Update on the emissions scandal

BGH confirms defect

In its judgement of 8 January 2019, published only recently, and after a large number of other rulings in lower courts, the Federal High Court of Justice (BGH) has classified defeat devices as a defect of quality.

Facts of the case

The background to this judgement was proceedings carried out in the lower courts, in which the purchaser of a diesel-powered vehicle fitted with an illegal defeat device (the plaintiff) filed a warranty claim against a distributor (the defendant). The plaintiff called for supplementary performance in the form of the delivery of a new vehicle, substantiating the claim by saying that the defeat device rendered the vehicle defective. After the Regional Court (LG) of Bayreuth, in its judgement of 20 December 2016 – (21 O 34/16) had surmised a defect without stating any specific grounds, the Higher Regional Court of Appeal (OLG) in Bamberg, in its judgement of 20 September 2017 – (6 U 5/17) left the issue of defectiveness unresolved, instead rejecting a claim by the plaintiff on the grounds that a replacement delivery would be impossible. In the opinion of the OLG, there was no entitlement to replacement delivery for the simple reason that the vehicle type in question was in the mean time no longer being manufactured, which meant that the delivery of a replacement would be impossible. In the view of the OLG, moreover, delivery of the follow-up model would not be an option either on account of its different motorisation characteristics. The BGH has now commented on these points in its recently published judgement as follows:

Judgement of the BGH

1. Defect of quality

In its judgement, the BGH makes it clear that a vehicle is defective within the meaning of Section 434 of the German Civil Code (BGB) if a defeat device is installed at the time when the vehicle is handed over to the purchaser and that device is illegal from the point of view of the licensing and registration laws. The BGH argued that the mere menace of an operating ban by the licensing authority was enough to render such a vehicle unsuitable for normal use as a car, and therefore defective.

2. Impossibility of replacement delivery (refusal of performance)

Furthermore, the BGH determined that what is decisive as regards the possibility or impossibility of a replacement delivery is whether the vendor can procure a thing that is similar or equivalent, but not necessarily identical. So impossibility as in Section 275 (1) of the BGB does not apply if the replacement delivery can only be made in the form of a new vehicle model. The fact that the new model has more powerful motorisation or modified exhaust certification does not, as a matter of basic principle, mean that there is no similar or equivalent thing available any more.
However, the BGH also correctly pointed out that the call for replacement delivery of a new vehicle can be repudiated by the vendor if the costs of that replacement delivery are disproportionately high compared with those of rectifying the defect (e.g. via a software update) (Section 439 [4] of the BGB).

Impacts

On the one hand, this judgement by the BGH is not a supreme court adjudication in the form of a verdict. Indeed, there will not actually be a verdict in this matter, since the parties came to an extrajudicial agreement prior to the date set for the hearing. On the other, by its judgement, the BGH has made its view of the above-mentioned issues clear. For that reason it may be assumed that other courts in future cases are very likely to follow the opinion of the BGH and rule accordingly.

[April 2019]