Just moments after the conclusion of second free practice for the British Grand Prix at Silverstone, the FIA has announced that it will begin legal proceedings against the Formula One Teams Association over its proposal to form a breakaway series to rival F1.

FOTA made the announcement late on Thursday night that it was to start its own series in 2010, having failed to reach an agreement with the FIA to commit to the F1 grid for next season thanks to the ongoing dispute over Max Mosley’s idea for a budget cap.

BMW Sauber, Brawn GP, Ferrari, McLaren, Red Bull Racing, Toro Rosso, Renault and Toyota all planned to quit F1 as a result of the ongoing dispute but the governing body has now responded with the threat of legal action.

In a short statement, the FIA revealed that the teams – and Ferrari in particular – had contractual commitments to F1 that couldn’t broken, leaving it with little option but to begun legal proceedings.

The governing body also confirmed that the publication of the 2010 entry list has also been delayed.

“The FIA’s lawyers have now examined the FOTA threat to begin a breakaway series,” the missive read. “The actions of FOTA as a whole, and Ferrari in particular, amount to serious violations of law including wilful interference with contractual relations, direct breaches of Ferrari’s legal obligations and a grave violation of competition law. The FIA will be issuing legal proceedings without delay.

“Preparations for the 2010 FIA Formula One World Championship continue but publication of the final 2010 entry list will be put on hold while the FIA asserts its legal rights.”

The long-term future of F1 has been called into serious question after the Formula One Teams Association announced that it is to set up a breakaway championship.

In a statement issued late on Thursday evening, eight of the current F1 outfits – BMW Sauber, Brawn GP, Ferrari, McLaren, Red Bull Racing, Toro Rosso, Renault and Toyota – revealed that they have taken the decision not to change their conditional entries for the 2010 campaign and will instead now look to go it alone with their own rival series.

While Williams and Force India had already lodged unconditional entries for next season, the remaining eight teams insisted they were unhappy with the planned budget cap rules, and indeed weren’t happy with the way in which the FIA was trying to trying to push the plan through despite opposition from the teams – who had already been trying to bring down costs themselves.

As a result, those eight teams had only lodged conditional entries for the 2010 season, with the FIA setting a deadline of today [Friday] for the teams to confirm they would be competing or risk missing out on a slot on the grid.

As a result of what the teams refer to as a ‘campaign to divide FOTA’, they insisted there was no option but to form a breakaway.

“The FIA and the commercial rights holder have campaigned to divide FOTA,” the statement read. “The wishes of the majority of the teams are ignored. Furthermore, tens of millions of dollars have been withheld from many teams by the commercial rights holder, going back as far as 2006. Despite this and the uncompromising environment, FOTA has genuinely sought compromise.

“It has become clear however, that the teams cannot continue to compromise on the fundamental values of the sport and have declined to alter their original conditional entries to the 2010 World Championship.

“These teams therefore have no alternative other than to commence the preparation for a new Championship which reflects the values of its participants and partners. This series will have transparent governance, one set of regulations, encourage more entrants and listen to the wishes of the fans, including offering lower prices for spectators worldwide, partners and other important stakeholders.”

It remains to be seen how the FIA respond to the announcement, especially in the case of Ferrari, Red Bull and Toro Rosso, who were named as unconditional entries on the list revealed by the FIA a week ago; the governing body insisting they had already agreed to commit to the sport.

The Formula One Teams Association has confirmed that the nine remaining outfits currently on the grid have joined Williams in submitting entries to the FIA for the 2010 F1 season.

Williams had broken ranks with its fellow teams to sign up for next season earlier this week, and was suspended from FOTA as a result – a move team principal Frank Williams said was ‘regrettable but understandable’.

A number of teams – including Ferrari, Red Bull and Toyota – had called their future participation in the sport into question due to the ongoing saga of the proposed budget cap, which FIA president Max Mosley has been attempting to push through for the 2010 season.

That had led to anger from the teams, who had been discussing their own ways to try and bring down the costs involved in the sport, and also raised concerns that it would lead to a two-tier system in F1 – with teams working to the budget enjoying greater technical freedom over those teams working outside the optional financial limit.

However, while Ferrari, McLaren, Renault, Toyota, Brawn, Red Bull, Toro Rosso, BMW and Force India have now lodged their entries with the FIA, a statement from FOTA revealed that the entries were conditional on a new version of the Concorde Agreement being signed by 12 June – at which point they would commit to F1 until 2010.

The teams also called for the rules for the 2010 season to be based on ‘the current 2009 regulations, amended in accordance with proposals that FOTA has submitted to the FIA’.

“The renewal of the Concorde Agreement will provide security for the future of the sport by binding all parties in a formal relationship that will ensure stability via sound governance,” the statement read.

“All FOTA teams’ entries for the 2010 FIA Formula One World Championship have been submitted today on the understanding that (a) all FOTA teams will be permitted to compete during the 2010 Formula One Season on an identical regulatory basis and (b) that they may only be accepted as a whole.

“All FOTA teams now look forward with optimism to collaborating proactively and productively with the FIA, with a view to establishing a solid foundation on which the future of a healthy and successful Formula One can be built, providing lasting stability and sound governance.”

The warring Formula One Teams’ Association (FOTA) and FIA have made ‘a small amount of progress’ in the dispute over the controversial £40 million budget cap that Max Mosley intends introducing into the top flight next year – but still no agreement.

Following the reunion between all FOTA members aboard Flavio Briatore’s yacht earlier in the day ahead of this weekend’s Monaco Grand Prix , the sport’s ten competitors headed into their second crisis meeting with Mosley confident that they now held ‘a common view’ on how best F1 should look to the future in terms of cost-reduction and a universal position from which to re-initiate negotiations.

The FIA President’s argument is that without a significant reduction in spending in what is by some margin the world’s most expensive sport, F1 will not survive, fearing more car makers will follow Honda’s lead in withdrawing should costs not be brought dramatically down in an age of global recession. The Englishman similarly contends that new teams will only be willing to make the graduation in the knowledge that they will be able to race at a competitive level without having to spend hundreds of millions of pounds in order to do so. Campos Meta 1 and Team USF1 have both already lodged applications for the three slots currently available on next year’s starting grid.

Claiming that the change in regulations would by contrast engender a ‘two-tier’ championship of haves and have-nots, with those choosing to adhere to the cap benefitting from greater technical freedoms than their rivals, the sport’s present incumbents have also pointed out that many of the larger operations would simply be unable to sufficiently reduce their expenditure – in some cases as high as £200 million per year – in time to comply for next season.

Ferrari, Renault, Toyota and Red Bull have all categorically vowed to quit if Mosley refuses to back down, and despite there still being no resolution to the stand-off – one that threatens to tear F1 in two – FOTA has revealed that ‘a small amount of progress’ was made by way of a ‘constructive’ meeting, as both parties prepare to continue discussions in the Principality on Saturday in the aim of finding a satisfactory compromise.

“We had a very long, productive meeting,” reported FOTA chairman Luca di Montezemelo. “FOTA will have another meeting tomorrow (Saturday), to discuss, and then we will meet Mosley again.”

“We had a good, constructive meeting and there are ongoing discussions,” echoed the FIA President, speaking to BBC Sport. “We spent three hours in there. Everybody knows what the issues are, [and] I’m always confident there will be an agreement.”