in Section 56 TKG in the current version, which the TKG received in implementation of Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 on the European Electronic Communications Code. The old law was therefore the subject of the case, as it was a case from 2018 that was first decided by the Regional Court of Düsseldorf, then by the Higher Regional Court of Düsseldorf, the Federal Court of Justice and then again by the Higher Regional Court of Düsseldorf, to which the Federal Court of Justice referred the case back. The Higher Regional Court of Düsseldorf then referred the decision to the ECJ, which has now clarified the decision as described above. The decision is also relevant for the legal situation under the current TKG and its Section 56. Although the decision was issued on Art. 30 V Universal Service Directive, it is also relevant for Art. 105 I Directive (EU) 2018/1972 (EECC Directive) in conjunction with the correlation table in Annex XIII. It must therefore also be taken into account when interpreting the current Section 56 TKG. A violation of this means that the contract is to be regarded as concluded for an indefinite term and thus as terminable at any time. In any case, this is how the BGH ruled on Section 43b TKG (old version) (see BGH NJW-RR 2023, 1016 marginal no. 38). It can hardly be doubted that the BGH would also decide accordingly today in view of the provision of Section 56 TKG in force since December 2021.

Telecommunications companies in both the fixed network and mobile communications sectors must therefore take this decision into account in their contract designs in order to avoid the risk of termination in their customer base and to keep the churn rate low.

On the decision of the Higher Regional Court of Hamburg

In another decision, the Higher Regional Court of Hamburg had to deal with the question of when the term of an end customer contract for telecommunications services begins. This question is relevant insofar as the term is limited to a maximum of 24 months under Section 56 of the German Telecommunications Act (TKG). The general terms and conditions of many telecommunications companies contain a corresponding provision stating that the start of the contract term coincides with the start of service provision. A corresponding agreement between telecommunications companies and end customers is generally compatible with the provision of Section 56 TKG. However, the Higher Regional Court of Hamburg dealt with the question of whether the law on general terms and conditions – in this case Section 309 No. 9 lit a) BGB – must be observed despite the provision in Section 56 TKG.

Does the law on general terms and conditions therefore take precedence over the provision in Section 56 TKG, which expressly stipulates that the start of the contract term is the start of service provision, when general terms and conditions are used that set the start of the contract term at a later date than the conclusion of the contract, or is Section 56 TKG a special provision that takes precedence over the law on general terms and conditions?

This legal question has practical implications in particular where telecommunications companies, in the context of expanding new infrastructure, such as the cost-intensive laying of fiber optic cables, which is usually carried out in civil engineering, carry out pre-marketing and conclude contracts with end customers in order to secure revenues and thus the business case for the investments. In such cases, the provision of services often begins months and, not infrequently, more than a year after the conclusion of the contract, because the network expansion, including planning and implementation as well as the necessary approvals from the authorities pursuant to Section 127 TKG for civil engineering, takes a considerable amount of time.

The Higher Regional Court of Hamburg affirmed the application of the law on general terms and conditions and concluded in the specific case that a provision in the general terms and conditions corresponding to Section 56 TKG contradicts Section 309 No. 9 lit a) BGB. Section 56 TKG is therefore not a lex specialis provision that takes precedence over the law on general terms and conditions in the BGB. The contract term should therefore begin with the conclusion of the contract and not with the start of service provision, i.e., the activation of the telephone or Internet connection for use by the customer. Based on the general terms and conditions law of the BGB, the customer is therefore particularly worthy of protection in these circumstances.

Outlook

The defendant telecommunications company has since appealed the ruling to the Federal Court of Justice. The ruling is eagerly awaited. However, the decision already has consequences, as considerable legal uncertainty will arise until the Federal Court of Justice has made a decision and customers who are aware of the decision may attempt to terminate their contracts with their telecommunications providers earlier than provided for in the general terms and conditions. Companies will attempt to find solutions to secure their planned revenues.

If the ruling becomes final, it would probably have significant consequences for infrastructure expansion in Germany. At the very least, business plans will have to be adjusted if no creative legal solutions can be found. This, in turn, will influence the investment decisions of corporate bodies, at least until a decision is made by the Federal Court of Justice, which will be much more cautious about network expansion, especially in rural areas with low population density.