On Monday, Germany's Federal Court of Justice ruled that the auto manufacturer Audi is not immediately liable to pay compensation for its parent company's role in rigging diesel emissions.

Liability could shift to the Volkswagen subsidiary if it can be shown that bosses there knew that unauthorized technology had been installed in vehicles when they put them on the market.

Judges had indicated that it would be difficult to prove Audi's liability, as a subsidiary of Volkswagen, in installing the so-called defeat devices from the parent company.

What does the court's decision mean?

Tens of thousands of vehicle owners in Germany are entitled to damages after a 2020 landmark court ruling on the Volkswagen diesel scandal.

However, it was unclear whether the liability could also be applied to Volkswagen's subsidiary Audi.

The ruling sends the decision back to lower court judges in the town of Naumburg, who said Audi should also pay out some €20,000 euros ($24,226) plus interest.

The lower court judgment was based on Audi having known about the devices being installed. The Federal Court of Justice has now ruled that this needed to be proved in the lower court. 

The plaintiff in the latest case directly sued Audi rather than the Volkswagen Group, which developed the diesel engine in his car.

The man had bought the Audi A6 Avant, with the manipulated software installed in the vehicle, in May 2015. Despite a recall campaign and updates being installed on affected cars, the individual wanted to return his car in exchange for the purchase price.

What is 'dieselgate'?

The "dieselgate" emissions cheating scandal plunged one of the main pillars of German industry, Volkswagen, industry into a yearslong crisis.

The German giant ran into trouble when it was revealed in September 2015 that it had installed cheating devices in 11 million diesel vehicles worldwide.

The devices appeared to make the vehicles seem less polluting in lab tests than they actually were on the open road.

The saga has so far cost VW more than 30 billion euros ($33 billion) in fines, legal costs and compensation payments to vehicle owners, mostly in the United States.

What do Audi employees say about the scandal?

An engine developer for Audi told a court in October that the company's leadership had at least some knowledge of software to rig emissions tests being installed in thousands of vehicles.

Volkswagen has always insisted that a handful of lower-level employees were responsible for the scam - which came to light in 2015 — without the knowledge of their superiors.

The developer, Giovanni P, was accused of manipulating the software that was later able to cheat on emissions tests.

While he confessed to most of the charges against him, Giovanni P said he had merely been executing orders from the Audi leadership.

In some cases, he said, he had not been in a position to disagree with their decisions.

Former Audi CEO Rupert Stadler is first auto boss to go on trial in Germany over "dieselgate."

He accused of having failed to stop the sale of 120,000 tampered-with vehicles, even after he learned about the software cheat when the scandal broke in September 2015.

The 57-year-old denies charges of fraud, falsifying certifications and false advertising.

rc/dj (dpa, Reuters)