Norges Bank Investment Management, an $850bn fund, said it was its duty to protect the fund’s investment in VW.
The fund will participate with other shareholders in the legal action which is to take place in Germany under German law.
VW admitted last year that it has used software to cheat emissions tests for its cars. Last month the automaker reached a deal with the US government worth almost $10bn to buy back more than 400,000 diesel cars and establish compensation procedures.
Peter Johnsen, chief investment office for equity strategies at the Norwegian fund, was quoted in the Financial Times saying: “We have been advised by our lawyers that the company’s conduct gives rise to legal claims under German law.
“As an investor it is our responsibility to safeguard the fund’s holdings in Volkswagen.”