Ferrari loses first court battle, ready to appeal

Thu, 05/21/2009 - 03:09

Ferrari's bid to block disputed changes to Formula One's regulations was rejected by a French court on Wednesday.

The ruling by the Tribunal de Grande Instance, which is open to appeal, did not focus on the merit of the regulation changes but on Ferrari's right to block them.

The Italian team had sought an injunction on the grounds that a 2005 agreement gave it veto power over regulation changes decided by the international racing federation FIA.

Ferrari later indicated that it was ready to appeal and in a statement said the court had recognised in its ruling that it was not qualified to decide on the validity of its veto power, which was thus a matter for the civil courts.

What the ruling did establish, Ferrari added, was that FIA could continue to demand that teams signing up for next season accept its ''regulations which were elaborated unilaterally and without respecting established procedure''.

FIA has maintained that not only had Ferrari's veto expired when it joined the newly formed Formula One Teams Association (FOTA) last year, but Ferrari failed to exercise its veto when the changes were discussed at meetings of FIA's governing World Motor Sport Council in March and April.

It was this latter argument which apparently convinced the French court.

Ferrari was given the veto power in 2005 when it agreed to extend to 2012 Formula 1's Concorde Agreement, which dictates the terms for competition and revenue sharing between FIA, the teams and their commercial partners, the Formula One Group (FOG).

FIA chief Max Mosley issued a statement welcoming the court's verdict and in a swipe at Ferrari said ''no competitor should place their interests above those of the sport in which they compete''.

'FIA, the teams and our commercial partners will now continue to work to ensure the well-being of Formula 1 in 2010 and beyond, '' he added.

It remains to be seen whether Ferrari, which has been involved in Formula 1 every year since it started in 1950, and several other teams will carry out their threat to drop out of Formula 1 next year.

In its statement issued after the ruling, Ferrari said it intends to keep working with FOTA, FIA and FOG ''to ensure that in Formula 1 the same rules apply to everyone, that regulations remained fixed and that we continue in our overall goal of reducing costs''.

The rule changes at issue center on a 40-million-pound voluntary budget cap and a provision which would give teams which respect it greater technical leeway than those that surpass the limit.

According to Ferrari, such a budget cap would not only be impossible to enforce but would create a two-tier situation on the track in which some teams would have unfair technical advantages.

The 40-million-pound budget cap does not include drivers' salaries nor, for 2010 only, engine costs.

Ferrari last year spent an estimated total of $415 million, just over 267 million pounds, on Formula 1.

FIA maintains that the cap is necessary not only to keep the sport's costs down but also to attract new teams which do not have the financial muscle which Ferrari and some other teams have because they owned or backed by major automobile producers, in Ferrari's case Fiat.

Other manufacturers involved in Formula 1 include Renault, Toyota, and BMW, while Mercedes is a partners with McLaren

Manufacturers view Formula 1 as an occasion to test the innovative technology they will then apply to normal cars.

Renault and Toyota have already said they would also quit Formula 1 if the two-tier system remains, as have Red Bull, which has Mercedes engine, and sister team Toro Rosso, which uses a Mercedes power train.

Applications for next season must be presented by May 29 and Mosley had made it clear that teams which do not sign up will not participate.

FIA, FOTA and FOG will meet on the sidelines of this weekend's Monaco Grand Prix to try and hammer out an acceptable compromise which can guarantee a regular season next year.

If no accord is struck, Ferrari on Wednesday reiterated its intention, as sanctioned by a company board meeting earlier this month, not to sign up for the 2010 season

The dispute over the regulation changes is viewed by many observers as a power struggle between FIA, FOTA - which is headed by Ferrari Chairman Luca Cordero di Montezemolo - and the FOG, through which Bernie Ecclestone runs the sport's commercial side.

Both Mosley and Ecclestone have said that Ferrari is a key attraction of Formula 1 and have until now voiced doubts that it will carry out its threat to withdraw from the sport.

Some eight new teams are reported to be ready to apply for next season under the budget cap, two-tier rules.