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The Volkswagen Scandal at the CJEU: Defeat Devices between the Conformity Guarantee and Environment Law

Published online by Cambridge University Press:  08 November 2022

Marie-Eve Arbour Open the ORCID record for Marie-Eve Arbour [Opens in a new window]
Marie-Eve Arbour*
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Full Professor in Private Law, Université Laval, Québec, G1V 0A6, Canada
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Email: marie-eve.arbour@fd.ulaval.ca
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Case Notes
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European Journal of Risk Regulation , Volume 13 , Issue 4 , December 2022 , pp. 670 - 681
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© The Author(s), 2022. Published by Cambridge University Press

Headnote: In July 2022, an interesting trilogy was handed down by the Court of Justice of the European Union in the wake of the Volkswagen scandal. It calls into play the intersection of contractual guarantees and environmental regulation requirements imposed by European Commission law upon the diesel car industry. The Court concludes that emission reduction devices that are fully functional only during a certain temperature window as detected by software are defeat devices. Their use may trigger sanctions pursuant to Member States’ private law, as such equipped vehicles lack conformity with the sale contract concluded against the backdrop of environmentally friendly performance.

Legislation: Article 5(2) of Regulation 715/2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information and of Article 2(2)(d) and 3(6) of Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees.

I. Introduction

As much as the diesel car industry is a very significant player within the European Union (EU) economy, Volkswagen AG is a German totem in the eyes of worldwide consumers. When, in 2016, the mini-symposium on “the dieselgate” was published in this very journal,Footnote 1 the authors had pinpointed some of the fields of law potentially mobilised by the clamorous, public admission of fraudulent practices by Volkswagen AG’s top managers.Footnote 2 What these authors could not predict, however, were the epic proportions that the matter took, nor the incredible flood of national and supranational cases it engendered. This was so partly because the legal questions underlying the global, deliberately deceptive practice are complex, but also because the company adopted a surprisingly adversarial and defensive attitude in the aftermath of a viral mea culpa that seemingly anticipated much less litigation. It appears that following the Volkswagen scandal, the German Kraftfahrbundesamt (KBA) indeed recalled 2.4 million vehiclesFootnote 3 equipped with proper exhaust gas recirculation (EGR) valves, but these were also equipped with a switch capable of distinguishing laboratory from road conditions, allowing the emission control system to properly function when not under actual normal driving conditions. Whilst the Court of Justice of the European Union (CJEU) qualified it as a “defeat device” in light of French consumer law,Footnote 4 the EU strengthened its regulation framework after criticism abounded.Footnote 5

Within this context, the CJEU recently confirmed that softwareFootnote 6 that lessens the green performance of pollution control devices half of the time is a prohibited defeat device and may open the door to the annulment of sales contracts pursuant to Member States’ legislation.

II. Facts and context

The CJEU trilogyFootnote 7 arose following references for a preliminary rulingFootnote 8 surrounding the interpretation of Article 5(2) of Regulation 715/2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance informationFootnote 9 and of Article 2(2)(d) and 3(6) of then applicable Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees.Footnote 10 The cases were initiated with applications, by Austrian plaintiffs, for the cancellation of sales of contracts contrary – they alleged – to legal prohibition and/or lacking conformityFootnote 11 after they discovered the environmental performance of their vehicles was not what they had expected and paid for.

To begin with, all three targeted motor vehicles had been European Commission (EC) type approved by Member States by virtue of framework Directive 2007/46 then in force,Footnote 12 which lays down a compulsory certification procedure for cars to be driven on the road. Those involved vehicles were allegedly in line with the Euro 5 standard and were thus equipped with an EGR valve designed to reduce pollutant emissions. The problem arose when the buyers learnt that software conditioned the functioning of the device to a temperature window when the environmental performance of the car was central to their decision to enter the contract. It is not contested, indeed, that under normal driving circumstances the device functioned fully, but that it did so only when the outside temperature ranged between 15°C and 33°C at an altitude, moreover, of less than 1,000 metres.Footnote 13 Contrary to the consumers’ expectations, it thus appeared that such a device was not on duty on a full-time basis; rather, it gradually decreased its activity down to zero as the temperature went beyond its designed range of operation. As a result, they argued, the conformity guarantee was violated; consequently, all three frustrated consumers sought the annulment of these sales contracts.

On their side, defendants implicitly suggested that, although restricted in its use, the compliant device met the industry standards surrounding nitrogen oxide (NOx) emissions and the quality required by EU law. They contended that, in any event, the device falls into one of the exceptions, as its part-time use is necessary to protect the engine against “damage” or “accident”, and that the lack of conformity – if any – was “minor” and could not justify the annulment of the sale. In substance, the Court deals with the very technical question of determining whether the installed NOx reduction device is, at all, a “defeat” one, and if so whether it falls within the permitted exceptions. If not, could the sale be annulled on the basis of the general law of obligations (configured by both national law and EU law)?

