Appeal in offing after Dieselgate ruling goes largely for car makers

The High Court in England has largely ruled in favour of car manufacturers in the extensive 'Dieselgate' group litigation, rejecting most of the principal allegations that vehicles contained prohibited defeat devices. Lady Justice Cockerill's 396-page judgment found against manufacturers in only a limited number of instances, notably concerning certain devices in Mercedes and Peugeot-Citroën vehicles. Crucially, the ruling diverged from established European Union case law on the interpretation of 'defeat devices', requiring an intentional and impermissible purpose for their operation. Claimant lawyers have indicated a "compelling case" for an appeal, arguing that the judgment creates a significant disparity between the legal position in Great Britain and much of Europe regarding emissions standards and consumer protection. The decision sets the stage for a critical appeal that will shape product liability and environmental compliance in the UK automotive sector.

The long-running 'Dieselgate' emissions scandal in the United Kingdom has reached a pivotal juncture, with the High Court delivering a liability ruling that largely favoured car manufacturers. This complex multi-party litigation, encompassing claims from approximately 1.6 million motorists, sought to hold automotive giants accountable for allegedly installing 'defeat devices' designed to manipulate emissions tests. The judgment, handed down by Lady Justice Cockerill, represents a significant development, as it largely dismissed the claimants' primary allegations against several leading manufacturers, including Ford, Nissan-Renault, Mercedes, and Peugeot-Citroën.

The High Court's decision is particularly noteworthy for its interpretation of what constitutes a 'prohibited defeat device' under UK law, a definition that appears to diverge from the jurisprudence of the Court of Justice of the European Union (CJEU). This divergence has prompted claimant lawyers to declare a "compelling case" for an appeal, highlighting the potential for a stark difference in consumer and environmental protection standards between Great Britain and the rest of Europe. This article will delve into the background of the Dieselgate litigation, analyse the High Court's key findings and their legal implications, and consider the prospective grounds and significance of the anticipated appeal.

The 'Dieselgate' scandal first erupted in 2015 when Volkswagen admitted to installing software, known as 'defeat devices', in millions of its diesel vehicles worldwide. This software was designed to detect when a vehicle was undergoing official emissions testing and to alter engine performance to produce lower nitrogen oxide (NOx) emissions than in real-world driving conditions. The revelation sparked a global outcry and led to widespread legal action, including in the UK, where consumers alleged that other manufacturers also employed similar illicit technologies.

In the UK, the litigation against various car manufacturers was consolidated under a Group Litigation Order (GLO), representing one of the largest group actions in English legal history. The legal claims typically centred on allegations of breach of contract, misrepresentation, and claims under the Consumer Protection Act 1987 (c. 43), arguing that vehicles were not of satisfactory quality or contained a 'defect' by failing to meet expected safety and environmental standards. The regulatory framework at the heart of the dispute included the Emissions Regulation 2007, which transposed relevant EU directives into UK law, prohibiting the use of defeat devices that reduce the effectiveness of emission control systems.

Prior to the main liability trial, an earlier High Court ruling in the Mercedes-Benz claims had established a crucial precedent, rejecting the manufacturer's argument that English courts should be bound by the decisions of the German motor transport regulator (Kraftfahrt-Bundesamt or KBA) regarding vehicle compliance. This cleared a significant hurdle for claimants, affirming the ability of British courts to independently assess the presence of prohibited defeat devices.

Lady Justice Cockerill's recent High Court judgment, delivered after a 13-week trial focusing on 20 representative vehicles from five manufacturers, largely found in favour of the car makers. The court rejected most of the principal allegations that the vehicles contained prohibited defeat devices. Specifically, for Ford, Renault, and Nissan, the judge concluded that the alleged devices did not meet the legal definition of a prohibited defeat device and therefore did not breach the Emissions Regulation 2007.

However, the judgment was not a complete victory for the industry. Lady Justice Cockerill did make adverse findings regarding a specific device in some Mercedes cars, which was subsequently removed by a software update in December 2015, and a strategy used in some Peugeot-Citroën vehicles. Despite this, she was not persuaded that the Mercedes device significantly impacted NOx emissions in the particular test vehicle. The court's interpretation of a 'defeat device' was central to the outcome, requiring an "intentional and/or impermissible purpose of causing the emissions control system to operate differently when it sensed it was being tested."

A critical aspect of the ruling, and a likely ground for appeal, is the judge's decision post-Brexit not to follow several key decisions of the Grand Chamber of the CJEU concerning the interpretation of Article 3(10) of the Emissions Regulation 2007. This has created a "significant divergence between the legal position in Great Britain and much of Europe," where devices deemed illegal in the EU might be permitted in the UK. Claimant lawyers argue that if the judge's interpretation of the law is incorrect, a majority of the sample cars would indeed contain unlawful defeat devices. This highlights a fundamental difference in how 'defeat devices' are legally defined and regulated, potentially impacting consumer protection and environmental standards in the UK.

The implications of this ruling extend beyond the immediate parties. The judgment's narrow interpretation of 'defeat device' could set a precedent that makes it more challenging for consumers to bring successful claims against manufacturers for emissions-related misconduct in the future. It also raises questions about the effectiveness of UK environmental and consumer protection laws in holding manufacturers accountable, particularly when compared to the more robust stance taken by European courts. The ongoing litigation, which still has a second trial scheduled for October to address damages and other remedies for the limited adverse findings, underscores the complexity and protracted nature of these claims.

The High Court's ruling in the Dieselgate litigation marks a significant moment for both claimants and car manufacturers in the UK. While providing some clarity, it has largely sided with the automotive industry, potentially limiting the scope for successful consumer claims based on emissions irregularities. The pronounced divergence from CJEU jurisprudence on the definition of a 'defeat device' is a critical point of contention and forms the bedrock of the claimants' intention to appeal.

For practitioners, this judgment underscores the importance of a precise understanding of statutory interpretation, particularly concerning technical definitions within regulatory frameworks. The impending appeal will be closely watched, as its outcome could redefine product liability and consumer protection in the UK automotive sector, potentially influencing future legislative or regulatory responses to environmental compliance. Should the appeal succeed in aligning UK law more closely with European interpretations, it could open the door for a broader range of claims and greater accountability for manufacturers. Conversely, if the High Court's interpretation is upheld, it may solidify a distinct, and potentially less stringent, legal landscape for emissions regulation in Great Britain.