VW defeated in landmark Dieselgate case brought by van buyer

German court ruling will force carmaker to compensate tens of thousands more customers

Germany’s highest civil court has ordered Volkswagen to pay more than €28,000 to an owner of a diesel minivan, in a landmark judgment that will force the carmaker to compensate tens of thousands of customers.

In the first Dieselgate claim to be heard at the Bundesgerichtshof (Federal Court of Justice) in Karlsruhe since the company was found to be cheating on emissions results more than four years ago, the court found in favour of Herbert Gilbert, who bought a VW Sharan in 2014 for about €31,500.

It ruled that the 65-year-old was entitled to return his vehicle and receive a partial refund, plus interest.

The precedent will de facto force VW to compensate claimants in at least 50,000 outstanding cases.

However, the world’s largest carmaker has largely mitigated the risk of a worst-case scenario.

Last month, it reached a settlement with 240,000 drivers in Germany, who had sued VW in the country’s largest collective lawsuit. They will receive between €1,350 and €6,250 each, as part of a €750m payout.

In 2015, the German group was forced to recall more than 11m cars worldwide after it was revealed that its EA189 diesel engines contained software that manipulated the results of pollution tests.

While VW swiftly reached a €10bn settlement with US owners, and has been forced to set aside more than €31bn in Dieselgate costs, it has taken years for drivers in Germany to receive any compensation en masse.

Instead, tens of thousands of individual cases have wound their way through the country’s legal system, often overwhelming local courts, before the law was changed to allow for a collective lawsuit.

“Today we have made history,” said Claus Goldenstein, whose law firm brought Mr Gilbert’s case.

“The ruling means legal certainty for millions of consumers in Germany and shows once again that even a large corporation is not above the law.”

Volkswagen said it did not expect a wave of new claims, as the statute of limitations may have run out for many of the 2.4m owners of affected VW vehicles in Germany.

It added that it would now approach remaining plaintiffs with “appropriate proposals” in order to “relieve the burden on the judiciary as quickly as possible”.

Further cases being heard at the Bundesgerichtshof in July are expected to clarify whether claimants who bought their VW diesel vehicles after the scandal was uncovered are also entitled to compensation.

The Wolfsburg-based carmaker is also awaiting the result of one of the largest consumer lawsuits in the UK, in which more than 90,000 British VW customers are claiming damages.

The bigger risk for the carmaker, and the wider auto industry, is the upcoming ruling from the European Court of Justice, which is examining whether newer diesel engines, used by VW and several other large brands, were also illegally manipulated.

In April, EU advocate general Eleanor Sharpston advised the ECJ that the technology did contain a “defeat device”.

If the court accepted her opinion, owners of diesel vehicles in Germany “could then refer to our Bundesgerichtshof ruling and enforce compensation in the billions”, said Mr Goldenstein, whose company also represents a further 21,000 claimants against VW.