Palou, the 2021 IndyCar title winner and current clear points leader, appeared poised to join the Arrow McLaren outfit for 2024 but has now seemingly gone back on the deal.
He plans to instead remain with Chip Ganassi Racing - the team having previously filed a lawsuit against Palou, who signed a McLaren contract during 2022.
Plausibly, Palou - who qualifies for an FIA superlicence to race in F1 - might have seen any potential grand prix path with McLaren blocked by the strong rookie performance of Oscar Piastri.
Following the dispute earlier this month, Zak Brown confirmed at the 2023 Dutch Grand Prix that McLaren has begun formal legal proceedings against Palou and his business.
The American said: “Alex informed us that he has no intention of honouring his contract with us in IndyCar or Formula 1. We have a contract so [this is] now in a legal process.
“We filed in the London courts last week against him - both as a person and his business entity. We’ll just let the legal proceedings carry the situation forward.”
Brown cited Daniel Ricciardo breaking a bone in his hand during a Friday practice shunt at Zandvoort, meaning he will now miss the race, as to why Palou might have been better offer waiting “around the hoop” for a true McLaren berth.
He said: “I have no idea what’s going through his mind because I haven’t spoken with him.
Source: Autosport