„Dieselgate“: Federal Court of Justice orders VW to pay damages

Affected customers can expect VW to pay several thousand euros in compensation.

With its leading decision of 25 May 2020, the German Federal Court of Justice found that VW had deliberately misled its customers by mounting an illegal shutdown device for exhaust fumes in certain types of engines. The highest civil judges of the country thus confirmed a court ruling of the Koblenz Higher Regional Court, which had awarded damages to a customer. According to the judges, VW’s behaviour, namely the mounting of an illegal shutdown device in certain types of engines, is to be considered immoral and caused damage to the plaintiff. The damage is to be seen in the conclusion of the purchase contract for the defective vehicle, which the buyer would not have concluded if the illegal shutdown device had been known to him.

According to the judges, the purchase contract is disadvantageous for the buyer because, from an ex ante perspective, it is only a matter of chance whether the defect undetected by the buyer at the time of purchase will be revealed and the usability of the vehicle subsequently restricted, for example, by a decommissioning order. According to the Federal Court of Justice, it is not decisive whether the object of purchase is a new or used vehicle.

With its judgment, the Federal Court of Justice clearly strengthens the position of consumers, but also emphasises that, by way of profit adjustments, the use of the defective vehicle by the buyer needs to be taken into account as a deductible when establishing the buyer’s damages.

The scandal surrounding the illegal shutdown device was uncovered in autumn 2015. At that time it came to light that the nitrogen oxide emissions of a particular engine type were higher during normal operation than on the test bench. The software was responsible for activating full exhaust gas purification only on the test bench. VW acknowledged the use of such software.

The judgment has no effect on settlement agreements already concluded in connection with a recent class action. After the verdict, VW announced that it would offer remaining plaintiffs one-off payments.

The judgment of the Federal Court of Justice has no direct legal effect on court proceedings pending outside Germany. However, it cannot be ruled out that, for example, Czech courts dealing with similar cases will base their decisions on the judgment of the Federal Court of Justice and also decide in favour of the customers.

Judgment by the German Federal Court of Justice of 25 May 2020, file no. VI ZR 252/19


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