Lindenbaum › news & insights › Approval from authorities does not shield car manufacturers from liability in the Diesel scandal

Approval from authorities does not shield car manufacturers from liability in the Diesel scandal

In the CM and DS/Volkswagen AG judgment of 1 August 2025, the European Court of Justice (“ECJ”) confirmed that car manufacturers cannot escape liability by relying on approvals by competent authorities.

Before a car is sold or operated in the EU, it must receive type-approval from the relevant national authority, which involves passing tests to ensure the car’s design meets strict EU safety, environmental and technical standards. In this ruling, the ECJ clarified that even if the car is accompanied by a certificate stating that it is type-approved, such approval does not legitimize defeat devices. Furthermore, the ECJ also ruled that (i) it makes no difference for liability whether the defeat device was installed during the production or later via a software update; and (ii) EU law does not preclude capping compensation at 15% of the purchase price, provided this fairly covers the harm suffered.

This ruling is among several emerging from ongoing litigation relating to the ‘Dieselgate’ scandal which exposed car manufacturers for installing unlawful defeat devices in diesel vehicles certified under the Euro 5 and Euro 6 emission standards. These emission standards, require new diesel vehicles marketed after 2011 (Euro 5) and after 2015 (Euro 6) to be equipped with special filters to reduce harmful exhaust pollutants. However, tests revealed that manufacturers installed defeat devices to cheat emissions tests, making cars appear cleaner during laboratory testing than they actually were under normal driving conditions.

Shortly before this ruling, the Amsterdam District Court already ruled in another Diesel claim, this one against the car manufacturer Stellantis. The District court concluded, similar to the ECJ in the CM and DS/Volkswagen case, that approval from competent authorities does not shield car manufacturers from liability.

Factual and Legal Background of ‘Dieselgate’

Defeat devices are software mechanisms that reduce the effectiveness of emission control systems, leading to real-world emissions far beyond the permitted values. Such defeat devices are prohibited under Article 5(1) and (2) of Regulation No 715/2007 of 20 June 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) (the “Regulation”).

The ‘Dieselgate’ scandal uncovered that various car manufacturers, including Volkswagen, installed these defeat devices in diesel vehicles. Once this surfaced, Volkswagen updated its software for the vehicles. This software reduced the exhaust gas recirculation rate when outside temperatures went above or fell below a certain threshold, meaning that it was only fully effective if the outside temperature did not drop below 10 °C, known as a “temperature window”. Manufacturers appeared to have deliberately chosen the range in which the system was in full operation to cheat emissions tests, as the test for type-approval is conducted with a prescribed temperature between 20 and 30 °C. Similarly, in the recent case against Stellantis, an expert found reduced operation of the system in Euro 5 Opel vehicles at temperatures between 13 and 18 °C and that the system was deactivated at temperatures lower than 13 °C or higher than 36 °C.

Both Volkswagen and Stellantis argued that the temperature window was necessary in order to protect the mechanical parts of the car and, therefore, falls under an exception in the Regulation. Furthermore, Volkswagen argued that, if the relevant German authority had been consulted about the system, it would have confirmed the company’s mistaken belief that the defeat device was lawful. Due to such “hypothetical approval” the defeat device would be an “unavoidable error”.

Earlier Judgments

For context, below are the most relevant cases upon which the ECJ grounded its judgment in this case:

• In QB/Mercedes-Benz the ECJ ruled that the purchaser of a motor vehicle equipped with a defeat device has a right to claim compensation from the manufacturer of that vehicle where the device has caused loss or damage to that purchaser. The ECJ considered that the European regulations on emission reductions are intended to protect the interests of the individual purchaser against the manufacturer.[2] Furthermore, the Court emphasized that when acquiring a vehicle that has received type-approval and is, therefore, accompanied by a certificate of conformity, an individual purchaser can reasonably expect that the type-approval Regulation has been complied with and therefore, can take action in the case of non-conformity.
• In GSMB/Auto Krainer, the ECJ clarified that exceptions listed under Article 5 (2) of the Regulation must be interpreted strictly and can only be used to limit the manufacturer’s liability in exceptional circumstances. As such, in GSMB the ECJ ruled that the exemption did not apply if the emissions control system – intended to protect parts of the exhaust gas recirculation valve, the exhaust gas recirculation cooler and the diesel particulate filter – was only active when the outside temperature was between 15 and 33 °C and the driving altitude was less than 1000 meters. The Court based its reasoning on the fact that in the European Union temperatures below 15 °C and altitudes above 1000 meters are to be considered normal.
• In IR/Volkswagen the ECJ ruled that pollution control devices must comply with obligations laid down in the type-approval Regulation, whether they are installed from the outset or after a vehicle’s entry into service.

Questions posed to the ECJ

The German Landgericht Ravensburg submitted a request for a preliminary ruling to the ECJ concerning the following questions:

• whether EU law precludes the vehicle manufacturer from relying on the existence of an unavoidable error, or that the vehicle had  received type-approval from the competent authority, or hypothetically would have received approval from the competent authority, in order to escape liability.
• whether installing an unlawful defeat device via a software update after EC type-approval has an impact on the purchaser’s right to compensation.
• whether the amount of compensation can be reduced to account for the benefit the purchaser received from using the vehicle and can be capped at 15% of the purchase price.

The judgment

In answering the first question the ECJ confirmed that a vehicle manufacturer cannot avoid liability or the obligation to pay compensation on the ground that type-approval has been granted or would have been granted by the competent authority.

As to the second question, the Court ruled that there should be no difference in the amount of compensation the purchaser receives if the unlawful defeat device was installed during the stage of production or later via a software update, as permitting installation after type-approval would undermine the regulation’s objective of protecting the environment and reducing emissions.

Lastly, the ECJ held that EU law does not preclude the amount of compensation granted to the purchaser to be reduced by an amount corresponding to the benefit the individual purchaser derived from using the vehicle, and does not preclude the amount of compensation to be capped at 15% of the purchase price, provided the amount adequately compensates for the loss or damage suffered.

Relevance for consumer claims in the Netherlands  

The additional clarification provided by the ECJ in this case represents a positive step for consumers who purchased diesel vehicles equipped with unlawful defeat devices and who are seeking justice through numerous ongoing collective and individual lawsuits across Europe.

In the Netherlands, Volkswagen settled claims for owners of around 100,000 cars with a “EA189” Diesel engine, for an amount of EUR 300 up to EUR 2,500 per vehicle. Claims for other engines, and against other car manufacturers, are however still pending.

In the case Stichting Emissions Claim /Stellantis, the District Court of Amsterdam already ruled before the ECJ judgment that consumers have a right to compensation even if the competent authority’s approval has never been withdrawn. The CM and DS/Volkswagen case confirms the District Court’s judgment in that case.

Importantly, in the Stichting Emissions Claim/Stellantis judgment the court also ruled that claimants are not required to prove that all cars by a certain manufacturer are equipped with a defeat device. It is sufficient for claimants to substantiate the presence of a defeat device in a certain brand and generation, after which the burden of proof will shift to the manufacturers to prove that the defeat device is not present in all vehicles. This alleviates the claimants’ burden of proof significantly.

Please contact Lindenbaum to learn more

The attorneys at Lindenbaum have been litigation counsel in several of the leading collective action cases in the Netherlands and Europe. Please do not hesitate to contact one of our experts.