Lidl denied damages after termination - new ruling from the Supreme Court

The background of the case was that the lease agreement for one of Lidl's stores had been terminated. The landlord cited demolition and reconstruction of the property as reasons for the termination, as well as having other justified reasons to terminate the lease agreement. After the termination, the landlord offered an alternative premise which Lidl deemed unacceptable, leading Lidl to claim damages under Chapter 12, Section 57 of the Swedish Land Code.

According to Chapter 12, Section 57 of the Swedish Land Code, a commercial tenant is entitled to compensation if the landlord terminates the lease agreement. However, the tenant's right to compensation can be nullified if the landlord has justified reasons to refuse an extension of the lease in accordance with the demolition and reconstruction provisions (first paragraph 2 and 3) or if the landlord has other justified reasons to dissolve the lease under the so-called general clause (first paragraph 4). The general clause can also be applied in cases of reconstruction and demolition.

The Supreme Court found that the demolition and reconstruction provisions could not be applied in this case because the alternative premises offered by the landlord were not acceptable. No condition that Lidl waived its right to compensation due to the indirect security of tenure was included in the lease agreement. The crucial question in the case was therefore whether the landlord's interest in taking possession of the premises outweighed the tenant's interest in continuing to operate in the premises, i.e., whether an assessment under the general clause would lead to a different conclusion.

Given that the landlord had concrete plans to develop the property in line with the city's vision for the area, the landlord was considered to have a strong interest in dissolving the lease. On the other hand, Lidl had operated in the current store location for a long time, and the store had a very good location. Despite this, Lidl had opened a nearby store in close time proximity to the termination and already had another store in the vicinity, which reduced the turnover and interest in continuing to operate the existing store. The nearby stores also impaired the landlord's ability to offer acceptable alternative premises. Upon a comprehensive assessment, the balance of interests favored the landlord, and the landlord was therefore not required to pay any compensation to Lidl.

In the ruling, the Supreme Court reviews relevant case law regarding Chapter 12, Section 57 of the Swedish Land Code with certain clarifications. The Supreme Court also provides some guidelines for the application of the demolition and reconstruction provisions, including how the offering of alternative premises and the assessment of its suitability should be conducted. Some guidance can also be drawn regarding which circumstances can typically be considered significant in a comprehensive assessment and balance of interests under the general clause, although ultimately it always becomes a matter of balancing the circumstances of the individual case.