In the dispute over shareholder lawsuits against the holding company Porsche SE in connection with the Volkswagen diesel scandal, the German Federal Court of Justice (BGH) is turning to the European Court of Justice (ECJ). The question of what responsibility Porsche SE, as Volkswagen's major shareholder, bears in relation to the events at VW can only be clarified with the help of the ECJ, Germany's highest court announced on Wednesday. The court explained that the issue concerns the interpretation of the European Market Abuse Directive, according to a decision the BGH says it already made in November.

The scandal surrounding manipulated emissions values at Volkswagen came to light in September 2015. The carmaker had installed illegal defeat devices in around eleven million diesel vehicles, which ensured that legal nitrogen oxide limits were only observed under test conditions, while being exceeded on the road. In addition to car buyers and authorities, shareholders also felt deceived and are seeking compensation for losses in share value. Small shareholders and major investors are suing Volkswagen in courts in Braunschweig and Porsche SE in Stuttgart. Common questions in the numerous lawsuits are to be bundled and answered in single proceedings at each location under the so-called Capital Investor Model Proceedings Act (KapMuG).

The BGH is itself dealing with questions arising from the KapMuG proceedings against Porsche SE at the Higher Regional Court (OLG) in Stuttgart. One point of contention is whether top managers who held positions at both companies should have shared their knowledge about events at Volkswagen with Porsche SE, so that the latter could have warned its shareholders in time about the costly fraud scandal. At the time, former Volkswagen CEO Martin Winterkorn also served as head of Porsche SE.

The BGH confirmed the OLG's view that a securities issuer such as Porsche SE is liable regardless of whether it is aware of price-sensitive information. However, the BGH criticized the OLG's position that Porsche SE could not have accessed the knowledge of managers with dual roles because they were obliged to maintain confidentiality about Volkswagen's internal affairs. The BGH countered that these managers could have requested a waiver of their confidentiality obligations at Volkswagen. The BGH has asked the ECJ to clarify under which specific circumstances Porsche SE would have been required to publish information about the Volkswagen diesel scandal via an ad hoc announcement. The answer, the BGH said, also depends on how the ECJ interprets the European Market Abuse Directive.

(Reporting by Jörn Poltz, edited by Myria Mildenberger. For further questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).