The analysis of the relevant provisions leads to a quite sophisticated regulation circuit established by Directive 2007/46/ECFootnote 14 based on EC type approval granted by national authorities to which it is conditioned prior to the circulation of vehicles on EU roads. Through regulatory acts and standards, Directive 2007/46/EC seeks to harmonise technical requirements in order “to ensure a high level of road safety, health protection, environmental protection, energy efficiency and protection against unauthorised use”.Footnote 15 Towards this end, and in the stream of international trends, Directive 2007/46/EC limits tailpipe emissions (NOx). Within a context where dynamic and static regulation tools intertwine, Regulation 715/2007 comes into the bigger picture, as it leads, through the corridor created by Article 5,Footnote 16 to UNECE Regulation No 83 with respect to certain technical requirements concerning vehicle type approval.Footnote 17

Targeting the same goal, Regulation 715/2007 also aims for “a high level of environment protection.”Footnote 18 It explicitly fosters the harmonisation of NOx emission reduction tools, among which figure Euro 5 and Euro 6 standards.Footnote 19 Aware of all effects attached to this endeavour, it “establishes common technical requirements for the type-approval of motor vehicles (vehicles) and replacement parts, such as replacement pollution control devices, with regard to their emissions.”Footnote 20 Towards this end, new vehicles put on the market must be type approved;Footnote 21 moreover, “the technical measures taken by the manufacturer must be such as to ensure that the tailpipe and evaporative emissions are effectively limited, pursuant to this Regulation, throughout the normal life of the vehicles under normal conditions of use”.Footnote 22

As a matter of fact, the use by the industry of defeat devicesFootnote 23 that diminish the usefulness of emission control systems is generally prohibited.Footnote 24 Though qualified as “defeat” devices, their use remains exceptionally authorised in some very limited circumstances.Footnote 25

In addition, Directive 1999/44/CE on certain aspects of the sale of consumer goods and associated guarantees provides that “the seller must deliver goods to the consumer which are in conformity with the contract of sale”;Footnote 26 they are otherwise liable to the consumer.Footnote 27 Austrian law is already familiar with this contractual protection. EU law further lays down a presumption of conformity of the consumer goods with the contract in four hypotheses that revolve around both the objective comparison of goods of the same type and consumer idiosyncrasies: (1) the good complies “with the description given by the seller and possess the qualities of [a presented] sample or model”;Footnote 28 (2) it is “fit for any particular purpose for which the consumer requires them and which he made known to the seller at the time of conclusion of the contract and which the seller has accepted”;Footnote 29 (3) it is “fit for the purposes for which goods of the same type are normally used”;Footnote 30 and (4) the good “show[s] the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling”.Footnote 31

However, such presumptions shall not be inferred if the consumer, at the time when the contract was concluded, “was aware, or could not reasonably be unaware of, the lack of conformity, or if the lack of conformity has its origin in materials supplied by the consumer”.Footnote 32 Unless the conformity defect is “minor” – as said – or the desired remedy is disproportionate, the sanction is left to the will of the consumer.Footnote 33

Albeit succinct, this overview suffices to capture the essence of the CJEU trilogy.

III. The CJEU’s trilogy

For the sake of greater clarity, this joint comment shall follow the structure proposed by Advocate General A Rantos, who conveniently synthesised the matter in five common questions.Footnote 34 Fundamentally, and as restated, the questions raised two intertwined matters destined to better define national courts’ discretionary margins: (1) the legality of part-time emission reduction devices in the EU and (2) the contours of the conformity guarantee.

1. EU technical requirements surrounding emission reduction devices

The first question underlies a very technical dimension of the litigation: simply put, it seeks to assess whether, as configured and installed, the software used is, at all, part of the “device”. Is the emission reduction device a “defeat” one?Footnote 35 Answering the question, the Court analyses the definition of a “polluting control system” already addressed by case law in a similar context.Footnote 36 It underlines that the proposed definition encompasses a “broad”,Footnote 37 dual dimension: the mechanical pieces and related electronic elements, including software.Footnote 38 Furthermore, is it a “defeat device”? This query leads to determine whether the software reduces the effectiveness of the emission control system “under conditions that may reasonably be expected to be encountered in normal vehicle operation and use”.Footnote 39 The defendant contended that those part-time devices are of common use in an industry-wide measure and are, indeed, permissible pursuant to Article 5 (1) of Regulation 715/2007. The German Kraftfahrt-Bundesamt (Federal Office for Motor Vehicles), too, holds them to be in line with Regulation 715/2007.Footnote 40

The Court recalls the general objective pursued by Regulation 715/2007 – the protection of the environment – and rejects the defendant’s arguments that had sought to limit the scope of the expression to the driving conditions laid down in occasion of the approval test; it notes instead that nothing in the wording of the relevant provisions allows the interpreter to draw a line between real driving conditions on EU soil and test phases.Footnote 41 The CJEU holds the concept of normalcy to be EU law per se; one “that must be given an autonomous and uniform interpretation throughout the [EU]”.Footnote 42 In other words: “real driving conditions”.Footnote 43 Hence, as they are designed to operate fully only roughly half of the time, the temperature-sensitive devices must be qualified as defeat ones,Footnote 44 which leads to a further consideration.

