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Volkswagen to Apply for Injunction to Suspend the Execution of Sales Ban
Volkswagen’s Trick
Volkswagen to Apply for Injunction to Suspend the Execution of Sales Ban
  • By Jung Suk-yee
  • July 27, 2016, 01:15
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Johannes Tamer, the CEO of Audi Volkswagen Korea, listens to whispering from the Korean vice president at the closed hearing held at the National Institute of Environmental Research in Incheon city on July 25.
Johannes Tamer, the CEO of Audi Volkswagen Korea, listens to whispering from the Korean vice president at the closed hearing held at the National Institute of Environmental Research in Incheon city on July 25.

 

Volkswagen AG is highly likely to be forced to pay out tens of billions of won in additional fines when it resumes sales of its products even after filing for an injunction to temporarily halt the Korean government’s measure to suspend its sales.

German carmaker has decided to voluntarily halt sales of its vehicle models implicated in an emissions scandal on July 25. However, it is said that the company plans to apply for an injunction to the court to suspend the execution until the final verdict of the lawsuit after the Korean government takes administrative action, such as the revocation of its certification and suspension of sales, on August 2.

When the court grants the injunction request by Volkswagen, Volkswagen will be able to sell its vehicles for months to years until the court decides whether to cancel the government’s administrative action or not. The court usually accepts a request for an injunction unless there are special circumstances.

During a press conference held at the Government Complex Sejong on the 26th, Hong Dong-gon, a director at the Traffic Environment Division of the Ministry of Environment (MOE), said on the assumption of Volkswagen’s request for the injunction, “The court is highly likely to grant Volkswagen an injunction against the government. However, we completed the legal review that Volkswagen can also face a fine for additional sales when we win the final decision even if the company sells its vehicle models until the verdict of the suit based on it.”

In short, Volkswagen will be forced to pay fines additionally according to its combined sales when the company loses the lawsuit against the government for the administrative disposition revocation even it intends to lower fines by voluntarily halting sales and resume sales through the request for an injunction. If the automaker resume sales after the 28th, the amount of fines will grow further. This is because the revision of the Clean Air Conservation Act that raises the ceiling on fines per vehicle model from 1 billion won (US$878,735) to 10 billion won (US$8.78 million) will be applied.

However, the fines will vary according to how many more cars Volkswagen will sell, how long it will take to receive a verdict for the lawsuit of administrative measure cancellation, how much car models are and how much of them are sold, whether the MOE will apply 1.5 percent or 3 percent on cars sold without certification and 0.5 percent or 1 percent on weighted imposition coefficient and how many mitigating circumstances the court will accept. 

Hong said, “Fabricated documents on emissions tests is definitely an illegal conduct in terms of both content and certification procedures. The court will decide but it is a very clear misconduct so we are highly likely to win the case.” In regard to the public hearing a day earlier, he said, “The company insists that it is just a simple mistake in documents. We will launch a thorough investigation on its claim and announce the results two days later.”