The diesel emission scandal has led to a flood of legal proceedings in Germany. The Eighth Panel of the German Federal Court of Justice (BGH), in Case VIII ZR 225/17, surprisingly indicated in a guidance order (issued despite the case having been settled out-of-court by the parties) that it may deem illegal defeat devices as a quality defect within the meaning of German contract of purchase law. With this decision, plaintiffs’ prospects of bringing successful claims have improved slightly. What remains unclear, however, is how to deal with all the cases in which contractual periods of limitation have already expired and buyers might thus remain empty-handed despite the presence of an illegal defeat device or other violations of emission law. The issue of limitation under European Union law will keep the automotive industry busy for a long time even after the emission scandal proceedings will have come to an end – at least until there is a uniform European solution to the issue. This is mostly a consequence of the new European type approval Regulation 2018/858, which entered into force on July 5, 2018. It extends the existing duties of market surveillance authorities visà-vis testing vehicles in the field for their “in-service conformity” and provides a timeframe of five years, or possibly even longer, within which the tests of the vehicles’ compliance with European type approval law are to be carried out. Market surveillance authorities have a number of powers, ranging from requiring that manufacturers present a plan of remedial measures to ordering the withdrawal of the vehicle from service. What the Regulation does not stipulate – because it is a matter of domestic contract of purchase law – is who will have to bear the costs for remedying the defect if, at the time the market surveillance authorities take corrective measures, the periods of limitation for warranty claims have already expired according to the contract of purchase. This blog entry will address this issue and also provide guidance on possible legal defenses. 

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