Germany would allow class-action lawsuits to be brought against big corporations, following a vote in the lower house of parliament on Thursday.
This is seen as a win for consumers in the wake of the Volkswagen emissions scandal.
The Bundestag passed the legislation to give consumers the option of seeking damages without doing it alone against major corporations.
The complaints would be led in the courts by specially authorised consumer protection associations.
As a prerequisite for collective redress, the complaint must affect a minimum number of people.
The legislation is set to come into effect on Nov. 1, so that the owners of cars fitted with emissions-cheating software by Volkswagen can bring forward a complaint before their right to claim lapses in late 2018.
Class-action lawsuits are common practice in the United States, where the German car making giant has been forced to pay out billions of dollars in compensation to duped customers.
The Diesel gate scandal, triggered by revelations in 2015 that Volkswagen had fitted diesel engines with so-called defeat devices to cheat environmental standards, prompted many European car owners to demand compensation often with little success.
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