Volkswagen’s first legal setback

Germany’s top court to rule on compensation for cheating

Almost five years after Volkswagen’s admission to cheating on emissions tests involving millions of diesel engined cars, a top German court will on Monday finally rule in a battle over compensation for tens of thousands of affected owners.

In an early May hearing, judges at the Federal Court of Justice (BGH) said there was a chance for at least partial compensation for some VW buyers, saying they had indeed been harmed by purchasing a manipulated vehicle.

If their colleagues at the Federal Constitutional Court (BVG) agree in their ruling, tens of thousands of cases for compensation could be brought to a close in the coming months.

Such a ruling would be the first major legal setback for VW in its home country, although the scandal has helped drag the entire car sector – one of Germany’s most vital – into a historic crisis.

In recent weeks, an out-ofcourt settlement covering hundreds of thousands of cases and the closure of criminal proceedings already drew a line under the biggest domestic risks for the sprawling car group from the “Dieselgate” scandal.

Monday’s hearing specifically concerned a case brought by 65-year-old Herbert Gilbert, who bought a diesel-powered Volkswagen Sharan minivan in 2014 – just one of the 11 million cars worldwide fitted with cheating software by the carmaker.

An appeals court found in favor of the pensioner, ordering VW to pay 25,616 euros ($27,930) and accept his return of the car. That payout would have been almost 6,000 euros below the original purchase price, as the judges took into account depreciation on the vehicle. Both VW and Gilbert appealed, with the company disputing the grounds for reimbursing the pensioner, while the plaintiff said he should be paid the full purchase price.

If BVG judges decide in favor of reimbursement, that “must to some extent take into account” Gilbert’s years of use from the vehicle and its corresponding loss in value, judge Stephan Seiters said at the court’s earlier hearing.

Such a discount could limit the potential financial blow to VW from thousands of similar cases.

The end of April also brought the closure of a mass lawsuit against the carmaker by hundreds of thousands of plaintiffs, the first of its kind.

VW will pay out at least 750 million euros to 235,000 drivers under an out-of-court settlement reached with consumer representatives, well below the amounts paid out in the US.

Buybacks, fines and compensation payments in the US alone account for most of the more than 30 billion euro cost of the scandal to the manufacturer so far.

Around 60,000 individual German VW owners’ cases remain open, making the top court’s decision a crucial precedent.

The company has already settled tens of thousands of cases.