Top German court to rule on VW 'Dieselgate' compensation

Photo: AFP Volkswagen CEO Herbert Diess (R) and VW supervisory board chairman Hans Dieter Poetsch are off the hook after VW paid €9 million to settle charges of market manipulation

Almost five years after Volkswagen's admission to cheating on emissions tests involving millions of diesel engined cars, a top German court will on Monday finally rule in a battle over compensation for tens of thousands of affected owners.

In a preliminary finding in May, judges at the Federal Court of Justice (BGH) said there was a chance of at least partial compensation for some VW buyers, saying they had indeed been harmed by purchasing a manipulated vehicle. If the ruling is confirmed on Monday, tens of thousands of cases for compensation could be brought to a close in the coming months.

Such a ruling would be the first major legal setback for VW in its home country, although the scandal has helped drag the entire car sector -- one of Germany's most vital industries -- into a historic crisis.

In recent weeks, an out-of-court settlement covering hundreds of thousands of cases and the closure of criminal proceedings have drawn a line under the biggest domestic risks for the sprawling car group from the "Dieselgate" scandal.

Monday's hearing specifically concerns a case brought by 65-year-old Herbert Gilbert who bought a diesel-powered Volkswagen Sharan minivan in 2014 -- just one of the 11 million cars worldwide fitted with emissions cheating software by the carmaker. "We expect that we will prevail at the BGH," said Claus Goldstein, whose legal firm represents Gilbert.

An appeals court has already found in favour of the pensioner, ordering VW to pay €25,616 ($27,930) and accept his return of the car. That payout, however, is almost 6,000 euros below the original purchase price, as the judges took into account depreciation of the vehicle's value.

Both VW and Gilbert appealed, with the company disputing the grounds for reimbursing the pensioner while the plaintiff said he should be paid the full purchase price. If judges decide in favour of reimbursement, that "must to some extent take into account" Gilbert's years of use from the vehicle and its corresponding loss in value, judge Stephan Seiters said at the court's earlier hearing.

Such a discount on the value of the vehicle could limit the potential financial blow to VW from the thousands of similar cases.

The end of April also brought the closure of a mass lawsuit against the carmaker by hundreds of thousands of plaintiffs, the first of its kind.

VW will pay out at least 750 million euros to 235,000 drivers under an out-of-court settlement reached with consumer representatives, well below the amounts paid out in the United States.

Buybacks, fines and compensation payments in the US alone account for most of the more than 30-billion-euro cost of the scandal to the manufacturer so far.

Around 60,000 individual German VW owners' cases remain open, making the top court's decision on Monday a crucial precedent. The ruling "could help bring many cases to an end," VW hopes, opening the way to settlements rather than allowing them to grind their way through the court system.

According to German media reports, VW's strategy has been to delay for as long as possible the arrival of any "Dieselgate" decision before top judges, hoping to maximise vehicles' loss of value and thereby minimise its potential payouts. The company itself has denied such claims.

On the criminal side, present chief executive Herbert Diess and supervisory board boss Hans Dieter Poetsch are off the hook on charges of market manipulation from Brunswick prosecutors, after VW paid a total of nine million euros to settle the charges.

But a case remains open against Martin Winterkorn, VW CEO at the time the diesel cheating was uncovered, as well as Rupert Stadler, former chief of subsidiary Audi.

Meanwhile an ongoing Stuttgart probe targets supervisory board chairman Poetsch. A major court case also continues by investors demanding compensation for their VW shares' plunge in value after "Dieselgate" came to light.

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