Various Claimants v Mercedes-Benz Group AG and Others

Over a two-week hearing in October 2024, the Court considered preliminary issues concerning the binding effect (if any) of four types of administrative decisions of the German Federal Motor Transport Authority, the Kraftfahrt-Bundesamt (“KBA”): (1) Type Approval decisions (“TADs”), (2) Mandatory Recall Decisions (“MRDs”), (3) Mandatory Update Decisions (“MUDs”) and (4) Voluntary Update Decisions (“VUDs”) (at [3]). The issue was further complicated by the UK’s withdrawal from the EU and the consequent changes of domestic legislation.

The first preliminary issue concerned whether any of the four decisions were binding upon the English Court and/or the Claimants in the Mercedes Litigation (and by extension other emissions group litigation) as non-addressees of the relevant decisions, as to the presence or absence of prohibited defeat devices (“PDDs”).

In relation to the TADs, MUDs and VUDs, the Court answered “no” (at [194]):

In relation to MRDs, the Court answered “yes” (at [195]). This reflected common ground between the Claimants and Mercedes (at [74]).

Perhaps of more significance, the Court carefully analysed the EU regime and Mercedes’ argument that it was not possible for it to amend EU type approvals to reflect the updates which were the subject of VUDs. The Court rejected this argument (at [101]-[140]), concluding that the “inability to amend Type Approval […] would be an improbable lacuna in the EU approval scheme” (at [128]) and that the approach of the KBA, to permit an amendment to type approval through a VUD based on provisions of German legislation which did not give effect to Article 31(12) of the EU Framework Directive was “unlawful” (at [131]). However, the Court declined to find that such decisions were a “nullity” (at [132]-[140]).

The Court also went on to consider the position under EU law, even if its conclusions on German law were wrong, in particular because of the requirements of total harmonisation alleged by the Defendants. On this issue, the Court preferred the argument of the Claimants that the obiter reasoning of Waksman J in Crossley & Ors v Volkswagen AG & Ors [2020] EWHC 783 (QB) (“Crossley 1”) at [394]-[396] was wrong (at [156]-193)). As such, the Judge found that even if the KBA decisions were binding as a matter of German law on the presence or absence of PDDs, “such decisions would not bind this Court in the context of an action brought by consumers seeking to claim damages in a civil action” (at [192(2)]).

The second preliminary issue concerned the impact (if any) on the binding effect of such KBA Decisions of any successful appeals in Germany against them. The Court concluded that there would be no material impact from such appeals, since the effect of a successful appeal would be that a relevant KBA Decision would be regarded as a nullity. As such, “there would in fact be no remaining regulatory act to bind either a claimant consumer or a defendant manufacturer in respect of the existence or non-existence of a defeat device following a successful appeal” (at [189]). The Claimants and Mercedes were agreed that this was the correct outcome (at [5]).

An 11-week trial concerning the PDD issues is due to commence in October 2025.

Thomas de la Mare KC and Ravi Mehta acted for the Claimants, instructed by a Steering Group consisting of Leigh Day, Pogust Goodhead, Slater & Gordon UK Limited, Milberg London LLP and Hausfeld & Co LLP.

Brian Kennelly KC and Rayan Fakhoury acted for Volkswagen AG & Others, instructed by Freshfields Bruckhaus Deringer LLP.

The judgment is available here.