EU Court rules that victims of Volkswagen emissions scandal can sue in own Member State – Ben Lask acts for UK Government

10 Jul 2020

Consumers have received a boost from the EU Court of Justice, following a ruling that customers who purchased a Volkswagen car affected by the unlawful manipulation of emissions data can sue the manufacturer in their own Member State: C-343/19 VfK v Volkswagen AG.

The judgment arose from a claim brought by an Austrian consumer organisation on behalf of 574 consumers who purchased Volkswagen cars prior to the public disclosure of the fact that the manufacturer had been fitting its vehicles with “defeat devices”. The devices meant that the exhaust gas emissions produced during testing were many times lower than those that would be produced under real-world driving conditions, thereby enabling the cars to obtain the certification required by EU law. The claim sought damages reflecting the fact that the true market value of the cars was said to be significantly lower than the purchase price actually paid.

The issue before the EU Court was whether the Austrian courts had jurisdiction to hear the claim, or whether any such claim had to be brought in Germany, where Volkswagen is based. The matter came before the Court on a preliminary reference, in which the UK Government intervened.

The general rule under EU Regulation 1215/2012 (“the Brussels I Recast Regulation”) is that, in proceedings with a cross-border element, a defendant must be sued in the Member State where it is domiciled. However, an exception to that rule provides that, in certain types of proceedings (including tort), the defendant may be sued in the place “where the harmful event occurred or may occur”. Previous case law had established that the place where the harmful event occurred covered both the place where the damage occurred and the place of the event giving rise to it, the result being that a claimant could choose to sue in either of those places. The question in this case was whether the damage occurred in the Member State where the unlawful devices were fitted to the cars (Germany) or the place where the cars were purchased (Austria).

In a judgment issued on 9 July 2020, the EU Court held that it was the latter. The Court explained that, whilst the cars had become defective as soon as the devices had been installed, the damage had occurred only when the cars were purchased for a price higher than their actual value. Since they were purchased in Austria, that was where the damage occurred. The Court held, moreover, that this was consistent with the Regulation’s aim of predictability, since a manufacturer which engaged in unlawful tampering with vehicles sold in other Member States could reasonably expect to be sued in those Member States. The result is that the claim could proceed in the Austrian court.

The judgment may have important implications for claims brought against Volkswagen in other Member States. In England and Wales, for example, a group of 91,000 claimants is suing Volkswagen in one of the biggest class actions to be heard here.

The UK Government was represented before the EU Court by Ben Lask, who is Standing Counsel to the Competition and Markets Authority.

A copy of the judgment is here.