Background
The plaintiff alleged that he bought a new Audi SQ5 3.0 TDI in spring 2014. The vehicle had a 3.0-liter V6 turbo-diesel engine certified to the Euro 5 emissions standard. He sought damages from the defendant based on the alleged use of unlawful defeat devices.
The plaintiff requested, among other relief, repayment of the purchase price less an allowance for use, plus interest, in exchange for transferring and surrendering the vehicle. He also sought a declaration that the defendant was in default of acceptance and reimbursement of pre-litigation attorneys’ fees. The Ingolstadt Regional Court rejected the action, and the Munich Higher Regional Court rejected the relevant portions of his appeal.
The appellate court found no liability for intentional damage contrary to public policy under Sections 826 and 31 of the German Civil Code because there was no factual basis for test-bench recognition or other circumstances establishing particularly reprehensible conduct. It also rejected liability under Section 823(2) of the Civil Code in conjunction with Sections 6(1) and 27(1) of the EC Vehicle Approval Regulation, reasoning that those provisions did not protect buyers against entering unwanted contractual obligations.
The Court’s Holding
The Federal Court of Justice affirmed the rejection of liability under Sections 826 and 31. It also agreed that the plaintiff could not obtain “large damages”—rescission-like recovery of the purchase price in exchange for the vehicle—on the alternative statutory basis.
The Court held, however, that the appellate court erred by categorically rejecting liability under Section 823(2) in conjunction with Sections 6(1) and 27(1) of the EC Vehicle Approval Regulation. Under the Federal Court’s June 26, 2023 precedent in VIa ZR 335/21, those vehicle-approval provisions are protective statutes. They protect a buyer against suffering a financial loss upon contracting because a vehicle, contrary to its certificate of conformity, contains an unlawful defeat device within Article 5(2), first sentence, of Regulation (EC) No. 715/2007.
That theory may support recovery of the difference between the vehicle’s value and the price paid, even though it does not support return of the vehicle for repayment of the purchase price. Because the lower court had neither allowed the plaintiff to present a calculation of this diminished-value loss nor made findings on whether the defendant at least negligently installed an unlawful defeat device, the Federal Court partially vacated the appellate decision and remanded for further proceedings. It did not decide that the defendant was liable.
Key Takeaways
- Sections 6(1) and 27(1) of the EC Vehicle Approval Regulation qualify as protective statutes for purposes of Section 823(2) of the German Civil Code.
- A purchaser of a vehicle containing an unlawful defeat device may seek diminished-value damages from the manufacturer without proving intentional conduct contrary to public policy.
- This statutory theory does not permit “large damages” consisting of purchase-price repayment in exchange for surrender of the vehicle.
- On remand, the buyer must calculate and substantiate the alleged value difference, and the appellate court must determine whether the manufacturer at least negligently installed an unlawful defeat device.
Why It Matters
The ruling reinforces an important distinction in German diesel-emissions litigation: failure to establish intentional, particularly reprehensible misconduct does not necessarily eliminate manufacturer liability. A buyer may still pursue the narrower remedy of diminished-value damages based on negligent violation of vehicle-approval protections.
The decision also underscores that remand is required when a lower court rejected that theory as legally unavailable and therefore never developed the necessary factual record. Plaintiffs must still prove the presence of an unlawful defeat device, the manufacturer’s required level of fault, and an actual financial difference at the time of purchase.