McLaren wins lawsuit against Alex Palou: How much will the Spanish driver have to pay for breach of contract?

McLaren Racing won a key legal battle Friday against four-time IndyCar champion Alex Palou over his failed move to the team, with a judge in London ruling largely in favor of the British outfit.

The High Court of Justice found that McLaren, the reigning Formula 1 world champions, are entitled to receive roughly $12 million in damages. The lawsuit stemmed from Palou’s decision, three years ago, not to join McLaren despite having signed a contract with the team.

McLaren, based in Woking, England, operates both its Formula 1 program and the Arrow McLaren IndyCar team in the United States. The organization filed suit after Palou ultimately stayed put rather than completing the switch.

A deal that never happened

McLaren has emerged as a powerhouse in Formula 1, with Lando Norris winning the drivers championship last season and the team capturing the constructors title. Its IndyCar operation, however, is still relatively young.

According to McLaren’s lawyers, Palou’s agreement at the end of 2022 to join the team would have been a “masterstroke.” Instead, the Spanish driver remained with Chip Ganassi Racing and went on a remarkable run, winning three straight IndyCar championships from 2023 through 2025, along with the Indianapolis 500 last May.

McLaren vs. Palou: The F1 dispute at the heart of the case

During last year’s trial, McLaren’s legal team argued that the organization missed out on on-track success it would have achieved with Palou as its driver. They initially sought $19.7 million in damages.

Palou’s attorneys countered that he owed McLaren nothing. Palou himself testified in October that he believed McLaren had misled him about his chances of competing in Formula 1.

Judge Simon Picken sided with McLaren on several key points. He ruled that the team had to pay additional sums to Mexican driver Pato O’Ward, totaling just over $1.3 million, because O’Ward had greater leverage in salary negotiations following Palou’s decision. The judge also upheld part of McLaren’s claim related to performance-based bonuses and sponsorship payments the team said it would have earned had Palou driven for them.

Final damages and reactions

In total, McLaren was awarded at least $10.2 million, with an additional $2 million to $2.5 million depending on expert evidence still to be finalized.

McLaren Racing CEO Zak Brown welcomed the ruling, saying: “We appreciate the court recognizing the significant commercial impact and disruption our business suffered as a result of Alex’s breach of contract.”

Palou, in a statement, said the decision “shows that the accusations against me were completely exaggerated.” He added: “I am disappointed that any damages have been awarded to McLaren. They have not suffered any loss because of what they gave gained from the driver who replaced me.”

Chip Ganassi also weighed in, offering unequivocal backing for his star driver. “Alex has our full support, now and always,” Ganassi said.

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