Top EU court lowers hurdles for diesel claims over illegal software

LUXEMBOURG — Diesel exhaust treatment software that shuts down below certain temperatures is illegal and such car owners are entitled to seek compensation, the EU's top court said on Tuesday, opening the door to a fresh wave of "dieselgate" suits.

The European Court of Justice (ECJ) said "the purchaser of a vehicle equipped with an unlawful defeat device has a right to compensation from the car manufacturer where that device has caused damage to that purchaser".

The judgement paves the way for a wave of fresh compensation claims against carmakers that equipped diesel cars with so-called "thermal window" software.

"Such a defeat device, which results in an increase in nitrogen oxide [NOx] emissions, is prohibited," the ECJ said.

Carmakers have long argued that their use of the software, which deactivates exhaust treatment measures when outside temperatures fall below a certain threshold, was necessary to protect the engine — even if it made the car more polluting.

The ECJ judgement comes after a German court in Ravensburg asked it to weigh in on a case brought by the owner of a Mercedes-Benz vehicle equipped with the "thermal window" software.

German judges have until now set high hurdles for "thermal window" damages, asking plaintiffs to prove that the car manufacturer had intentionally harmed the buyer rather than being merely negligent.

The ECJ said it was now up to the court in Ravensburg to establish that the software in the Mercedes-Benz case indeed constituted a defeat device, and calculate the amount of compensation that may be owed.

The ruling will likely have ramifications across the 27-member European Union.

"EU law protects, in addition to public interests, the specific interests of the individual purchaser of a motor vehicle," the ECJ said.

EU member states have to make sure that buyers of vehicles equipped with defeat devices have a right to compensation, it added.

"National legislation cannot make it impossible or excessively difficult for the purchaser to obtain adequate compensation for the damage caused to him or her," the judges added.

Mercedes-Benz said it "remains to be seen" how national courts will interpret the ECJ judgement.

It added that Mercedes-Benz vehicles that were recalled and received the appropriate software updates "can be used without restriction".

The "thermal window" software issue is different from the cheating scandal that erupted in 2015 when Volkswagen admitted to installing illegal defeat devices in millions of diesel cars to dupe emissions tests.

The manipulating software made the cars seem less polluting in the lab than they were on the road.

The resulting "dieselgate" scandal has led to a flood of lawsuits against the German giant, and ensnared other carmakers as well.

German consumer lawyer Claus Goldenstein, who represents some 50,000 claimants in connection with the emissions cheating scandal, said the ECJ ruling "simplifies" the legal battle for owners of cars with "thermal window" software.

"Several million people across Europe can benefit from today's ruling," he said in a statement.