German court rules Volkswagen must pay

Landmark judgement on dieselgate means thousands entitled to compensation

Carmaker Volkswagen, also known as VW, will be forced to pay compensation to tens of thousands of customers after Germany's highest civil court ruled against it in a landmark judgement involving the owner of a diesel minivan.

It is the first case brought by a car owner against the automaker for emission test cheating, and the ruling by Germany's Federal Court of Justice sets a precedent for 60,000 more individual lawsuits pending in the country.

The court said that people who had purchased a Volkswagen vehicle equipped with software that manipulated emissions tests are now entitled to financial compensation.

It said the world's largest carmaker must take back the plaintiff Herbert Gilbert's manipulated vehicle and pay him 28,000 euros ($30,700).

Claus Goldenstein, a lawyer handling about 21,000 VW cases including Gilbert's, said: "The ruling means legal certainty for millions of consumers in Germany and shows once again that even a large corporation is not above the law. Today we have made history."

VW said it would now offer affected motorists a one-off payment. The amount will depend on individual cases.

VW said in a statement on Monday: "For the majority of the 60,000 pending cases, this ruling provides clarity as to how the Federal Court of Justice assesses essential questions in German diesel proceedings.

"Volkswagen is now seeking to bring these proceedings to a prompt conclusion in agreement with the plaintiffs. We will therefore approach the plaintiffs with the adequate settlement proposals."

In September 2015, VW admitted to the United States Environmental Protection Agency that it had installed software in 11 million vehicles worldwide that allowed it to cheat emissions tests, in a scandal that came to be known as "dieselgate".

Scientists in the US had uncovered software installed in VW vehicles that could detect emissions test scenarios and would change the vehicle's performance accordingly to improve results.

It led to a crisis in confidence for the entire auto industry after similar workarounds were later discovered at other companies. VW has since faced a flurry of legal action worldwide.

The company had already settled a separate collective lawsuit for 830 million euros, involving 235,000 German car owners.

Volkswagen has said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain. VW has paid out more than 30 billion euros in fines, compensation and buyback programs worldwide since the scandal first broke in 2015.

The carmaker and wider auto industry will also pay close attention to an upcoming ruling from the European Court of Justice, which is examining whether newer diesel engines, used by VW and several other large brands, were also illegally manipulated. If it is proved so, compensation could amount to "billions", according to Goldenstein.