LUXEMBOURG (CN) — An Austria-based consumer rights group can sue Volkswagen in Austrian national court over defective cars sold during the automaker’s emissions scandal even though the company is headquartered in Germany, a magistrate with the EU’s top court said Thursday.
“The place where the damage occurred is the place where that transaction was concluded; the courts for that place will have (international and territorial) jurisdiction if the other specific circumstances of the case also support the allocation of jurisdiction to those courts.,” Advocate General Manuel Campos Sánchez-Bordona wrote in his nonbinding opinion for the European Court of Justice. (Parentheses in original.)
The Austria-based Verein für Konsumenteninformation, or VKI – which translates to the Association for Consumer Information – filed a complaint against Volkswagen in 2018 in an Austrian court on behalf of 574 people who had purchased cars with defective software aimed at cheating emissions tests. The nonprofit group represents consumers against companies in court.
The Klagenfurt Regional Court was unsure if it had jurisdiction in the case, as Volkswagen is based in Germany, so it referred the case to the Luxembourg-based Court of Justice, the European Union’s highest court. Under the so-called Brussels Regime, which determines legal jurisdiction in the EU, companies generally must be sued in the country where they are headquartered.
However, Campos Sánchez-Bordona wrote Thursday, “It is also possible for that person to be sued in another member state, specifically, in the courts for the place where the damage arose.”
Though not required, rulings from the Court of Justice often follow the same legal reasoning as advisory opinions.
In this case, the people who purchased the vehicles are considered the “direct victims” and the damage they experienced, namely a substantial drop in the value of their vehicle, took place in Austria.
Part of the criteria for determining if another jurisdiction is possible rests on the so-called principles of foreseeability.
“A vehicle manufacturer like Volkswagen is in a position to foresee with ease that its vehicles will be placed on the market in Austria,” Campos Sánchez-Bordona wrote.
However, the magistrate said his determination “must not be used to choose which court (the referring court or the courts for the place of the event giving rise to the damage) should decide on the substance of the case.” (Parentheses in original.)
The Luxembourg-based court has begun its deliberations in the case and a ruling is expected later this year, though that may be delayed as a result of Covid-19 response measures.
In September 2015, the U.S. Environmental Protection Agency announced that it was recalling nearly half a million Volkswagen cars sold in the United States because the company had used the cars’ software to evade emission standards.
An investigation revealed that Volkswagen had intentionally programmed its engines to activate emissions controls only during laboratory testing in order to meet regulatory standards. When the cars were used normally, they emitted nearly 40 times the permitted amount of nitrous oxide. This was done in 11 million cars worldwide.