Some devices, albeit defeat, are nonetheless compliant in the eyes of EU law if they fall within the span of a threefold exception. In this context, the second question was best synthesised in Case 128/20: shall article 5(2) of Regulation 715/2007, which allows for defeat devices to be nonetheless put onto the market if they are needed to protect the engine against damage and accident and are needed to ensure the safe operation of the vehicle, be interpreted in the sense that the temperature window activated by the software was indeed intended to protect part of that device?Footnote 45 Merging the three cases shows that the defendant provided arguments to sustain all of these exceptional hypothesis.

To begin with, the Court notes that the proposition calls for a strict interpretation of such exceptional provisions.Footnote 46 From a purely semantic perspective, an analysis of the word “engine” leads to Regulation 692/2008,Footnote 47 in which the Annex distinguishes between the emission control system (the EGR valve, the EGR cooler and the diesel particulate filter) and the engine itself,Footnote 48 as they are, indeed, located physically apart from one another in vehicles.Footnote 49 As a result, the device must be fit for purpose and cannot benefit from an exception that would allow it to operate in order to protect itself.

In parallel, the “accident” and “damage” exemptions had already been addressed by the case CLCV and Others (Defeat device on diesel engines). This recent precedent allowed the Court to remind parties that the exception refers to “sudden and exceptional damage” and cannot cover “[t]he clogging up or the ageing of the engine … since such occurrences are, in principle, foreseeable and inherent in the normal operation of the vehicle”.Footnote 50 Indeed, the Court rejects the defendant’s arguments supported by the German regulator to the effect that the temperature window serves to prevent the formation of deposits, causing the EGR valve to position itself poorly, potentially causing a loss of power or even a risk of fire.Footnote 51

Setting aside the argument, the Court rather holds that a device that is often deactivated under normal driving conditions “would clearly run counter to the objective pursued by that regulation, from which that provision allows derogation only in very specific circumstances and would result in a disproportionate infringement of the principle of limiting NOx emissions from vehicles”;Footnote 52 and, it adds, “with the result that the principle of the prohibition of such defeat devices, laid down in Article 5(2) of that regulation, could, in practice, be applied less frequently than that exception”.Footnote 53

The CJEU then turns to the argument suggesting that the word “need” brings back the state-of-the-art dimension to the litigation and calls for proper evaluation at the time of the EC type approval and “should take account of the need to balance environmental interests with the economic interests of manufacturers”.Footnote 54 The Court closes the door to such a proposition: “when the EU legislature determined the emission limits for pollutants, it took into account the economic interests of manufacturers and, in particular, the costs imposed on undertakings by the need to comply with those limits”; it entails that “manufacturers [must] adapt and apply technical devices capable of complying with those limits as that regulation does not require the use of any particular technology”.Footnote 55 Hence, “[p]ermitting a defeat device … solely because, for example, research costs are high, the technical device is expensive or vehicle maintenance is more frequent or more costly for the user would jeopardize that aim”.Footnote 56

As a result, the Court concludes that the defeat device is indeed prohibited by EU law.Footnote 57 As the technical requirements were not met by the defendant, the comingling of environment protection and the conformity of the diesel vehicles to sale contracts remain open and nourish the three remaining questions.

2. The conformity of the diesel vehicles to the sale contracts

The third question is subsumed by Case C-145/20 and analyses the impact of a lack of environmental requirements compliance on conformity guarantees.Footnote 58 In other words, it raises the issue of private law sanctions whenever a green performance variation was hidden from consumers who believed that they had acquired an environmentally friendly vehicle properly certified by a national authority.

Austrian law provides that “a contract which is contrary to a legal prohibition or accepted principles of morality shall be null and void”.Footnote 59 In addition, Article 2 (1) of Directive 1999/44 “obliges the seller to deliver goods to the consumer which are in conformity with the contract of sale”.Footnote 60 The legislative piece then sets some parameters to the evaluation of such conformity. It is presumed that the goods – here, the diesel vehicles – are in conformity with the sale contract whenever “they show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods”.Footnote 61 To what extent does the presence of a defeat device within an otherwise certified car meet those criteria?

The Court simply states that “[w]hen acquiring a vehicle model of a type that has been approved and is, therefore, accompanied by a certificate of conformity, a consumer can reasonably expect that Regulation No 715/2007 and, in particular, Article 5 thereof, has been complied with in respect of that vehicle, even in the absence of specific contractual clauses”.Footnote 62 This conclusion allows a further one: “[Directive 1999/44] must be interpreted as meaning that a vehicle which does not comply with the requirements of Article 5 does not show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods, within the meaning of Article 2(2)(d) of that directive”.Footnote 63

A further important question was clearly asked in Case 145/20: “[i]s Article 3(6) of Directive [1999/44] to be interpreted as meaning that a lack of conformity consisting in the equipping of a vehicle with a defeat device that is prohibited [by EU law] must be regarded as minor … if the purchaser acquired the vehicle even though [they were] aware of the presence and operation of that device?”.Footnote 64 However, the notion “minor lack of conformity” is not defined by EU law, nor has it been explored by case law;Footnote 65 consequently, it “must be determined in accordance with its usual meaning in everyday language, while also taking into account the context in which it occurs and the purposes of the rules of which it is part”.Footnote 66

