As far as legally permissible? Not a good idea!

Initial Situation

Jurisdiction clauses (but also other contractual clauses) often contain an addition that essentially reads: "...to the extent permitted by law." Either the drafter copied the relevant clause and did not think about it (which is always a bad idea) or did not know what is legally permissible or not. The fact is, such a contractual clause can become problematic.

Case Law

The Bavarian Supreme Regional Court (BayObLG) dealt with the validity of the following jurisdiction clause contained in general terms and conditions in a contract between two entrepreneurs (BayObLG, Order of 26 October 2021 – 101 AR 148/21):

"The place of jurisdiction for all disputes arising from this contract is exclusively Stuttgart, to the extent permitted by law."

The BayObLG considers this clause to be invalid. Unlike the two lower courts, it did not address the relevant provisions of the German Code of Civil Procedure (especially § 38 ZPO) but already found the clause to be invalid due to a violation of the transparency requirement under the law of general terms and conditions (§ 307 Paragraph 1 Sentence 2 BGB).

Firstly, the court points out that the contract text, in which the jurisdiction clause is embedded, already exhibits the character of a form used by the plaintiff based on its external appearance as well as its content, and thus constitutes a general term and condition.

The court considers the jurisdiction clause - even in business transactions - to be non-transparent due to the addition "to the extent permitted by law," which leads to the invalidity of this clause.

It has not yet been determined at the highest judicial level whether a severability clause in general terms and conditions can be exceptionally deemed valid if the legal situation is doubtful or if the user should be spared from formulating exceptions for exceptional circumstances in the interest of the clarity of the clause. However, if the legal situation is clear, for which a regulation is to be made in general terms and conditions, and the issue of clarity for this regulation is not relevant, severability clauses in general terms and conditions - even in business transactions - cannot be validly agreed. In this situation, the user is rather required to provide a clear version of their general terms and conditions. They cannot leave it to the courts to limit a broadly and carelessly formulated clause to the legally permissible measure and thus give it any content at all; however, this is what the use of a severability clause leads to.

The court's view is correct and not surprising. The Federal Court of Justice (BGH) had already ruled in 1995 (BGH, Judgment of 12 October 1995 - I ZR 172/93) and in 2012 (BGH, Order of 20 November 2012 - VIII ZR 137/12) that severability clauses of the type "to the extent permitted by law" in general terms and conditions cannot be validly agreed upon if the legal situation is not seriously doubtful. In this context, the prohibition of validity-preserving reduction must also be observed, according to which it is the responsibility of the user of the general terms and conditions if the clause is not clear and understandable. It is not the task of the courts to limit the clause to the legally permissible extent.

Practical Note from the User's Perspective

Avoid the addition "to the extent permitted by law" in your pre-formulated contractual clauses, especially in the jurisdiction clause. This addition brings no security but, on the contrary, leads to the invalidity of the clause. This naturally also applies to similar additions such as "to the extent that no mandatory provisions are opposed," "to the extent that the law does not prescribe otherwise mandatorily," etc.

Practical Note from the Contract Partner's Perspective

You have a convincing argument for the invalidity of the clause and can use this knowledge tactically in case of a dispute.