The Williams F1 team has confirmed that the threat of legal action arising from Mike Coughlan's decision to return to grand prix racing from NASCAR has been laid to rest after it reached a settlement with US-based Michael Waltrip Racing.

The F1 outfit was under threat of being sued by MWR after it appointed former 'Spygate' central figure Coughlan as its new chief engineer in the wake of Sam Michael's resignation, with the Americans claiming 'interference' with its employee. The NASCAR operation was also planning to take Coughlan to court, claiming breach of contract, after it had rescued him from the F1 wilderness with the role of director of vehicle design [see story here].

MWR had claimed that its contract with Coughlan ran through to 30 November 2012, with the team holding a one-year option on his services after that. Having been approached by WIlliams, however, Coughlan told the team that he was leaving in April and finally departed in June, taking up his new role with Williams shortly afterwards.

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The suit was said to seek damages in excess of $75,000 for the breach, plus other punitive damages and legal fees, alleging that Coughlan's rapid departure has affected the team's subsequent performance this season with a consequent loss of sponsorship and prize money.

The threat of legal action was dropped, however, when MWR, Coughlan and Williams reached an amicable solution to the dispute.

"I have always been an admirer of Frank Williams and his team and am delighted that we have found a good way forward," MWR co-owner Rob Kauffmann said in a statement, "I wish the team well with its move back to the front of the F1 grid and am sure that Mike Coughlan can make a big contribution with that."