Europe opens floodgates for Dieselgate lawsuits

The European Court of Justice (ECJ) has issued a ruling that the software cheating devices employed by Volkswagen to manipulate its emissions are illegal under European law.

In a judgement that could have far-reaching consequences for a huge number of class action-style lawsuits brought against Volkswagen within Europe and far beyond, the ruling by Europe's highest court will also have ramifications for other European brands such as Audi and Mercedes-Benz who had hoped the 'engine maintenance' defence would protect them.

The ECJ also said it sympathised with owners of Volkswagen diesel-powered vehicles who claimed they were deceived into buying vehicles they believed produced lower emissions.

The latest blow to Volkswagen follows a similar decision in April 2020, when the ECJ said defeat devices couldn't be justified by the argument that they contributed to "preventing the ageing or clogging-up of the engine".

Back then, Volkswagen argued that the law could be construed that the definition of a 'defeat device' was anything 'downstream' of the engine – meaning a device that was implemented after exhaust gases had left the engine itself.

Again, the ECJ disagreed with the German car-making giant and said the law applied to 'upstream' tech too, and that an engine's software was capable of being included in the definition of a cheat device.

The court said it would allow emissions-tampering software if it "protected against sudden and exception damage", but “only those immediate risks of damage which give rise to a specific hazard when the vehicle is driven” should justify its use.

As well as helping those suing VW, the clarification of the rules governing software controlling a diesel engine's emissions will remove another well-known loophole that allows a car's ECU to 'switch-off' hardware during a range of temperatures to protect the engine and/or components.

Without the engine maintenance defence, Volkswagen is now even more exposed to the army of owners claiming a loss of value after the emissions scandal was exposed back in 2015.

To date, Volkswagen Group has already paid out an incredible €30 billion ($A48bn).