The ruling by the European Court of Justice is another blow to the German car industry, which has been mired by the Dieselgate scandal for years now.
The owners of vehicles equipped with devices to manipulate their emissions, such as those used in the so-called Dieselgate scandal, have the right to compensation, according to the EU's top court.
The European Court of Justice ruled in favour of the plaintiff on Tuesday who brought the case against the Mercedes-Benz group.
He asked that the German giant compensate him for the damage related to the equipment included in the diesel car he purchased with an illegal device known as a thermal window or defeat device, which allows for the purification of exhaust pipe gas to be controlled from vehicles in line with the outside temperature.
In a separate decision last July, the court deemed this practice illegal in most cases.
Mercedes Benz reacted to the ruling by explaining that "only the damage actually caused to a buyer is relevant", adding that "there must be an unlawful defeat device, which is disputed in the present case".
Despite referring to just an individual case, the file could end up affecting a large number of motorists.
Andrew Canning from the European Consumer Organisation told Euronews in a statement that the decision is "an important" one and confirms that "individuals who bought cars equipped with defeat devices are entitled to obtain compensation".
"The decision is also important because it states that national legislation should not make it impossible or too difficult for individuals to enforce their rights," Canning added.
"We hope that, after this new decision in the Dieselgate saga, car manufacturers will now facilitate compensation for all concerned individuals."
The German Court that referred the case to the European Justice must now decide how to implement the ruling, which comes as another blow to the German car industry that has for years been mired by the Dieselgate scandal that erupted in 2015 after US authorities accused Volkswagen (VW) of installing devices in its cars to cheat emissions tests.
VW eventually admitted wrongdoing, leading several other countries to launch investigations and prompting then-CEO Martin Winterkorn to resign.