Facts
The [X. AG] (landlord) had rented the hotel/restaurant [Y.] including an apartment in Engelberg to [A.] and [B.] (tenants) by rental agreement of July 17, 2004. On December 15, 2005, the landlord terminated the rental agreements for the hotel/restaurant and the apartment as of July 15, 2006, citing the reason of own use. The tenants contested the termination before the conciliation authority and alternatively requested an extension of the rental agreement by four years.
The conciliation authority found that the rental agreement would last until June 30, 2010. The landlord brought an action before the President of the Cantonal Court II, who granted the action and declared the termination valid. The Higher Court Commission of the Canton of Obwalden overturned the decision of the President of the Cantonal Court and declared the termination invalid.
The landlord filed a complaint with the Federal Court, which dismissed the complaint insofar as it was admissible.
Considerations
The Federal Court stated that the lower court had not incorrectly distributed the burden of proof. The termination was invalid because the landlord had not proven own use. The lower court had rightly assumed that the landlord had not made own use credible.
The Federal Court pointed out that the termination was contestable if it violated the principle of good faith. The termination had to be justified upon request. A termination was contrary to good faith if it was declared without an objective, serious, and…