Background
The claimant bought a used BMW X4 in October 2018. The vehicle had an N57 diesel engine certified to the Euro 6 emissions standard. Alleging that the vehicle contained prohibited defeat devices, he sought damages from the manufacturer equal to the purchase price less compensation for use, with interest, in exchange for transferring and surrendering the vehicle.
He also sought tort interest, a declaration that the defendant was in default of accepting the vehicle, and reimbursement of pre-litigation legal fees. The Dessau-Roßlau Regional Court dismissed the action, and the Naumburg Higher Regional Court rejected the appeal. The appellate court found no intentionally immoral conduct supporting liability under Sections 826 and 31 of the German Civil Code and held that Sections 6(1) and 27(1) of the EC Vehicle Approval Regulation were not protective statutes capable of supporting liability under Section 823(2) of the Civil Code.
The Court’s Holding
The Federal Court of Justice agreed that the claimant had not established liability for intentionally immoral conduct under Sections 826 and 31. It also confirmed that the claimant could not obtain “large” damages—rescission-like recovery of the purchase price in exchange for the vehicle—under the regulatory theory asserted.
The court nevertheless held that the appellate court erred by rejecting Section 823(2) liability as a matter of law. Under the Federal Court’s intervening precedent, Sections 6(1) and 27(1) are protective statutes safeguarding a vehicle buyer against purchasing a vehicle whose conformity certificate is inaccurate because the vehicle contains a prohibited defeat device within Article 5(2), first sentence, of Regulation (EC) No. 715/2007. A buyer may therefore recover differential, or diminished-value, damages if the manufacturer at least negligently installed such a device.
Because the lower court had neither allowed the claimant to plead and calculate that loss nor made the necessary findings concerning a prohibited defeat device and the defendant’s fault, the Federal Court partially vacated the appellate decision as to the principal damages claim, acceptance-default declaration, and legal-fee claim. It remanded for further proceedings and left the rejection of the separate tort-interest claim undisturbed.
Key Takeaways
- German vehicle-approval provisions can support manufacturer liability under Section 823(2) when a prohibited defeat device makes the vehicle’s conformity certificate inaccurate.
- That regulatory claim may permit recovery of the difference between the vehicle’s purchase price and its actual value at purchase, but not purchase-price repayment in exchange for returning the vehicle.
- On remand, the claimant must be permitted to calculate and plead diminished-value damages, and the appellate court must determine whether the defendant at least negligently installed a prohibited defeat device.
Why It Matters
The decision reinforces the Federal Court’s post-2023 framework for German diesel-emissions litigation: failure to prove intentional, morally reprehensible conduct does not necessarily end a buyer’s case. A negligence-based statutory claim may remain available, although its remedy is limited to the vehicle’s diminished value rather than unwinding the transaction.
For manufacturers and purchasers, the ruling also highlights the procedural importance of addressing differential damages expressly. Courts may not dismiss such claims solely because rescission-like damages are unavailable when the pleaded facts could support the narrower measure of loss.