Not all things work ’’the German way’’, particularly if they’ve been ilicitly handled with in order to provide an advantage for manufacturers. Starting from this point, we approach the recent developments in the case-law of the Court of Justice of the European Union regarding an objective mechanism of compensation for deceived car owners.
As an introduction, we would like to point out that the focus in this article will be on the case before the Court of Justice of the European Union on the subject of emission control devices in cars. The case in question ended with a landmark decision for Mercedes-Benz and every other car manufacturer, which will have to pay compensation to those who bought vehicles fitted with such devices if they are found to be illegal.
To provide some context and to show the progress made by the CJEU ruling, we would like to point out that until recently car owners who suffered damage due to illicit handling devices could only be compensated if it was proven that the manufacturers had intentionally deceived them. But proving fault is often a difficult task.
This is what happened in the case of the EA189 engines produced by Volkswagen, also known as the “Dieselgate” scandal.
The Volkswagen scandal began on September 18, 2015, when the U.S. Environmental Protection Agency (EPA) warned automaker Volkswagen about fraudulent programming of TDI diesel engines produced from 2009-2015.
They only met nitrogen oxides (NOx) pollution standards under laboratory conditions, exceeding the legal limit by up to 35 times under normal operating conditions. The EPA considers this type of design illegal, and VW has admitted the fraudulent nature of the practice.
Returning to the subject under discussion in this article, we note that in Case C-100/21| Mercedes-Benz Group the Court considers a broader framework for the regulation of motor vehicle type-approval within the Union. In that regard, the Court recalls that, under the Framework Directive, vehicles must be subject to EC type-approval. That approval can be granted only if the type of vehicle complies with the provisions of Regulation No 715/2007, inter alia those relating to emissions.
An important change, which cannot be overlooked, concerns the right of vehicle owners who have suffered damage caused by illicit handling devices to obtain compensation from manufacturers.
Specifically, the CJEU judgment extends the right of owners of vehicles fitted with an illicit handling device to claim compensation if the device has caused them damage, without having to prove intent, as was the case in Dieselgate.
We also consider it important to mention the facts underlying Case C-100/21. We therefore recall that the Ravensburg Regional Court (Germany) was seised of a claim for damages between a private individual (QB), on the one hand, and Mercedes-Benz Group, on the other. The action seeks compensation for the damage allegedly caused by the Mercedes-Benz Group by equipping the diesel vehicle purchased by QB with software which reduces the exhaust gas recycling rate when outside temperatures fall below a certain threshold.
Such a defeat device, which results in increased nitrogen oxide (NOx) emissions, would be prohibited by Regulation 715/2007 on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles.
Next, what we want to present is that the Framework Directive establishes a direct link between the motor vehicle manufacturer and the individual purchaser of a motor vehicle, which aims to guarantee to the latter that the vehicle in question complies with the relevant Union legislation.
Accordingly, the Court considers that the provisions of the Framework Directive, interpreted in conjunction with those of Regulation No 715/2007, protect, in addition to the general interests, the particular interests of the individual purchaser of a motor vehicle in relation to its manufacturer where that vehicle is fitted with a prohibited handling device.
Member States are therefore obliged to provide for the right of repair available to the purchaser of such a vehicle and to lay down, at national level, the arrangements for compensating injured parties.
In the absence of provisions of Union law governing the procedures for obtaining redress for purchasers affected by the purchase of a vehicle fitted with a prohibited manipulation device, it is for each Member State to determine those procedures.
Although it is for each Member State to determine the arrangements for compensation, the Court states that national legislation cannot make it impossible or excessively difficult to obtain adequate compensation for the damage caused to the purchaser.
It is also possible to provide that national courts ensure the protection of rights guaranteed by the Union legal order and do not lead to unjust enrichment.
As a general conclusion, the CJEU’s judgment in Case C-100/21| Mercedes-Benz Group has, in addition to other legislative clarifications, created real leverage for buyers harmed by the installation of illicit handling devices. Recovery of damages has been made easier, thus encouraging injured buyers to take action against vehicle manufacturers who are at fault for installing such devices.
In conclusion, the CJEU’s decision is a wake-up call for car manufacturers who could face a wave of compensation claims in the future.
This article was drafted, for the Costaș, Negru & Asociații – Lawyers’ Civil Partnership blog, by Atty. Loredana Maria Feier, affiliated to the Cluj Bar Association.
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