Index Selection Checklist
The applicable index is determined by the nature of the tenant’s activity, not by the parties’ preference: commercial and artisanal activities → ILC; tertiary non-commercial activities (liberal professions, logistics) → ILAT. Using the wrong index makes the clause unwritten.
For the three-year review cap and the renewal rent cap: only the ILC or ILAT may be used. The ICC was removed for leases concluded or renewed from 1 September 2014. For contractual indexation clauses, the ILC, ILAT, and ICC are all still permitted, as are directly connected industry-specific indices and the general price level (CPI).
An action to challenge a void index clause is not time-barred (Cass. 3e civ., 19 November 2020; 16 November 2023). Repayment of overpaid rent is subject to a five-year limitation period running from each payment (Cass. 3e civ., 30 June 2021). The void clause does not affect the validity of the lease itself.
Align the indexation index with the review index: using ICC for indexation while ILC/ILAT governs the three-year review creates an arbitrage opportunity. A mid-lease index change may constitute a notable modification of the parties’ obligations justifying uncapping at renewal.
Always include a fallback index clause: specify the substitute index to apply if the primary index is declared void or ceases to exist. Without this, the parties face a legal vacuum if the chosen index disappears and cannot agree on a replacement.

Three Contexts, Same Indices

Indices appear in French commercial leases in three distinct contexts, each governed by different rules:

  • The three-year statutory review (Art. L. 145-38 C. com.): uses the ILC or ILAT to cap the reviewed rent. The parties cannot choose different indices for this calculation — the statutory rule is mandatory;
  • The renewal rent cap (Art. L. 145-34 C. com.): also uses the ILC or ILAT, replacing the ICC which was removed in 2014;
  • The contractual indexation clause: the parties have more latitude — they can choose the ILC, ILAT, or ICC, or any index with a direct connection to the lease or one party’s activity, or in certain cases the general price level.

A choice that is lawful in one context may be unlawful in another. Keep the three contexts separate when drafting or reviewing any index provision.

ILC or ILAT: Which Applies to Which Activity

The framework is set out in Article D. 112-2 of the Code monétaire et financier. Both indices are composite indices published quarterly by INSEE, but they track different economic variables and apply to different categories of activity.

ILC — Indice des Loyers Commerciaux C. mon. fin. Art. D. 112-2, al. 1
Composition Weighted sum of consumer prices, new construction costs, and retail turnover
Applies to Commercial and artisanal activities
Examples Shops, restaurants, hotels, artisans of all kinds, industrial activities under Art. L. 145-1; bank branches, travel agencies, property agencies
ILAT — Indice des Loyers des Activités Tertiaires C. mon. fin. Art. D. 112-2, al. 2
Composition Weighted sum of consumer prices, new construction costs, and GDP in value
Applies to Tertiary activities other than commercial and artisanal
Examples Liberal professions, logistics warehouses, teaching activities, purely professional use premises, property management companies

The boundary between ILC and ILAT is not always clear. The ILAT was introduced in 2011 and its scope remains imprecisely defined, since “tertiary activities” has no statutory definition. The determining factor for grey-zone premises is the nature of the activity, not the physical format of the premises. A bank branch is a commercial activity (ILC); a property management company collecting rents without trading commercially arguably uses ILAT.

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Warning — The Grey Zone for Office/Retail Hybrids

The most disputed category is what practitioners call “boutique-bureaux”: premises that look like offices but are used for commercial activity — bank branches, insurance agencies, real estate agencies. The determining factor is the nature of the activity, not the physical format. Where there is doubt, identify the applicable index at the time of drafting and state the reasoning in the lease, so the choice is not challenged years later when the indices have diverged.

The ICC: No Longer Used for Reviews and Renewals, But Still Permitted for Indexation

The Indice du Coût de la Construction (ICC) tracked new construction costs and was the only index used in French commercial leases until 2014. The Pinel Act removed it as the reference index for both the three-year review cap and the renewal rent cap, replacing it with the ILC and ILAT for leases concluded or renewed from 1 September 2014.

The ICC was not abolished for contractual indexation clauses. Older leases that still reference the ICC for their indexation mechanism are not automatically void. However, using the ICC for indexation when the ILC or ILAT will govern the three-year review creates a structural tension: if the ICC moves differently from the applicable review index, the tenant may be able to invoke the statutory review to push the rent down to the ILC/ILAT-capped level, even though ICC indexation has been pushing it up. The indexation index should be aligned with the review index to eliminate this arbitrage opportunity.

