On 1 October 2026, the Court of Justice of the European Union delivered its judgment in Case C-459/25, concerning a lease between a professional landlord and a consumer tenant.

The lease contained a term requiring the tenant, in the event of a breach, to pay all of the landlord's legal costs. This could cover lawyers' fees, the costs of commencing and conducting proceedings, and other expenses connected with recovering the claim.

Such a term may be unfair because it transfers the entire financial risk of litigation to the consumer in advance and without a clear limit. Once a court finds the term unfair, it ceases to have effect.

A contractual costs term and a court costs order are different

The Court explained that removal of the term does not release the tenant from the ordinary consequences of losing court proceedings. A court may still order an unsuccessful tenant to reimburse the other party's costs under national procedural rules.

The distinction matters: a contract may not automatically shift all of the landlord's actual costs to a consumer, while a court may award the recoverable costs prescribed by law after assessing the specific case.

The judgment is relevant to landlords, agencies and other businesses using standard terms on recovery costs, lawyers' fees and litigation in consumer contracts.