VW diesel problems are stepping up after the setbacks of a German court

The Volkswagen Group is facing the prospect of compensating thousands of owners of contaminated diesel vehicles after Germany's highest court has undermined the automaker's defense strategy into a rare blame.

The Federal Court of Justice refuted VW's arguments that its fraud software was legal under European Union law and that, consequently, the company was not required to compensate the customers concerned. The court issued an unusual opinion on Friday, despite the long-awaited cancellation of the February 27 hearing after the grievor's withdrawal from the grievor.

VW had sought to reach a settlement in this case to prevent the court from ruling on it, which would weaken its efforts to avoid claims over its faked diesel vehicles. Unlike the United States, the company has refused to compensate affected customers in Europe and some 400,000 customers have signed up to take legal action against the world's largest automaker.

The court's statement does not allow for "concrete conclusions" as to its impact on other lawsuits, Volkswagen said in a statement. The company reiterated that it was "impossible" to deliver a new vehicle in the case in question, as the Tiguan sold to the customer in 2015 was "totally different" from the current version.

Volkswagen struggled to overcome the three-year-old scandal. In 2015, he admitted that he wanted diesel cars to detect test conditions and lower emissions levels within legal limits, while polluting more on the road. The crisis has affected not less than 11 million diesel vehicles in the world and has now cost about 28 billion euros to VW. Investigations by German prosecutors at the root of the engine stall are also underway.

The customer in the case that was to be heard next week had called for a new car because the Tiguan SUV that he had bought in July 2015 – two months before the US authorities discovered engine tampering – had been rigged. VW claimed that it could not deliver a new car because it was no longer produced. The current Tiguan SUV, which starts at 27,775 euros, is the model that will succeed it.

In its statement, the court stated that VW had the obligation to provide a vehicle free of defects and that the change of model did not preclude a replacement. The court did not specify the impact of the software updates on VW's position.