The Court reminds us that EC private law seeks, whenever possible, to encourage the performance of contracts – albeit following a price reduction or bringing into conformityFootnote 67 – rather than their plain rescission. In fact, and pursuant to Directive 1999/44/EC, the former is excluded if the lack of conformity is minor; that is, “even though [the purchaser] was aware of the presence and operation of that device”. It is not disputed that the plaintiffs were unaware of the lack of conformity at the time they entered the contract.Footnote 68 In Case 145/20, the plaintiff specifically sought the rescission of the contract, although he admitted that he might still have bought the vehicle under different conditions.Footnote 69 In the opinion of Court, though, the analysis of the “minor” aspect is not subjective in nature;Footnote 70 rather, it is purely objective.Footnote 71 It follows that “the fact that, after having purchased a good, a consumer admits that [they] would have purchased that good even if [they] had been aware of such a lack of conformity is not relevant for the purposes of determining whether a lack of conformity must be classified as ‘minor’”.Footnote 72

Both the Court and AG Rantos admit that the lack of conformity must be “of a sufficient magnitude” to justify the termination of the contract.Footnote 73 Here, the Court underlines the fact that, deprived of a compliant NOx reduction device, EC type approval should not have been granted. It follows that the lack of conformity is not “minor”, and this opens the door to the annulment of contracts.

Finally, a question emerged solely from Case 134/20 and asked whether the assessment of a defeat shall depend on the fact that such a device was, from the start, fitted in the vehicle by the manufacturer or was installed later.Footnote 74 Pursuant to Article 3 (2) of Directive 1999/44/EC, the lack of conformity that may open the door to a remedy must exist at the time of delivery. Clearly, the device involved was installed afterwards, to “remedy the unlawfulness of the switch system and to satisfy the requirements of Regulation No 715/2007 by means of a repair”.Footnote 75 The Court sets aside the apparent obstacle by recalling the general context in which the latter Regulation was adopted, along with the objective it pursues. This reasoning allows the Court to consider irrelevant the fact that the software was installed after the targeted vehicles were marketed and delivered, as all devices must comply with the requirements laid down by the Regulation.Footnote 76

IV. Comment

As it builds on textual, policy, purposive and consequentialist analyses, the CJEU trilogy is quite the last element in a string of cases that dealt with defeat devices. Others are awaited.Footnote 77 Handed down in the aftermath of the diesel scandal, the CJEU trilogy left plaintiffs with three certainties: the car industry regulatory framework impacts upon almost every condition of the conformity guarantee; the lack of conformity is not “minor” (conversely, we may qualify it “major”); and, as a result, consumers from twenty-seven Member States may seek the termination of sale contracts with the seller, as the CJEU basically acknowledged that greenwashingFootnote 78 is no tolerable contractual practice: “[t]he beauty evoked by commercial marketing may induce consumers to act to their later regret on sober reflection, but more is at stake when these aesthetic charms camouflage environmental injury”.Footnote 79

The trilogy brings together two areas of law that had been traditionally kept apart. From a strictly legal standpoint, the comingling of the law of contracts and car regulation is achieved through the merging of two paradoxically interpretative approaches to these fields of law: one that calls for strict, technical understanding on the one hand (Regulation 715/2007) and, on the other, a much more porous and evolutive contract law capable of metabolising contemporary regulatory trends (such as the protection of the environment). When both the protection of the environmentFootnote 80 and a high level of consumer protectionFootnote 81 are taken seriously, a true commitment towards the reduction of NOx emissions seems tangible.Footnote 82

It also mobilises some features of contract law. As it repealed Directive 1999/44/EC, the recently adopted Directive 771/2019 on certain aspects concerning contracts for the sale of goods takes a much more sophisticated approach to the contractual equilibrium nested in the conformity guarantee. Much like its predecessor, it is a “market directive”Footnote 83 that aims to “strike the right balance between achieving a high level of consumer protection and promoting the competitiveness of enterprises, while ensuring respect for the principle of subsidiarity”.Footnote 84 Although many private law matters are left to the Member States (validity, formation, damages, etc.Footnote 85 ), it lays down EU-derived milestones that shall provide consumers with a useful tool in redressing asymmetries caused by non-conformity.

Directive 2019/771 on certain aspects concerning contracts for the sale of goodsFootnote 86 is a much more updated, comprehensive and sophisticated piece of legislation. It formulates the detailed subjective and objective requirements in assessing the conformity of goods that must, among other things, “be of the description, type, quantity and quality, and possess the functionality, compatibility, interoperability and other features, as required by the sales contract”.Footnote 87 For our purpose, the functionalist criterion – intended as “the ability of the goods to perform their functions having regard to their purpose”Footnote 88 – shall leave no remaining doubt as to the capacity of contract law to act as a persuasive tool to foster EC law compliance.

