The European Court of Justice (ECJ) ruled on Thursday that the law protecting German carmaker VW from takeovers violates the bloc's rules. Consequently, Porsche AG, the well-known luxury car producer which currently owns 30.9-per-cent of the VW, revved up its plans of a takeover.

"The conditions are now right (to build a stake in VW)," a Porsche spokesman told dpa-AFX.

Tuesday's decision by the European Court of Justice (ECJ) to strike down the 47-year-old "Volkswagen law" clears the way for Porsche which spent 5 billion euros (7 billion dollars) to build its holding in VW, the biggest carmaker in Europe. Porsche has a 10- billion-euro line of credit and will probably use it to gain the controlling stake in VW, annalists predicted.

The company’s board of directors will meet on November 12, but it’s not certain that this issue will be on the discussion agenda.

VW fell by 3.3 per cent to 174.40 euros by late afternoon after previously increasing more than 2 per cent on the news of the ECJ's decision. Meanwhile, Porsche’s shares grew by five per cent to 1,723.70 euros.

The German government answered ECJ's decision and said it would change the law that was meant to conserve the state influence over Volkswagen without delay.

The Luxembourg-based court said EU law "prohibits any restriction on movements of capital between member states."

"A national measure which is liable to deter direct investments by limiting the possibility for shareholders to participate in the company ... constitutes such a restriction," the EU high court added in its statement.