Indexation clause (clause d'échelle mobile)

The clause d’échelle mobile (indexation clause) is the provision by which the rent of a bail commercial (French commercial lease) moves on its own, usually once a year, in line with an index. It saves the landlord from having to apply for a revision and spares the tenant an unexpected one: the rent follows the curve of the chosen index, up or down. Almost every French commercial lease contains one.

It differs from the statutory three-yearly revision, which requires an application and is calculated differently, and from a fixed step increase, which is not indexation since it depends on no index.

Where the rule comes from

The freedom to index is framed by the French Monetary and Financial Code. Article L. 112-2 requires an index directly related to the subject matter of the contract or to the activity of one of the parties; for commercial rents, these are the ILC (commercial rents index) and the ILAT (tertiary activities rents index). Article L. 112-1 prohibits a clause from taking into account a period of index variation longer than the period elapsed between two revisions, which condemns clauses that create a distortion. The courts treat a clause that operates upwards only as unwritten.

The French Commercial Code adds a safeguard: under article L. 145-39, where, through the operation of an indexation clause, the rent is increased or reduced by more than a quarter compared with the price previously fixed, either party may apply for a revision of the rent, which is then brought back to the rental value.

In a valuation report

I read the clause closely: index adopted, base reference quarter, effective date, any floor or ceiling. I reconstruct the indexed rent year by year to establish the rent actually due at the valuation date. This reconstruction is the starting point for smoothing after uncapping and makes it possible to check whether the one-quarter threshold of article L. 145-39 has been crossed.

For the renewal rental value, the clause counts among the respective obligations of the parties: indexation particularly unfavourable to the tenant can be argued as a factor reducing the rent.

Example

A lease signed in 2016 at €30,000 per year provides for annual indexation on the ILC. In 2024, the indexed rent reaches €37,800, an increase of 26 % on the initial rent. The one-quarter threshold having been crossed, the tenant may apply for a revision to the rental value, which I assess at €33,000 because footfall in the street has fallen. The rent would then be brought down to that amount, subject to the smoothing provided by the same article.

Not to be confused with

The turnover clause, which bases the rent on the tenant’s takings, and the two-part rent (loyer binaire), which combines a guaranteed minimum and a variable element; the Cour de cassation held in 2026 that the latter falls outside judicial rent fixing.