In doing so, the coupling of ex ante regulation and ex post solutions partly designed by a supranational legislator manages to address a global-scale lack of conformity. In fact, the blurred dividing line between private and public has long been documented by authoritative scholars, and this line is even more nebulous in environmental law, where “the private sector is both an object and agent of environmental governance”,Footnote 89 and where “[t]he intersection between regulation and enforcement, individuals’ rights and public interest [is] crossed over”.Footnote 90 Private remedies then pave the way to deterrence and even regulation,Footnote 91 thus blurring the roles that have traditionally been ascribed to public agencies on the one hand and, on the other, private parties,Footnote 92 and they document “a shift from the use of the centralised infringement procedure initiated by the European commission, to relying on stakeholders such as [non-governmental organisations] to raise non-compliance issues before national Courts”.Footnote 93

Surely enough, though, remedies and procedural features do not present a harmonised panorama,Footnote 94 although efforts are being deployed towards an approximation of Member States’ legislation in the field of class actionsFootnote 95 and cooperationFootnote 96 (and this model tends to validate the hypothesis of there being an Americanisation of law).Footnote 97

From another, wider perspective (and maybe most importantly), the CJEU sent three powerful messages to diesel car manufacturers and national regulators: firstly, the state of the art cannot supersede supranational regulation; secondly, regulation costs must be internalised by the industry; and thirdly, technical means must be devised in order to comply with Euro thresholds (Euro 5, Euro 6, etc.), no matter what. It is not contested that the conciliation of the free circulation of diesel vehicles in the EU with the reduction of air pollution passed through the negotiation, by stakeholders, of NOx thresholds and further national EC-type approval.Footnote 98 Clearly, the approximation of legislation had been carried out by considering the “implications for markets and manufacturers’ competitiveness, the direct and indirect costs imposed on business and the benefits that accrue in terms of stimulating innovation, improving air quality, reducing health costs and increasing life expectancy, as well as the implications for the overall impact on carbon dioxide emissions”.Footnote 99

Through performance standard-setting, EC law had already enforced the internalisation of costs associated with regulation choices. Indeed, on their side, environmentalists were not exactly celebrating the Euro 5 thresholds, even stating that “the interconnection between emission standards and air quality standards is far from being obvious”, given that they already are “the fruit of a political compromise”.Footnote 100 Sadly enough, both the scandal and the arguments set forth by Volkswagen tend to demonstrate its unwillingness to take on these costs, thus transferring them to society.Footnote 101

V. Conclusion

It appears from the CJEU trilogy that Volkswagen AG chose to argue its cases on every point it could find to convince the Court that the device in question was compliant, and, were it qualified as a defeat device, that this had no consequences on the contractual side. The message it sends shows little respect for the EU’s highly regulated market, the rules of which, coupled with the mutual recognition procedure, guarantee the free circulation of cars in all Member States, as much as it offends those consumers who actually keep the company alive.

Through these lenses, the remedy given to the second scandal – the conception of the temperature window – appears even more troubling, given that all efforts were deployed to circumvent a regulatory reform that was discussed in Brussels at the same time.Footnote 102 From a broader perspective, however, the CJEU trilogy may be just another drop in the environment protection law ocean, in addition to all other legal grounds for enforcement and compliance, including penal law, unfair practices, civil liability,Footnote 103 product liability, contract law, consumer law, administrative law, misrepresentation, etc. Cases to come will nourish the legal sphere and bring about new ideas, such as the intersection between commercial unfair practices and the Charter of Fundamental Rights of the European Union.Footnote 104 Towards this goal, the CJEU trilogy certainly nourishes “the bright and adventurous future of consumer law research”,Footnote 105 which is as global and stimulating as ever.

References

1 See the contributions gathered in the Mini-symposium on the Volkswagen Scandal, (2016) 1 European Journal of Risk Regulation.

2 The context is well documented: see, among many others, N De Sadeleer, “Reinforcing EU Testing Methods of Air Emissions and the Approval Processes of Vehicle Compliance in the Wake of the VW Scandal” (2016) 17 ERA Forum 467, L Krämer, “Dieselgate and the Protection of the Environment by Public Authorities” in E Maître-Ekern, C Dalhammar and HC Bugge (eds), Preventing Environmental Damage from Products – An Analysis of the Policy and Regulatory Framework in Europe (Cambridge, Cambridge University Press 2018) p 153.

3 Based on para 25(2) of the German Verordnung über die EG-Genehmigung für Kraftfahrzeuge und ihre Anhänger sowie für Systeme, Bauteile und selbstständige technische Einheiten für diese Fahrzeuge (EG-Fahrzeuggenehmigungsverordnung). For a synthesis of the event in Germany, see C Schmid, “Germany” in M Frigessi Di Rattalma (ed.), The Dieselgate – A Legal Perspective (Berlin, Springer 2017), who underlines that the legal basis for such recall was not product safety law, but the framework that surrounds type-approval law (at p 33).

