Berlin paves way for class-action lawsuits

The German Cabinet on Wednesday put forward a new framework that would allow consumers to jointly sue companies for damages, basically allowing class-action lawsuits in the wake of the diesel emissions scandal.

Volkswagen's huge pollution scandal has seen the carmaker paying out billions of dollars to settle class-action lawsuits in the United States and Canada, but no such instrument has been in place for consumers in Germany.

The draft law to rectify this situation still needs parliamentary approval, but should take effect on November 1, just ahead of the year-end statute of limitations for claims against auto manufacturer Volkswagen.

German Justice Minister Katarina Barley reckoned that up to 2 million owners of VW diesel cars could potentially join class-action lawsuits.

The head of the federal association of consumer protection organizations, Klaus Müller, said the Volkswagen scam was only the tip of the iceberg, adding the new law could help consumers make use of their rights in many other areas, too.

Some obstacles in place

To prevent a never-ending flood of US-style class-action suits, the German plans involve some procedural hurdles.

Complainants will need to be represented by consumer protection associations. The first step for a given association would be to comprehensively process 10 cases and present a lawsuit to the court.

A total of 50 affected people will have to sign up to a litigation register within a two-month period for the case to be brought forward.

The consumer body representing the claimants will need to have been registered for at least four years and have at least 350 members.

hg/jd (AFP, Reuters, dpa)