European Court of Justice Upholds Compensation Limits in Emissions Scandal

The European Court of Justice (ECJ) in Luxembourg has ruled that the use of a vehicle can be factored into damage claims related to the emissions scandal. This decision came after the Regional Court of Ravensburg sought clarification on pertinent legal questions.

According to the court's ruling, car buyers entitled to compensation can have the usage of their vehicles accounted for in the damages awarded to them. Furthermore, the court found that capping compensation at 15 percent of the purchase price does not inherently violate EU law. However, the compensation must still provide adequate restitution, as emphasized by the court.

The Regional Court of Ravensburg is currently handling lawsuits from car buyers against Volkswagen. The Federal Court of Justice in Karlsruhe previously determined that buyers affected by the diesel scandal are entitled to compensation, even in cases of negligence. However, it limited the compensation to a maximum of 15 percent of the purchase price and allowed for the deduction of vehicle usage. The ECJ has now deemed both of these stipulations permissible.

Two vehicle owners initiated legal action, claiming their cars were equipped with a 'thermal window' feature. This software, which reduces exhaust gas recirculation at outside temperatures above ten degrees Celsius, was deemed an illegal defeat device. In one instance, this thermal window was only installed after the vehicle was purchased, via a software update.

In the Ravensburg case, manufacturers have argued in some instances that they could not have reasonably known that a defeat device was illegal, especially if the Federal Motor Transport Authority had approved it. In response, the ECJ clarified that a car manufacturer cannot evade liability solely because a national authority authorized the vehicle type or the defeat device, even if it possesses an EU type approval. Additionally, it is irrelevant whether the software was present from the start or was later installed.

The Regional Court of Ravensburg will now decide on the specific legal disputes, evaluating whether the deduction for vehicle usage and the cap at 15 percent constitutes reasonable compensation.