Austrian OGH Decision on Clarity of Technical Terms in GT&Cs

Jul 18, 2025 Benn-Ibler Rechtsanwälte

Section 6(3) of the Austrian Consumer Protection Act (Konsumentenschutzgesetz, hereinafter KSchG) states that a contractual provision in general terms and conditions or contract forms is considered invalid if it lacks clarity or is incomprehensible.

Defendant set general rules for bonus pensions

In the case at hand, the defendant conducts an insurance business and routinely enters into insurance contracts with consumers. These contracts incorporate the General Insurance Conditions for Life and Pension Insurance (Allgemeine Versicherungsbedingungen für Erlebens- und Rentenversicherungen, hereinafter AVB) as the standard terms and conditions (AGB). Sections 16(10) and (11) of the AVB state:

(10) The bonus pension is a type of profit distribution offered by some tariffs during the pension payment period.

(11) The bonus pension amount will be sustained provided that the annual profit participation rate remains at or above the threshold necessary to support the bonus pension.

If the annual profit share rate exceeds the amount needed for the bonus pension, the surplus is applied as a one-time premium for an additional pension from the date when the profit is credited. The percentage increase in the pension is reported in the relevant annual report. These additional pensions also contain a bonus pension component.

If the annual profit participation rate falls below the bonus pension threshold, both the pension and related shares will be adjusted based on specified actuarial principles.

The plaintiff, a duly authorised association with standing to initiate class actions, sought an injunction on the basis that the clause in question lacked transparency. Both the court of first instance and the appellate court ruled in favour of the plaintiff. The appellate court specifically stated that the term ‘actuarial principles’ did not meet the standard of transparency required.

Technical terms do not always reduce transparency

However, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) decided as follows:

The transparency requirement stipulates that terms used should be familiar to the average consumer or at least reasonably understandable. Nevertheless, general terms and conditions may include necessary technical terminology. In sectors involving complex investment or insurance products, it is reasonable to presume a basic level of consumer knowledge to ensure that these industries retain their ability to communicate effectively within legal frameworks. Accordingly, the use of the term ‘actuarial principles’ does not constitute a violation of the transparency requirement.

OGH 7 Ob 3/25d (21 May 2025)