The Haas racing team terminated the contract with Russian title sponsor Uralkali as a result of the war between Russia and Ukraine earlier this year. The bigger reason however was the close links the company’s owner Dmitry Mazepin maintained, with Russian President Vladimir Putin.
Not only that, Haas also ended the deal with their F1 race driver Nikita Mazepin who was replaced by Kevin Magnussen.
At the time when the controversies erupted, Uralkali said it was considering a legal action as it sought repayment of the sponsorship money it had paid in advance.
In a statement issued last month, the company stated:
“As most of the sponsorship funding for the 2022 season has already been transferred to Haas and given that the team terminated the sponsorship agreement before the first race of the 2022 season, Haas has thus failed to perform its obligations to Uralkali for this year’s season.
“Uralkali shall request the immediate reimbursement of the amounts received by Haas.”
Uralkali then wrote to Haas to dispute the termination of the contract and, to request a refund of the advance amount in question, which is 12 million Euros! Haas however has finally responded, rejecting Uralkali’s claims.
In a letter accessed by Motorsport.com that is sent by Haas to Uralkali, Haas justifies its position and mentions it had a right to end the deal as a result of a clause in the sponsorship agreement which stated that “Uralkali does not ‘injure, bring into dispute, ridicule, or lessen the public reputation, goodwill of favourable image of Haas.”
American team Haas claims that Mazepin’s ties with Kremlin and the sanctions imposed by the European Union led to the ‘disrepute clause.’ Funnily and surprisingly, no sanctions had been imposed by the European Union when the contract was terminated.
Stating further, Haas also justified why it should not repay the advance sponsorship money to Uralkali.
“According to unanimous legal scholars and case law, the party which terminates the agreement for breach of the other party is under no obligation to return to such party what it has already received under the agreement,” it states.
“The claim of Uralkali to obtain the re-payment of the paid amount of EUR 12,000,000 is therefore ungrounded and rejected.”
The story makes a startling twist when Haas states that it is entitled to receive compensation money for the loss of profits it would have incurred if it hadn’t terminated the contract. Haas, therefore, demanded 8 million Euros for this reason from Uralkali which, it expects to receive in a few days.
Setting a condition for the same, Haas has mentioned it would hand over Mazepin’s 2021 F1 cars to Uralkali, which was a clause in the original contract, only after Uralkali has transferred the 8 million Euros.
As per a source that knows the case in detail, it has come to light that Haas has also refused to pay Mazepin his salary for the time duration he worked with the team from the starting of the season until his contract was cancelled.
The source also mentioned that Uralkali is left astonished with Haas’s stance of withholding the money it is obliged to repay as per the contract but, the 2021 F1 car and the demand for more money.
One source said: “Everyone understands the world is in a difficult situation, but it is patently ridiculous to argue that Haas is entitled to keep money paid from a contract it exited unilaterally, without rendering any of the agreed upon services.”
“They seem to be fine with spending Russian money – and even are asking for more – but don’t want to have any Russians around.”
“It’s a truly shocking treatment toward a title sponsor who stepped up last season when the team badly needed resources and who had offered to go above and beyond the contracted amounts to provide additional bonuses to team staff to achieve better results for all involved.”
Urakali and Nikita Mazepin’s representatives declined to comment but, referred to a previous statement that had been issued on the company website.
The Haas team, when approached, hasn’t responded to the matter yet. While the matter could most certainly witness an escalation in many ways, it does make us wonder if money can cast a blanket over business ethics and morality.