4 A first judgment of the CJEU handed down in the context of French penal procedures under Art 213-1 of the Code de la consommation against “X”, an actor of the diesel car industry, qualified as such the mechanism: see X (Defeat device on diesel engines), Case C-693/18, EU:C:2020:1040, followed by order of the Court in joint Cases 690/18, 691/18 and 692/18 of 6 May 2021, ECLI:EU:C:2021:363.

5 It adopted Regulation 2018/858 of the European Parliament and of the Council on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles, amending Regulations (EC) No 715/2007 and (EC) No 595/2009 and repealing Directive 2007/46/EC, OJ L 151, 2018, p 1.

6 The reasons for the use of software are not clearly explained, nor is the identity of the person(s) who actually ordered its use: see Krämer, supra, note 2, at p 154.

7 CJEU, 14 July 2022: Case C-128/20, GSMB Invest GmbH & Co. KG v Auto Krainer GesmbH (“C-128/20”); Case C-134/20, IR v Volkswagen AG (“Case 134/20”); Case-C-145/20, DS v Porsche Inter Auto GmbH & Co. KG, Volkswagen AG (“C-145/20”). Advocate General (AG) Rantos delivered on 21 September 2021 a joint opinion on these cases. The Court, however, delivered single judgments for each of them.

8 Under Art 267 TFEU. The questions were brought about in Austria by the Landesgericht Klagenfurt, the Landesgericht Eisenstadt and the Oberster Gerichtshof (Austria).

9 Regulation 715/2007 of 20 June 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information, OJ 2007 no. L 171, p 1.

10 Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees, OJ 1999 no. L 171, p 12 (“Directive 1999/44/EC”). As we know, this Directive was repealed in 2019 by Directive (EU) 2019/771 of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC and repealing Directive 1999/44/EC (OJ 2019 L 136, p 28), with effect from 1 January 2022. Nevertheless, in view of the date of the dispute in the main proceedings, Directive 1999/44 remains applicable to that dispute.

11 Under paras 871 (1), 879 (1), 922 (1), 932 (1) and 4, Allgemeines bürgerliches Gesetzbuch (General Civil Code, “ABGB”).

12 Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles (Framework Directive), OJ 2007 L 263, p 1, as amended by Commission Regulation (EC) No 1060/2008 of 7 October 2008 (OJ 2008 L 292, p 1). For a definition of the EC type approval, see Art 3 (5): “procedure whereby a Member State certifies that a type of vehicle, system, component or separate technical unit satisfies the relevant administrative provisions and technical requirements of this Directive and of the regulatory acts listed in Annex IV or XI”. Annex IV further refers to Regulation 715/ 2007, which itself integrates emissions thresholds stemming from Euro 5 and Euro 6 (see also Case 145/20, at para 49).

13 See AG Rantos, at para 81; Case 128/20, at para 19; Case 134/20, at paras 24–25; Case 145/20, at para 34. The defendants sought to better define the technical contours of the temperature window: see, eg, Case 134/20, at para 35.

14 Directive 2007/46/EC, which provides that it “establishes a harmonized framework containing the administrative provisions and general technical requirements for approval of all new vehicles within its scope and of the systems, components and separate technical units intended for those vehicles, with a view to facilitating their registration, sale and entry into service within the Community” (Art 1).

15 ibid, 3rd Recital.

16 Regulation 715/2007, Arts 3 (6) and 4 (2).

17 Regulation No 83 of the Economic Commission for Europe of the United Nations (UNECE) – Uniform provisions concerning the approval of vehicles with regard to the emission of pollutants according to engine fuel requirements, OJ 2006, L 375.

18 1st Recital, Regulation 715/2007.

19 4th and 6th Recitals, Regulation 715/2007.

20 Art 1 (1), Regulation 715/2007.

21 See Regulation 715/2007, Art 4 (1): “1. Manufacturers shall demonstrate that all new vehicles sold, registered or put into service in the Community are type approved in accordance with this Regulation and its implementing measures. Manufacturers shall also demonstrate that all new replacement pollution control devices requiring type approval which are sold or put into service in the Community are type approved …. These obligations include meeting the emission limits set out in Annex I and the implementing measures referred to in Article 5.” Further requirements were set by Regulation (EC) No 692/2008 implementing and amending Regulation No 715/2007 (OJ 2008 L 199, p 1), later amended by Commission Regulation 566/2011, OJ 2011 L 158, p 1 (no longer in force).

22 Art 4 (2), Regulation 715/2007 (emphasis added). See also Art 5 (1): “[t]he manufacturer shall equip vehicles so that the components likely to affect emissions are designed, constructed and assembled so as to enable the vehicle, in normal use, to comply with this Regulation and its implementing measures”.

23 Defined as “any element of design which senses temperature, vehicle speed, engine speed (RPM), transmission gear, manifold vacuum or any other parameter for the purpose of activating, modulating, delaying or deactivating the operation of any part of the emission control system, that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use” (Art 3 (10), Regulation 715/2007, emphasis added).

24 Art 5 (2), Regulation 715/2007.

25 ibid, Art 5 (2) (a).

26 Art. 2 (1), Directive 1999/44/CE (emphasis added).

27 ibid, Art 3 (1) (a).

28 ibid, Art 2 (2) (a).

