More haste, less speed! What we can learn from the recent Nyck de Vries loan agreement dispute.

What was agreed?

De Vries had to raise €500,000 to help fund his Formula 2 campaign. He borrowed half that sum, €250,000, from Mr Schothorst’s investment fund, Investrand. The main terms of the loan agreement were:

• De Vries was charged a fixed rate of interest of 3% per annum.
• Mr Schothorst would receive 50% from all De Vries’ ‘Formula 1 activities’ as variable interest.
• The loan would be waived if De Vries failed to secure a F1 race seat by 2022.

The issues in dispute

The dispute centred around when De Vries was considered to be a “F1 driver” for the purposes of the latter two terms detailed above.

De Vries had served as Mercedes’ reserve driver since 2020 and made his F1 debut as a stand-in for Alex Albon of Williams in the 2022 Italian Grand Prix. However, the 2023 season is his first as a full-time F1 driver for AlphaTauri.

It was Schothorst’s position that the loan was still valid and repayable, and he argued that De Vries had:

• engaged in F1 activity when he stood in for Williams at the 2022 Italian Grand Prix; and
• breached the loan agreement by failing to keep him properly informed of all recent developments concerning his career, including failing to provide copies of his contracts (with McClaren in particular), meaning that Schothorst could not determine if the correct variable interest was being paid.

The outcome

The Judge disagreed with both of Schothorst’s arguments. In particular, the Judge found that De Vries never had a formal F1 race contract and was an uncontracted, reserve driver only – the variable interest clause in the loan agreement was therefore not triggered.

After considering a 26 page-long Whatsapp transcript between the two men which showed that they were in regular contact, the Judge also found that De Vries had met all of his obligations and had provided Schthorst with sufficient information about his career activities and development. The outcome was that De Vries was not liable to pay any further sums under the loan agreement.

Could this have been avoided?

Yes, the entire dispute and associated costs could have been avoided had a little more consideration been given to the definition of “F1 driver” in 2018. A classic case of more haste, less speed.

Our Disputes team has significant experience in bringing and defending breach of contract claims, including disputes involving the recovery of sums due pursuant to a loan agreement. Adele recently successfully obtained a court order securing the recovery of $2.5m+ disputed loan monies for her client from an international-based defendant. Our Corporate & Commercial team is also on hand to ensure your contracts are carefully drafted to avoid similar issues to this case. If you need help, please get in touch.