Life in the Fast Lane: Courts Act Swiftly to Resolve Dispute Between F1 Team and Driver

The 2015 Formula One World Championship season opener was recently held in Melbourne, with Mercedes Lewis Hamilton taking an assured win in his dominant Mercedes. The writer made the annual pilgrimage to the Albert Park track, looking forward to an exciting weekend of motorsport. But the race weekend action was not confined to the race track, as a dispute between Swiss F1 team Sauber and a former driver turned ugly.

Dutch driver Giedo van der Garde served as Sauber’s reserve driver for the 2014 season and was contracted by Sauber as one of its two racing drivers for the 2015 season. However, in November 2014, van der Garde was told that he would not be driving for the team in 2015, with Sauber opting to sign Swedish driver Marcus Ericsson and Brazilian rookie Felipe Nasr as their race drivers. As he had a valid contract to drive in 2015, van der Garde referred the matter to the Swiss Chambers Arbitration Institution.

Arbitration is a dispute resolution process used in place of Court proceedings where an independent arbitrator specialising in the relevant dispute makes a binding decision on the parties to the dispute which generally cannot be challenged.   It is common for commercial contracts to make provision for disputes under the contract to be referred to arbitration, instead of the parties commencing Court proceedings.

In van der Garde’s case, Sauber were ordered to:

“refrain from taking any action the effect of which would be to deprive Mr. van der Garde of his entitlement to participate in the 2015 Formula One Season as one of Sauber’s two nominated race drivers.”

Therefore, it was ordered in Arbitration that van der Garde was to drive for Sauber in the 2015 season. Despite the Arbitration decision, Sauber nominated Ericsson and Nasr as their two drivers for the first race of the season.

On the Monday before the Grand Prix, van der Garde filed an urgent application in the Victorian Supreme Court seeking to enforce the Arbitration decision to allow him to drive for Sauber in the Australian Grand Prix. The Court ordered on the Wednesday before the race that the Arbitration decision was upheld, meaning that Sauber was required to allow van der Garde to drive in the Australian Grand Prix in place of either Ericsson or Nasr.

Australia is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which allows international arbitration decisions to be enforced in any countries that are parties to the Convention. It is on this basis van der Garde sought to have the Arbitration decision enforced. Sauber sought to argue that to enforce the Arbitration decision would be contrary to public policy, as van der Garde’s lack of preparation and experience driving the current car would pose a risk to himself and the public and there was insufficient time to modify the car so that van der Garde could drive it safely. These arguments were rejected by the Court who stated that all safety, training and insurance requirements would have to be met to allow van der Garde to drive.

Sauber sought to appeal the Supreme Court’s decision, but the appeal was quickly dismissed as there was no error in the original decision. On the Friday of the race weekend the Sauber cars were conspicuous by their absence during the first Practice Session.

Van der Garde threatened to bring proceedings for contempt of court, due to Sauber’s failure to take any steps to prepare for van der Garde to drive in the Grand Prix. Contempt proceedings may have resulted in Sauber’s Australian assets being seized by the Court and their director, Monisha Kaltenborn being imprisoned. However, Sauber and van der Garde were able to come to a settlement whereby van der Garde would not drive for the team in time for the cars to hit the track in the second Practice Session later that afternoon.

If you would like advice regarding arbitration, mediation or any other alternative dispute resolution, contact McLaughlins Lawyers, your Gold Coast litigation specialists.