29 ibid, Art 2 (2) (b).

30 ibid, Art 2 (2) (c).

31 ibid, Art 2 (2) (d).

32 ibid, Art 2 (3).

33 ibid, Arts 3 (2) and (3), Directive 1999/44/CE. See also the 10th Recital: “consumers should be entitled to have the goods restored to conformity with the contract free of charge, choosing either repair or replacement, or, failing this, to have the price reduced or the contract rescinded” (Directive 1999/44/CE, emphasis added).

34 Delivered on 23 September 2021 (“AG Rantos conclusions”). The Court approved on almost all grounds the opinion delivered.

35 “Article 3(10) of Regulation No 715/2007, read in conjunction with Article 5(1) of that regulation, is to be interpreted as meaning that a device which, under real driving conditions of a motor vehicle, ensures exhaust gas recirculation in full only when the outside temperature is between 15 °C and 33 °C and the driving altitude is lower than 1000 m, whereas, outside that window, per 10 °C, and above an altitude of 1000 m, per 250 m, the exhaust gas recirculation rate decreases in a linear way down to zero, with the result that NOx emissions increase beyond the limit values laid down in the regulation, constitutes a ‘defeat device’” (AG Rantos conclusions, at para 81), inspired by first and third questions, Case C-128/20; first question, Case 134/20; and first part of the second question, Case C-145/20,.

36 CJEU, judgment of 17 December 2020, CLCV and Others (Defeat device on diesel engines), C-693/18, EU:C:2020:1040, at para 64 (“CLCV and Others (Defeat device on diesel engines)”).

37 In this regard, the CJEU stated “[t]hat broad interpretation of the concept of ‘element of design’ is borne out by the objective pursued by Regulation No 715/2007, which consists, as is apparent from recital 6 in the preamble thereto, in considerably reducing NOx emissions from diesel vehicles in order to improve air quality and comply with limit values for pollution” (ibid, at para 67).

38 Case 134/20, at paras 39–41 and Case 128/20, at para 36. The latter had been qualified as such an “element of design” in a famous French case that had brought the matter to the attention of the CJEU in a similar context: CLCV and Others (Defeat device on diesel engines), at para 68.

39 Art 3 (10), Regulation 715/2007 (emphasis added).

40 See, eg, Case 134/20, at para 25.

41 ibid, at paras 47–50.

42 ibid, at para 46; Case 128/20, at para 36.

43 AG Rantos, at para 92.

44 Case 134/20, at paras 53–54.

45 Second referred question, Case 128/20, at para 25. See also Case C-134/20 (second and third questions) and second part of the second question, Case C-145/20 (AG Rantos conclusions, at para 105 ss).

46 Case 128/20, at para 50; Case 145/20, at para 61.

47 Commission Regulation no. 692/2008 implementing and amending Regulation No 715/2007, OJ 2008 L 199, p 1.

48 Case 128/20, at para 51.

49 ibid, at para 52. See also AG Rantos, at para 115ff.

50 ibid, at para 54. See also AG Rantos, at para 110ff (emphasis added).

51 The defendant’s arguments are summarised by the Court at paras 59–63.

52 Case 128/20, at para 63 (emphasis added).

53 ibid, at para 65 (emphasis added).

54 ibid, at para 66 (emphasis added).

55 ibid, at para 67 (emphasis added).

56 ibid, at para 68.

57 ibid, at paras 64 and 70.

58 The question reads: “[i]s Article 2(2)(d) of Directive [1999/44] to be interpreted as meaning that a motor vehicle that falls within the scope of Regulation [No 715/2007] shows the quality which is normal in goods of the same type and which the consumer can reasonably expect if the vehicle is equipped with a prohibited defeat device … but the vehicle type nevertheless has a valid EC type approval, meaning that the vehicle can be used on the road?” (Case 145/20, at para 45. See also AG Rantos conclusions, at para 140 ff, and note that the contractual dimension is absent from Case 128/20 and is partly absent from Case 134/20).

59 Para 879(1) of the Allgemeines bürgerliches Gesetzbuch (Austrian Civil Code).

60 See Case 145/20, at para 47.

61 ibid, at para 48 (emphasis added).

62 ibid, at para 54 (emphasis added). See also AG Rantos, at para 611.

63 ibid, at para 55 (emphasis added).

64 ibid (emphasis added). See also AG Rantos conclusions, at para 152ff.

65 AG Rantos conclusions, at para 159.

66 Case 145/20, at para 88.

67 AG Rantos conclusions, at para 154.

68 ibid, at para 158.

69 ibid, at para 155.

70 Case 145/20, at para 85.

71 AG Rantos, at para 157.

72 Case 145/20, at para 86 (emphasis added).

73 ibid., at para 94; AG Rantos, at para 160.

74 ibid., at para 32. See also AG Rantos conclusions, at para 132ff.

75 ibid., at para 86; see similarly AG Rantos, at para 134.

76 ibid, at para 94.

