British motorsport team McLaren Racing is suing Spanish IndyCar champion Alex Palou for at least $23 million after he backed out of his contract to join the team.

In a filing submitted to the High Court of Justice Business and Property Courts of England and Wales Commercial Court on September 29, McLaren said Palou guaranteed he had “no outstanding obligation under any contract or agreement” that would keep him from joining McLaren after the IndyCar season ended.

The suit is the latest move in a bitter dispute involving Palou, McLaren, and Chip Ganassi Racing. In July 2022, McLaren announced it had signed Palou to drive its IndyCar and as a reserve driver with its Formula 1 team, while Chip Ganassi Racing maintained it held his contractual rights for the 2023 season.

Palou and Ganassi eventually reached an agreement last year for Palou to drive for Ganassi for the 2023 IndyCar season but also work for McLaren’s F1 team as long as it did not interfere with IndyCar. The deal saw him participate in a practice session for McLaren last season and act as the reserve driver for McLaren at F1’s Miami Grand Prix in May.

However, the relationship went sour when Palou contacted McLaren Racing chief executive Zak Brown on August 8 announcing he would not join McLaren and had signed a three-year extension with Ganassi through 2026.

Last month, Palou confirmed he would not honor his contract with McLaren and had ended his relationship with the management group that brokered the deal.

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The $23 million McLaren is seeking is to recoup costs the organization says it lost due to the broken contract, including $15.5 million in lost revenue under official partnership agreements with sponsors tied to Palou joining the team, the costs of using him as a reserve F1 driver, how much McLaren spent developing Palou for F1 racing, and a $400,000 advance on his 2024 salary.

McLaren said it is not seeking any repayment of legal fees it covered for Palou in last year’s dispute with Ganassi.

The filing also states that after McLaren was informed of Palou’s decision, they were sent a letter from his attorneys incorrectly claiming he had been promised a full-time seat in F1 and due to only being a reserve driver “a complete severing of the relationship [was] in order.”

McLaren has both Lando Norris and Oscar Piastri signed on as F1 drivers through at least 2025.

McLaren said Palou signed two contracts – one with McLaren Racing to become an F1 reserve driver and another separate deal with Arrow McLaren to compete in IndyCar for the team while also serving as the F1 backup.

At a media event ahead of the IndyCar season finale last month, Palou reiterated his stance that he wanted to stay in IndyCar after learning only a reserve driver role was available.

He said: “If you look at my interviews until 2021, I would say I was not focused on F1 at all, and that was totally true. But things changed when I won the championship. I was 24. I had just won my first big championship and what if I try something and it goes sideways, then I can come back when I'm 27 and still super young and can still do it for 10 or 15 years.

“The door opened a little bit with McLaren. It was amazing. The opportunity was great, but there was nothing else thereof, 'you will have a car.' Maybe if I was 20, I would have waited, but I'm not 20. I'm 26. I don't know of anyone who waited until 30 that got into Formula 1.”

Meanwhile, McLaren has announced a partnership extension with fleet management company Merchants Fleet.

Under an expanded new agreement, Merchants Fleet will continue as an official partner of the McLaren Extreme E team and become an official partner of the McLaren Formula E team for the 2023-24 season.

Merchants Fleet branding will continue to feature on McLaren’s Extreme E race cars, as well as on the race suits of the drivers.