The UK is currently witnessing one of the largest consumer group actions in history stemming from allegations that major car manufacturers used unlawful software - commonly referred to as 'defeat devices' - to manipulate diesel emissions test results. The key allegation is that carmakers used software to reduce nitrogen oxide emissions during laboratory testing, while actual on-road emissions were significantly higher.
This litigation is reminiscent of the 2015 Volkswagen “Dieselgate” scandal, where VW settled similar claims and ultimately paid over €30 billion globally in fines, settlements, and vehicle refits, including a £193 million settlement with 91,000 UK claimants in 2022. Elements of that settlement have recently been unpicked in Germany meaning the scandal continues despite the substantial sums which have already been paid out.
The current litigation involves five car manufacturers - Mercedes-Benz, Ford, Nissan, Renault, and Stellantis (owner of Peugeot and Citroen) - who are the lead defendants in High Court litigation concerning 20 test case vehicles (but with the potential to expand to 1.6 million claimants across 14 diesel models if the litigation goes the claimants' way). The claimants allege that the car manufacturers installed defeat devices between 2012 and 2017, misleading consumers and regulators about the environmental performance of their vehicles. The allegations are denied by the car manufacturers, who maintain their emissions systems were designed in this manner for safety or engineering reasons and seek to distance themselves from the similar VW claims.
A three-month trial in the High Court of England and Wales commenced in October 2025 and is ongoing with judgment expected in the summer. The trial involves examining a sample of 20 vehicles to determine whether the software used constitutes a 'defeat device' under English and EU law. A quantum trial will follow if the claimants succeed - the total value of the litigation is estimated at £6 billion, with further claims likely to follow depending on the outcome of the test case.
Key takeaways
This litigation is of significance to D&O insurers for a number of reasons. The claim sits at an intersection between ESG-related concerns and the increased prevalence of class actions in the UK. The key takeaways include:
- The ongoing litigation reinforces that England and Wales has increasingly become a significant forum for large‑scale group actions. Whilst this type of claim in the UK is still in relative infancy, and remains a far cry from the more developed US-type class actions, it is clear opt‑in group litigation on a large scale is on the rise. For D&O insurers, this means exposures arising from alleged corporate misconduct can manifest in coordinated claims on a very large scale; such claims are sophisticated, well-funded and expensive to defend.
- The claim is a consequence of the ongoing effects of climate change. The diesel emissions litigation makes clear ESG compliance remains a cornerstone of wider corporate risk governance and carries a substantial risk for companies (and by extension insurers). Inherently, the vehicle industry is particularly susceptible to ESG-related claims however the diesel emissions litigation doesn't only implicate car manufacturers and mega-corporations, ESG claims on a smaller scale against small and medium enterprises – such as greenwashing claims – still have the potential to be complex and significant. Victory for the claimants in the diesel emissions litigation will have far broader implications, not least fuelling the appetite for similar claims in the future.
- On that note, whilst the current trial is significant in value in its own right, since it operates as a test case, its potential implications extend far beyond the current defendants. The previous VW litigation remains unresolved nine years later and this case could have a similar longevity. The nature of such claims means they have implications which may ripple outwards. Regardless of the outcome, the diesel emissions litigation is likely to result in increased regulation, more investigations and increasingly a magnifying glass over compliance issues. The knock-on implications mean exposure to fines, legal costs defending potential civil and criminal claims and potential product recall costs.
- From a coverage perspective, these types of case give rise to interesting questions around the potential application of fraud/dishonesty exclusions (which are typically subject to a final determination provision such that Insurers may need to continue to advance defence costs whilst litigation is ongoing). For D&O insurers, directors may require individual representation multiplying the costs involved. Another potential coverage question relates to the insurability of fines, which as a matter of public policy, are usually not covered by insurance.
Overall, the diesel emissions Litigation represents a pivotal moment in English environmental and consumer law. For manufacturers and stakeholders, the case is a significant milestone and, as the High Court proceedings unfold, the outcome will likely shape the future of the industry. The expectation is that claims of this nature will become increasingly common and D&O insurers may be interested in the wider implications which may include increased regulation, changes in litigation strategy and a renewed interest in corporate accountability in the UK.