Indexation Clauses: The Permitted Index Menu

For a contractual indexation clause, Article L. 112-2 of the Code monétaire et financier defines which indices are lawful. An indexation clause may use:

  • The ILC (commercial and artisanal activities);
  • The ILAT (tertiary activities);
  • The ICC (still permitted for indexation, though no longer used for reviews and renewals);
  • Any index with a direct connection to the object of the lease or to the activity of one of the parties (e.g. an index tracking the cost of raw materials specific to the tenant’s trade);
  • The general price level (CPI) — permitted under Article L. 112-3 for commercial, artisanal, and tertiary activities.

What is expressly prohibited is indexation based on the minimum wage (SMIC), on the general level of prices or wages generically, or on prices of goods or services with no direct connection to the lease.

Changing the Index During the Lease

A mid-lease change of the indexation index is a modification of the parties’ respective obligations. Under Art. L. 145-33 C. com., the parties’ obligations form part of the factors that determine rental market value. Changing the index could therefore constitute a notable modification of an element affecting rental value, which could in turn justify uncapping the renewal rent. This risk is frequently overlooked when tenants negotiate an index switch hoping for a more favourable trajectory. Mid-lease index changes should not be made without a thorough analysis of the renewal implications.

When the Index Is Void: Consequences and Prescription

An indexation clause specifying a prohibited index is unwritten as to the index choice. The sanction affects the clause itself, not the whole lease: the landlord cannot use the void clause to demand termination of the lease (Cass. 3e civ., 14 June 1983). Equally, an index clause in a three-year review context specifying a non-statutory index is unwritten under Art. L. 145-15 C. com.

The critical point on prescription: an action to have a clause declared unwritten is not subject to any limitation period (Cass. 3e civ., 19 November 2020; Cass. 3e civ., 16 November 2023). A tenant can challenge a void index clause at any time, including many years after the lease was signed, and claim repayment of any excess rent paid — subject to the five-year limitation period for the repayment claim itself (Cass. 3e civ., 30 June 2021, n° 19-23.038), running from the date of each overpayment.

Where a clause is declared void, courts have sometimes substituted a lawful index rather than simply striking the clause (Cass. 3e civ., 22 June 1987). However, the court cannot impose an index that was not agreed by the parties (Cass. com., 16 November 2004).

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Drafting Point — Include a Fallback Index

Include in the indexation clause a provision for index substitution: if the chosen index is declared void, ceases to be published, or becomes unavailable, specify the substitute index to be applied — or provide that a substitute will be agreed by the parties within a stated period, failing which it will be fixed by an expert appointed by the court at shared cost. This avoids the legal vacuum that arises when the primary index disappears and the parties cannot agree on a replacement.

Practical Checklist: Reviewing an Indexation Clause
Step 1 — Identify the activity precisely: commercial or artisanal → ILC; tertiary non-commercial (liberal professions, logistics) → ILAT; grey-zone activity → assess on the basis of the commercial character of the activity, not the physical format of the premises. State the reasoning in the lease.
Step 2 — Verify consistency across all three contexts: confirm the indexation clause, the three-year review clause, and the renewal clause all use the same index. If the indexation clause still references the ICC (from a pre-2014 lease), assess the arbitrage risk and consider updating it.
Step 3 — Add the fallback clause: specify in the indexation clause what happens if the primary index is declared void or ceases to be published. A fallback to the other permitted index (ILC ↔ ILAT) or to the CPI is typically appropriate, with a defined procedure for expert determination if the parties cannot agree.
Step 4 — Do not change the index mid-lease without renewal analysis: a mid-lease index switch that constitutes a notable modification of the parties’ obligations could justify uncapping at the next renewal. Model the renewal impact before agreeing to any index change as part of a renegotiation.
Step 5 — For existing leases with a potentially void index clause: assess whether the index used has a direct connection to the lease or the parties’ activity. If there is a risk, quantify the exposure (overpaid rent × five years). The void clause challenge is not time-barred, but the repayment claim is.
Reviewing or Drafting an Indexation Clause?

Index selection errors are easy to make and expensive to correct — particularly given that challenges carry no limitation period. We advise on index selection, mid-lease index disputes, and the drafting of indexation clauses that hold up across the full lease term and at renewal.

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Legal Notice. This article is for general information and educational purposes only. It does not constitute legal advice. Laws and regulations may have changed since publication. Always seek qualified French legal advice on index selection in a French commercial lease.