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The Palou/McLaren lawsuit is heading towards resolution. Here’s what to know

On Sep 30, 2025

The protracted lawsuit between McLaren and four-time IndyCar Series champion Alex Palou is headed towards the finish line.

Filed in August of 2023 in the United Kingdom, the complaint by McLaren Indy LLC and McLaren Racing LTD against ALPA Racing LLC, Mr. Alex Palou Montalbo, and Palou Motorsport SL starts today, Monday, September 29, and should bring an end to the matter at some point in the coming weeks or months.

The move to civil court comes after unsuccessful efforts to negotiate a settlement with McLaren. Having acknowledged the breach of contract with McLaren, the trial will be held in front of a judge who will hear McLaren’s complaint against Palou, which seeks an eight-figure finding against the Spaniard, and from Palou’s legal team, which contests the sizable figure sought by McLaren.

BACKGROUND

McLaren’s lawsuit stems from its second attempt to sign Palou. Its first attempt to acquire Palou’s services for 2023 was met with resistance from Chip Ganassi Racing (CGR) which activated its option to retain Palou for 2023. The matter was resolved through mediation and Palou remained with CGR in 2023 under a new one-year contract. In the agreement, Palou secured the right to leave CGR at the end of 2023, and went on to win his second IndyCar Series championship with the team in 2023.

Free to depart CGR one year later than was originally planned, Palou executed amended contracts with McLaren in October of 2022 where the Spaniard would make a full-time switch to McLaren in 2024 under a driving agreement that would run through 2026. McLaren would also pay for the use of his ‘name, fame, reputation, and likeness’ through a separate promotions agreement. McLaren Racing CEO Zak Brown was keen to recruit the IndyCar champion to lead its Arrow McLaren IndyCar program, and in turn, Palou’s dream of competing in Formula 1 gained momentum, albeit without the known existence of an explicit guarantee to race for McLaren in F1.

To that end, during Palou’s season-in-waiting at CGR, he would serve as the McLaren Formula 1 team’s reserve driver and participate in occasional F1 tests, the first of which took place shortly after the conclusion of the 2022 IndyCar season and continued into 2023.

With their burgeoning relationship developing while Palou was under contract with CGR, McLaren paid Palou $400,000 in January of 2023 in what it describes as a ‘signing bonus.’

On a similar timeline, McLaren also signed Formula 2 champion Oscar Piastri to race for its F1 team in 2023, which clouded the picture for Palou’s desired F1 future with McLaren.

Outside of his McLaren duties, Palou went on to handily beat the Arrow McLaren IndyCar team with CGR while earning the 2023 IndyCar title and Piastri placed ninth in the world championship as a rookie with McLaren, two positions behind teammate Lando Norris.

With a second IndyCar crown in hand, the last step in Palou’s delayed but contractually-bound switch to McLaren was to exit CGR, but it never happened.

In August of 2023, a lawyer representing Palou sent a letter to McLaren informing the team Palou had signed a new contract with CGR covering 2024-’26, which was the same span Palou previously agreed to drive for McLaren. Within days, McLaren sued Palou for breach of contract as Palou stayed at CGR in 2024 and 2025 where two more championships were captured with the team.

Palou drove McLaren’s F1 car in FP1 sessions at COTA in 2022 (above) and Hungary in 2023, but his hopes of a permanent F1 switch were complicated by the arrival of Oscar Piastri. Glenn Dunbar/Getty Images

WHAT’S AT STAKE

The judge will hear McLaren’s claims of extreme financial losses due to Palou’s reneging on contracts between himself and the McLaren racing organization. In the original complaint, which has since been revised in a filing from September 19, more than $30,000,000 was being pursued by McLaren.

McLaren asks for compensation from Palou for an array of financial losses it claims it has endured by Palou’s failure to honor the contracts, including reduced sponsor revenue, decreased auto manufacturer payouts, the need to pay other drivers to perform Palou’s untendered services along with the need to pay new or existing drivers a higher-than-desired salary in Palou’s absence, the $400,000 signing bonus, and a downsized sum for McLaren’s outlay to conduct F1 testing with Palou.The amended amount sought by McLaren, along with the application of an interest rate, would take the damages to an estimated $25,000,000, which McLaren will attempt to prove to the judge as accurate and worthy of compensation from Palou.

Palou’s defense, which has revolved around disputing the 10 or more valuations filed by McLaren that combine to reach the eight-figure damage estimation, comes with the hope of having any judgement against Palou being reduced to a much smaller amount.

TIMELINE

Leading into the trial, a number of depositions have taken place and expert witnesses have been agreed upon by the judge.

For “expert evidence in respect of driver engagement/remuneration, commercial sponsorship and exploitation of other commercial opportunities,” veteran driver manager Julian Jokobi and Brian Marks, a well-tenured business operations leader, were accepted to speak as “IndyCar Experts.” Their F1 counterparts, former team principals Otmar Szafnauer and Claire Williams, were welcomed by the claimants and defendants as “F1 Experts.”

The first week of the trial will see both camps present the judge with all relevant information to consider on their behalf.

The second week is where the solicitors for McLaren and Palou will call their respective experts to present testimony and statements. Others, who’ve been deposed in advance of the trial, can be invited to offer live testimony in front of the judge during the second week.

RACER understands the judge is expected to step away during the third week – bringing a temporary pause to the trial – to handle a pre-existing caseload before returning to the lawsuit at some point later in the month, if possible.