77 See, eg, QB v Mercedes-Benz Group AG, formerly Daimler, C-100/21, Advocate General Rantos’s Opinion delivered on June 2, 2022, JO L 2022, p 420 and pending case Volkswagen Group Italia SpA, Volkswagen Aktiengesellschaft v. Autorità Garante della Concorrenza e del Mercato, C-27/22, JO L 2022, p 420.

78 So it is often called, although this is no legal category, nor is it scientifically sound. The word is rather loosely used by the media in a polemical, political fashion. Interestingly, it is used in opposition to corporate social responsibility: see BJ Richardson, The Art of Environmental Law: Governing with Aesthetics (Oxford, Hart Publishing 2019) at p 182.

79 ibid, at p 183.

80 The AG sets the scene around the protection of the environment at the very first paragraph of its opinion. Following this path, the Court, too, evokes the recitals of Regulation 715/2017.

81 1st Recital, Directive 1999/44/EC; 2nd Recital, Directive 771/2019/EC on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, OJ L 136, 2019, p 28 (“Directive 771/2019/EC”).

82 Road transportation causes more than 28 percent of NOx emissions in the EU: see K Pedrose and B Vanheusden, “EU Air Pollution Law: Comprehensive but Insufficient” in M Peeters and M Eliantonio (eds), Research Handbook on EU Environment Law (Cheltenham, Edward Elgar 2020) at p 296.

83 Outside “discretionary windows”, the level of harmonisation it achieves is total regarding the aspects it covers: “Member States shall not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more, or less, stringent provisions to ensure a different level of consumer protection, unless otherwise provided for in this Directive” (Directive 771/2019/EC, Art 4).

84 ibid, 2nd and 10th recitals (emphasis added).

85 See Art 4, Directive 771/2019/EC, and further examples at 18th and 19th Recitals.

86 Directive 2019/771 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC, OJ 2019 L, 136.

87 ibid, Art 6 (a) (emphasis added).

88 ibid, Art 2 (10).

89 Richardson, supra, note 78, at p 182.

90 For a comparative account of the dieselgate, see the contributions gathered by Frigessi di Rattalma, supra, note 3.

91 See M Faure, “Regulatory Strategies in Environmental Liability” in F Cafaggi and H Muir Watt (eds), The Regulatory Function of European Private Law (Cheltenham, Edward Elgar 2009) at p 129; and, more recently, B Geebelen, “Ability of EU Legislation to Deter: The Volkswagen Case” (2017) 26 European Energy and Environmental Law Review 102.

92 See OO Cherednychenko, “Regulatory Agencies and Private Damages in the EU: Bridging the Gap between Theory and Practice” (2021) 40(1) Yearbook of European Law 146, at pp 147–48.

93 K Reiners and E Verluis, “NGOs as new Guardians of the Treaties? Analysing the Effectiveness of NGOs as Decentralised Enforcers of EU Law” (2022) Journal of European Public Policy.

94 See G Pedrazzi, “Civil and Consumer Law” in M Frigessi Di Rattalma (ed.), The Dieselgate – A Legal Perspective (Berlin, Springer 2017), at p 119.

95 See, eg, Proposal for a Directive on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC, COM/2018/0184 final 2018/089 (COD).

96 Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004, JO 2017 L 345.

97 See, in the Dieselgate context, K Van Elten and B Rehder, “Dieselgate and Eurolegalism. How a Scandal Fosters the Americanization of European Law” (2022) 29 Journal of European Public Policy 281. However, contextual differences must be considered in the comparison: see, eg, E Mujkic and D Klingner, “‘Dieselgate’: How Different Approaches to Decentralization, the Role of NGOs, Tort Law and the Regulatory Process Affected Comparative U.S. and European Union Outcomes in the Biggest Sandal in Automotive History” (2019) 43(7) International Journal of Public Administration 611.

98 One is indeed sufficient, as the mutual recognition principle then grants market access to the entire EU territory.

99 7th Recital, Regulation 715/2007 (emphasis added).

100 De Sadeleer, supra, note 2, at p 474. He adds: “[i]n fact, the aim of the EU environment law model is not to eliminate pollution, but rather to contain its most serious consequences” (at p 484). For a very thorough theoretical analysis of standards and the law, see H Schepel, The Constitution of Private Governance (Oxford, Hart Publishing 2005) at p 6.

101 S Poier, “Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?” (2020) 15(2) Problems of Sustainable Development 33, at p 38.

102 See, besides the diesel car regulatory framework, Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004, OJ L 345, 27 December 2017, p 1. Some authors remark that the practice was documented years before: see C Coglianese and J Nash, “The Law of the Test: Performance-Based Regulation and Diesel Emissions Control” (2017) 34 Yale Journal on Regulation 33, at p 36.

103 QB v Mercedes-Benz Group AG, formerly Daimler, supra, note 77.

104 See, eg, pending case Volkswagen Group Italia SpA, Volkswagen Aktiengesellschaft v. Autorità Garante della Concorrenza e del Mercato, supra, note 77.

105 H-W Micklitz, A-L Sibony and F Esposito, The Bright and Adventurous Future of Consumer Law Research (Cheltenham, Edward Elgar 2018) at p 1.