JANUARY 30, 2007

The questions of customer cars

The question of customer cars is one that is convulsing Formula 1 at the moment, both in terms of the 2007 season; but also for 2008 and beyond.

The questions over 2007 are relatively easy to sort out. When the cars that are alleged to be the same as other cars appear, rival teams must decide whether or not to take action. They can go to the FIA and point out that every team has to enter the World Championship and in that entry the applicant confirms that "we are a 'constructor' within the meaning of Schedule 3 of the 1998 Concorde Agreement". The entry is dependent on this and thus a car that does not comply cannot be entered in the World Championship. The problem is that Schedule 3 of the Concorde Agreement is not a public document because the agreement is a private legal contract, protected by a confidentiality agreement between the parties involved. However, it is our understanding that the definition of a constructor is "a person (including any corporate or unincorporated body) who owns the intellectual property rights to the rolling chassis it currently races and does not incorporate in such chassis any part designed or manufactured by any other constructor of Formula 1 racing cars except for standard items of safety equipment. Provided always that nothing in this Schedule shall prevent the use of an engine or gear box manufactured by a person other than the constructor of the chassis." One can argue that if there is a third party involved the cars can be the same if the team in question builds all the parts, but this does not explain how two teams can own the same intellectual property.

The FIA can decide whether it thinks that a car is legal but that actually means very little as a team could go to arbitration if it did not like the decision made by the FIA and believed that there was evidence that the Concorde Agreement had been broken.

The question of 2008 is much more complicated.

The Concorde Agreement comes to an end on December 31 2007. This means that the existing clauses of that contract lapse and without new rules being written (either in the form of regulations or in a new Concorde Agreement) the possibility exists - in theory at least - for teams to be customers of other teams. The FIA seemed keen to promote this concept at one point and in June 2005 issued draft 2008 Technical Regulations to which were attached an addendum which included sporting regulations which, according to an FIA press release at the time, meant that "teams will be free to buy a complete car or any part of a car from another constructor" but added that there would need to be discussion to clearly define how constructor's points should be awarded".

However when the 2008 regulations did come out the situation was still confused. The entry form no longer included the need to confirm the constructor status, but Article 1.7 of the technical regulations stated that "the name of the car manufacturer must always precede that of the engine manufacturer", which meant that any customer would have to use the same chassis name as the manufacturer of the chassis. This was backed up by Article 20 of the Sporting Regulations that made it clear that "the constructor of an engine or rolling chassis is the person (including any corporate or unincorporated body) which owns the intellectual property rights to such engine or chassis". The problem was that, according to Article 19 of the Sporting Regulations, constructors were only able to score Constructors' World Championship points with "both cars". This meant that the constructors could only enter two cars in the World Championship but could supply additional chassis to customers - if those customers did not mind not scoring points.

That, of course, is a ludicrous situation because a team's ability to raise money is based on the ability to score points in the Constructors' World Championship and the only value of such a situation would be for the bigger teams to own four cars and use two in a strategic manner to deprive rivals of points. The problem with that is that idea is that if one big team does it, all the big teams would be forced follow suit and then half the field would not be eligible for points but would still be playing a role in the race and one can imagine the whole thing descending into a demolition derby with expendable cars and cars that need to be protected.

Whether or not there are other stipulations which have not been made public is not clear but at the moment, but no-one we have asked has come up with any.