McLaren has landed a damages award of more than $12 million after winning its legal case against IndyCar champion Alex Palou, bringing an expensive and increasingly awkward saga to a close.
The dispute has been rumbling on since 2023, when McLaren moved against Palou after he backed away from an agreement to join its IndyCar operation for 2024. The plan, as it was framed at the time, came with a clear career runway: IndyCar with McLaren, and a possible future pathway to Formula 1. Instead, Palou elected to stay put with Chip Ganassi Racing, triggering a contractual row that quickly turned from paddock gossip into a courtroom fight.
Palou had been sitting inside McLaren’s wider orbit already. He was appointed the team’s F1 reserve driver at the start of the 2023 season and had previously taken part in first practice for McLaren at the 2022 United States Grand Prix in Austin. That dual-track relationship — useful for marketing, useful for leverage, and, in theory, useful for future planning — is exactly why McLaren argued the breach went beyond a simple driver move and into tangible commercial damage.
The case was heard at London’s High Court last year. Palou accepted he had breached the contract but maintained he owed McLaren nothing. On Friday, the judge ruled in McLaren’s favour, awarding damages in excess of $12 million (around £8.8m/€10.2m at current exchange rates) to compensate McLaren for what the court accepted was commercial loss and disruption caused by the breach.
McLaren says the bill isn’t finished yet, either. In its statement following the ruling, the team confirmed it will seek interest and reimbursement of legal costs at a further hearing — a reminder that even when you “win”, these cases have a habit of dragging on until every last line item is settled.
The other element McLaren was keen to underline was the role of Palou’s existing team. The judgment records that Palou had the backing of Chip Ganassi Racing in attempting to deny McLaren’s claims — a detail that adds a little extra edge to what might otherwise have been filed away as just another contractual mess in modern motorsport.
For Zak Brown, the verdict is both vindication and deterrent. The McLaren CEO described it as an “entirely appropriate result”, insisting the team had done what it promised.
“As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex and fully honoured what had been agreed,” Brown said. “We thank the court for recognising the very significant commercial impact and disruption our business suffered as a result of Alex’s breach of contract with the team.”
There’s a broader takeaway here that won’t be lost on anyone negotiating across categories — especially with F1’s talent market still behaving like a high-stakes game of musical chairs in 2026. Teams don’t just sign drivers now; they buy optionality, storylines, sponsor value and future planning. When one piece gets pulled out late, the knock-on effects are real, and this ruling effectively puts a price tag on that disruption.
McLaren, for its part, has no shortage of stability on the F1 side. Lando Norris and Oscar Piastri are set to race for the team through the 2026 season, which makes this less about an immediate cockpit scramble and more about protecting the organisation’s leverage and credibility when it commits resources to a driver programme — whether that’s in IndyCar, F1, or the increasingly blurred space in between.
Palou’s breach might have been accepted, but the idea he could walk away without consequence hasn’t survived contact with the High Court. And in a paddock ecosystem where contracts are treated as both sword and shield, McLaren will see this as a line drawn as much for the future as for the past.
