Facts
In 1974, X. SA leased a six-room apartment of 174 m2 located in Geneva to the spouses Y. On March 2, 2007, X. SA terminated the lease effective June 30, 2007, citing economic reasons in order to re-lease the apartment to a third party for a higher rent.
The spouses Y. filed a request with the Conciliation Commission to annul the notice of termination. The Tenancy Tribunal of the Canton of Geneva annulled the notice, finding that X. SA had not demonstrated that it could re-lease the apartment to a third party for a non-abusive rent higher than the rent paid by the current tenants. The Tenancy Appeals Chamber of the Canton of Geneva confirmed this judgment.
X. SA appealed the decision to the Federal Tribunal.
Considerations
The Federal Tribunal partially upheld the appeal, annulled the contested judgment, and remanded the case to the Appeals Chamber for a new decision.
First, the Federal Tribunal considered that the Appeals Chamber had defined the notion of "neighborhood" in Art. 269a para. 1 let. a CO too restrictively. The neighborhood is not limited to a homogeneous architectural complex and can be heterogeneous. The cantonal authority is best placed to determine the neighborhood in a particular case, and the Federal Tribunal intervenes only with restraint.
Secondly, the Federal Tribunal found that the Appeals Chamber had violated Art. 11…