Race to the (dotted) line: The contract dispute which rocked the world of Formula 1

Each year (usually around the middle of the Formula 1 calendar) 'silly season' begins, in which drivers engage in a 'giant game of musical chairs', with teams poaching in-form, out of contract, drivers from their rivals to secure the perfect line up. Those who watched the fifth season of Netflix's 'Drive to Survive' will have seen how one team got 'silly season' spectacularly wrong in 2022, resulting in a contract dispute playing out in delicious fashion for the all-seeing Netflix cameras. For those you who missed it (or for those wanting to revisit the drama) – buckle up for quite a tale.

Lights out and away we go

'Silly season' started badly for Formula 1 team Alpine, when two-time World Champion Fernando Alonso unexpectedly announced he would be leaving the team for rivals Aston Martin for the 2023 season. Whilst Alpine had been close to agreeing a contract with Alonso, it had not yet been signed, leaving the door open for Aston Martin to beat Alpine in locking down a deal with Alonso. A lesson perhaps to be learned for Alpine (and anyone else) delaying 'putting pen to paper' when looking to finalise an important contract for a driver, project or a potential commercial deal.

When the race goes from bad to worse

Whilst the situation with Alonso was painful enough for Alpine, it was about to get a whole lot worse. Cue Alpine announcing via Twitter their reserve driver, talented rookie Oscar Piastri (a former Formula 2 and Formula 3 champion), as Alonso's replacement, only for Piastri to Tweet a short while later that the press release was wrong and that he would not be driving for Alpine the following year. It soon became clear that, despite Alpine believing that they had a signed contract with Piastri, rivals McLaren had swooped in and signed him to drive for them, leaving Alpine scrambling to establish what had happened and why the contract they thought they had in place with Piastri had apparently been ignored.

Gearing up for battle

Faced with losing out on another talented driver (whom they say they had invested millions of pounds in preparing and developing for Formula 1) Alpine immediately disputed Piastri's contract with McLaren, arguing that their own purported contract with Piastri meant he had to drive for them for the 2023 season.

Whilst, as we saw in Drive to Survive, McLaren sought to enter into settlement negotiations with Alpine to resolve the dispute, offering one of their own drivers in exchange for Piastri, these were ultimately unsuccessful. Instead, the dispute required external adjudication, with the FIA Contractual Regulation Board (an independent group of lawyers with contract law experience, set up to determine the legality of driver contracts and settle disputes between F1 teams over those contracts) stepping in to consider both contracts and determine which would prevail.

Alpine in the hot seat

Whilst Alpine purportedly thought that a 'Terms Sheet' signed in November 2021 constituted a valid contract, this was only an intended starting point for negotiations and a final contract was never signed for the 2023 Formula 1 race season. An apparent series of delays (back to that 'old chestnut') caused by a reported 'bottleneck' within Alpine's legal department meant that, by the time Piastri was approached by McLaren, he was free to agree a contract with McLaren instead.

Chequered flag for Piastri?

In the end, a little over a month after the dispute arose, the FIA Contractual Regulation Board upheld McLaren's contract in a unanimous decision, having found a number of issues with the purported contract between Piastri and Alpine, some of which are noted above. With no route to appeal the decision (as the Board's decisions are binding on FIA members), McLaren were free to announce Piastri as their 2023 driver and Alpine had to look elsewhere (after paying McLaren's legal fees).

Post race analysis

So what can be learned from this Formula 1 dispute?

Most importantly, the saga highlights the importance of making sure negotiations are fully concluded and all contractual documentation is properly signed without delay when entering into important contracts. Secondly, those considering entering into a contractual dispute (particularly where there is a risk that you could be liable for the other side's expenses) should first take legal advice and fully consider the factual and legal position under the contractual documentation before proceeding. Finally, before making any kind of public announcement, make sure that you know what you are saying is correct to avoid potential reputational damage and/or embarrassment which can arise out of making an incorrect statement.

We'll be keeping our eyes peeled to see whether Piastri's decision to join McLaren pays off and whether any fresh contractual disputes arise out of this year's 'silly season'.