European Union citizens should be able to sue Volkswagen in their national courts if they have bought cars with emission cheat devices installed, the EU's top court has ruled.
The verdict by the Court of Justice raises the possibility that the German carmaker could face masses of legal complaints from consumers across the bloc.
The case came to the court in Luxembourg after an Austrian court handling a claim by the Austrian consumer association VKI on behalf of 574 owners of manipulated vehicles had sought to establish if it had jurisdiction on the matter.
The Court of Justice said that under EU law court applicants should, in principle, sue where the defendant is domiciled.
However, in cases of tort there was also the possibility of taking action in the place where damage had occurred.
The EU court said the damage occurred only at the time when the vehicles were purchased as they were acquired at a price higher than their actual value.
The VKI wants compensation for the difference between the price consumers paid for vehicles, and the value of a manipulated vehicle.
Volkswagen said the judgment changed little for plaintiffs, defendants and courts in the proceedings.
"Outside of Austria, the question of jurisdiction has hardly arisen," it said.
Austria's minister for consumer protection, Rudolf Anschober, said the ruling was encouraging.
"Consumers must not be treated differently according to their nationality," he said in a statement.
Volkswagen admitted in 2015 to using illegal software to cheat US diesel engine tests, a scandal that has cost it more than $30 billion in vehicle refits, fines and provisions.
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Nearly all US owners of affected cars agreed to take part in a $25bn settlement in 2016 in the United States.
The carmaker is in talks in Germany to settle a class action lawsuit there.