Various Claimants v Mercedes-Benz Group AG & Ors

In a civil damages claim, a regulatory approval or update decision does not necessarily determine whether an individual vehicle contains a prohibited defeat device. The relevant question is the decision’s regulatory content under the applicable national law and, where relevant, EU law.

Under German law as applied by the civil courts, vehicle type approval concerns the approved vehicle type, not individual vehicles. Statements in mandatory or voluntary update decisions that defeat devices are permissible are generally reasoning, not part of the binding tenor. A recall decision expressly determining that a prohibited defeat device exists is binding on the addressee manufacturer.

EU total harmonisation prevents national courts from invalidating or second-guessing another Member State’s regulatory approval in proceedings concerning registration, sale or entry into service. It does not prevent a national civil court from determining, in a damages claim, whether a vehicle actually contains a prohibited defeat device.

The judgment determined preliminary issues in Pan-NOx Emissions Group Litigation concerning the effect in England of decisions made by Germany’s Federal Motor Transport Authority, the Kraftfahrt-Bundesamt.

The decisions comprised vehicle type approvals, recall decisions, mandatory software-update decisions and voluntary software-update decisions. The central questions were whether those decisions were binding under German law, whether they bound English courts or claimants under English or EU law, and whether German appellate decisions would have binding effect after an appeal.

The issues were tried on the assumption that the KBA had been properly advised about the relevant defeat devices and updates. The court also considered the earlier decision in Crossley 1, which had treated relevant recall decisions as binding.

1. Type Approval Decisions. The court held that, for civil damages claims, the German civil courts’ approach was determinative. The BGH decisions treated EC type approval as concerning the legality of the approved vehicle type and not a specific vehicle. The tenor therefore did not include a binding determination that individual vehicles contained no prohibited defeat devices. The answer for the sample Type Approval Decisions was no.
2. For approvals made before the New Implementing Regulation, the information supplied did not establish a positive regulatory decision about the absence of prohibited defeat devices. Approvals made under the later regime might, depending on the information disclosed and considered, include such a finding for the vehicle type. They would still not determine the condition of an individual vehicle in a civil damages claim.
3. Recall Decisions. By agreement, and in any event, the sample Recall Decisions were binding under German law as to the existence of prohibited defeat devices. The answer was yes.
4. Mandatory Update Decisions. The German civil courts treated the operative subject matter as release of the software update. Statements that remaining defeat devices were permissible were justificatory reasoning and did not form part of the binding tenor. The answer was no.
5. Voluntary Update Decisions. Their tenor was limited to the software modification and did not bind civil courts as to the absence of prohibited defeat devices. The decisions were unlawful because the KBA could not use the asserted national approval route where amendment of the EU type approval was available and necessary. They were nevertheless effective, not nullities, because the error did not satisfy the very high threshold under German law.
6. Even if the relevant decisions had been binding under German law, EU total harmonisation would prevent an English court from challenging the regulatory validity of approval in proceedings concerning registration, sale or entry into service. It would not prevent a civil damages court from determining whether the vehicle actually contained a prohibited defeat device. The court respectfully disagreed with the wider obiter observations in Crossley 1.
7. The answer to the second preliminary issue was no: a successful German appeal would annul the relevant KBA decision retrospectively. The final answers were therefore no for Type Approval, Mandatory Update and Voluntary Update Decisions; yes for Recall Decisions; and no for decisions determined on appeal.

First-instance determination of preliminary issues in group litigation. The judgment itself does not state a prior appellate history for the present proceedings.