From the Insurance Department of Belzuz Abogados we offer you an analysis of the most recent judgments on the Volkswagen affair.

Everyone knows about the problems affecting the German car manufacturer Volkswagen, when it came to public knowledge in September 2015 that vehicles made by the Volkswagen group – Volkswagen, Seat and Skoda – had been equipped with fraudulent software. The software affected vehicles with an EA 189 diesel engine, enabling it to lower polluting emissions while subject to testing but not while being driven under normal traffic conditions. This meant that the vehicle apparently complied with the emission regulations on NOx (nitrogen oxide) particles included in the EURO 5 rules, Regulation (EC) 715/2007 of 20 June.

The Insurance Department of Belzuz Abogados has studied the various decisions handed down up so far, which to date have only been pronounced by the Courts of first instance.

Court of First Instance nº3 of Zaragoza dismissed the claim of a customer demanding that Volkswagen should refund the money he had paid for his car, (140 cvs Passat diesel affected by the defeat device). This is the second claim the manufacturer has won in this affair, together with another favourable judgment pronounced at the end of May by the Court of First Instance of Torrelavega. Both these claims were dismissed.

This trend of Judgments favourable to Volkswagen was cut short by the judgment handed down on 25 October 2016 by Court of First Instance nº 12 of Valladolid.

As lawyers specialising in product liability, we have analysed this claim, in which the claimant asks “that judgment be given declaring the actor’s right to the substitution of the vehicle by a new one of the same characteristics and in perfect condition, at no cost, and if this is not possible, by another of a higher category. In a subsidiary claim he seeks the termination of the vehicle’s agreement of purchase and sale.”

The grounds of all these claims is the vehicle’s failure to comply with the European Regulation CE 715/2007 of 20 June and art 118 of the General Users and Consumers Act, on the grounds that the vehicle should be replaced because repairing it would mean modifying the subject matter of the agreement, with regard to the power and consumption advertised by the manufacturer.

Volkswagen contested the claim, admitting that the problem was real, but arguing that it affected the emissions of NOx particles, not CO2, since although the emission levels of these particles are in breach of the regulations when the vehicle is submitted to emissions testing, under real conditions they are the same or lower than those produced by similar vehicles.

With regard to the action for non-compliance, it asserts that this is time-barred because more than two years had elapsed since the vehicle was delivered, and the vehicle was entirely fit for daily use.

The Court described this situation as unusual since compliance with regulatory standards is an administrative requirement before motor vehicles can be taken on the road.

From the contractual point of view, the object sold serves the purpose for which it was acquired, so there is no essential breach. The Court considers that compliance with regulations is an indispensible technical requirement for vehicles to be driven without restriction on Spanish and European roads.

This conduct violates Volkswagen’s duty to act in good faith in compliance with its obligations.

From the consumer’s point of view it is also reasonable not to wish to accept its repair by the manufacturer, as this would involve manipulating the engine using secretive measures, which could not be proved beyond doubt by expert examination. Moreover, it would not affect the performance of a vehicle as old as the actor’s, since when the consumer bought the car he did not know about the defeat device, in the terms of Directive EC 2005/29, when he decided to buy the suspect product.

The conclusion of the Court of First Instance is that a partial breach of performance pursuant to the provisions of art. 7.1 and 1101 of the Civil Code and 61.2 and 65 of the Consumer Protection Act occurred.

With regard to the plea of absence of standing to be sued asserted by the importer and distributor, on the grounds that they did not participate directly in the events and were only involved in importing and distributing the product, the court considered that the duty to act in good faith and the principle of heterogeneity of contract is not subjective but objective, and the conduct can be attributed to the business group, and since the whole group benefited from the fraud, it is liable to the consumer, for although the consumer did not acquire the vehicle directly from the manufacturer (which is directly responsible for the fraud) the two defendants benefitted from the image of the make whose business group they belonged to (this being joint and several liability under the provisions of Art 132 of the General Consumers Act ).

Taking into consideration the violation of the duty to act in good faith and the consumer’s loss of confidence, the court recognised the existence of an increase in the vehicle’s depreciation after September 2015 (from 2% to 5%). For all these reasons, it deemed that the damages suffered by the claimant should be valued at 10% of the purchase price of the vehicle, amounting to a total of 5006.50 euros.

We do not know precisely whether this judgment has become final or if an appeal has been lodged against it, so we are waiting to see how this case develops.

 José Garzón García 

Director del Departamento de Derecho del seguro | Madrid (España)

Belzuz Abogados SLP

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