SEPTEMBER 18, 2004

Time for the lawyers?

The implications of the announcement that the Ford Motor Company is pulling out of Formula 1 are still sinking in and there has not been much time to think through all the varous issues involved. But there is one question which will probably be mentioned before too long: Jaguar Racing was a party to the Concorde Agreement, a supposedly legally-binding commercial between the teams, the FIA and the Formula One group. In theory therefore the other parties to the agreement could have some claim against Ford for its early departure. At the very least the team will have to pay fines for missing races for the next three years and with a bill of $250,000 per race and seasons which will have at least 16 races the bill will be a minimum of $12m.

But there may be other claims as Ford's withdrawal could mean financial implications for other signatories. The problem with speculating along these lines is that the Concorde Agreement is a private document and the only light thrown on its clauses has been in court actions, notably involving the defunct Arrows team. This revealed that in Clause 5 of the agreement there are a number of mutual undertakings including the commitment by teams to compete until the end of the deal, unless prevented from doing so by force majeure. Financial problems are not considered to be force majeure. The Concorde Agreement signatories allows for teams going out of business (Prost Grand Prix and Arrows are good examples of this) but, depending on who signed the deal, it would not be the case with Jaguar Racing, a wholly-owned subsidiary of the Ford Motor Company.