Gladwell's Line- Constructed in Country - it's complicated!

by Richard Gladwell, Sail-World.com on 3 Jan 2010
Yet another rules storm is brewing on the America's Cup horizon - with just five weeks left until the start of the regatta. Potentially, it is the most serious yet, and certainly the most complex.

This time the point of difference is over the interpretation of another word in the America's Cup lexicon.

Further down that same paragraph, in the Deed of Gift for sailing's oldest trophy - indeed in the same long sentence, that tripped up the hapless Club Nautico Espanol de Vela's play to become the Challenger of Record, comes the phrase: 'with a yacht or vessel propelled by sails only and constructed in the country to which the Challenging Club belongs, against any one yacht or vessel constructed in the country of the Club holding the Cup.'

Now entitled the 'Constructed in Country' clause, this is the most difficult of the dozen or so legal issues that have beset the 33rd America’s Cup, and one expected to give the regatta adjudicators the most grief.

It is widely believed that the 3DL sails said to have been used by the Defender Alinghi 5 have been constructed in USA, at the North Sails facility in Minden, Nevada – the only one its type in the world.

Team Alinghi’s club, Societe Nautique de Geneve, have denied that, saying that: 'BMW Oracle's accusations regarding the defending yacht are simply false: Alinghi 5 complies with the Deed of Gift 'constructed in country' requirement, it was built in Switzerland and so are its sails.'

For its part SNG allege, without going into specifics, that BMW Oracle Racing have also infringed the CIC requirement.

Potentially this is the most serious of the rules issues, tabled to date.

If a competitor is found to have infringed this CIC requirement, in a race, they will be disqualified after a post-race Hearing.

The matter will most likely be the first heard by the International Jury, which doubles as the Expert Panel advising the New York Supreme Court.

And, depending on how the Int Jury handles the matter, both competitors could face disqualification.

While the word 'constructed' seems simple enough, the parties do not have an agreed position on what it means in the America’s Cup context. Like pretty well everything in this America's Cup, there is a complete absence of mutual agreement and an abundance of mistrust.

Some sideline pundits believe they know what it means. But certainly the Challenger and Defender have a different view; and the Int Jury may have a different view again; and whether the New York legal system sees it that way is another matter again.

The Challenger, Golden Gate Yacht Club’s view is dependent in the Int Jury accepting an implied term(s) on the word constructed – which essentially that any component that is available 'off the shelf' is legal no matter what the state of origin, and anything that is a custom build part must be built in the country of origin.

The Defender, Societe Nautique de Geneve prefers the simple dictionary definition – that 'constructed' means 'assembled'.

In other words you can source the parts from around the world and provided they are assembled in the country of origin, then you have complied and constructed your Challenger/Defender in the country of the Challenging/Defending club. As SNG assembled their yacht, and sailed it on Lake Geneva in Switzerland then, under their definition, they have complied with the Deed of Gift. So too has BOR90 when they assembled and sailed in San Diego.

As Mercury Bay Boating Club found out in the Court of Appeal back in 1991, there is no implied terms in the Deed of Gift. There it was held that there was not the implied term of 'fair' in the meaning of Match. In other words, the Deed of Gift did not require that the Defender had to respond to the Challenge with a like boat – and a Match could legally consist of a multihull defending against a monohull.

We also know that the Supreme Court will look to find the answer to a question on the Deed of Gift, within the Four Corners of the Deed. This it must do in any question of interpretation. Trouble is there isn’t a lot in the Deed of Gift on this point.

Back in 1887, next touchstone for the New York Supreme Court, the phrase was to some extent self-defining, as the challenger had to sail to the venue of the Match (the Defending Club’s home waters) on its own bottom.

Read in the context of the Deed the requirement clearly that you had to build the Challenger in its country of origin, and then sail it to the Match. (This is a similar process followed by the Court to define 'having' when the meaning was ambiguous.)

In 1956, the 'own bottom' requirement was deleted from the Deed of Gift by the New York Supreme Court after an application by the New York Yacht Club to facilitate the use of the 12 Metre class.

That paved the way for America’s Cup yachts to be taken to the regatta venue by ship, plane and as we saw with Alinghi 5, now by helicopter.

Maybe that amendment has kicked away a crutch that the NYYC and/or the Int Jury/Expert panel could have used to interpret the meaning of 'constructed' – giving a solution similar to the dictionary definition of 'construction' suggested by Alinghi.

It is all too easy to just look at the origin of parts used in the construction of a yacht, and make a decision on state of origin from there.

That ignores the fact construction requires not just hardware (or components) but also the software (human expertise).

In New Zealand there is the term '#8 wire mentality' which is a reference to the many ingenious purposes that a length of #8 size fencing wire can be used – mainly on farms.

The phrase became a Kiwi catch-cry to describe the vital role that ingenuity plays in turning a very basic set of components into something innovative and exceptional, that others have not been able to achieve previously.

Back to the New York Yacht Club.

When they introduced one of several 'Interpretative Resolutions' designed to clarify the term 'constructed'. NYYC extended the meaning to include Designed and Built in the country of origin. They further extended this definition to require the designers to be nationals of the country of the club of origin.

Many believe that NYYC went too far in their definition of 'constructed', and that nationality of designers should not be included. Others believe that the context of the America's Cup is that it is about the technology of one club/country against that of another club/country.

But who is to say that an International Jury would not take the country vs country view into account - that to create a winning component, you need both the hardware and software.

In this interpretation both sides have big problems as their design and development teams are multinational, and the presence of nationals of the country of the club of origin is almost the exception rather than the rule.

The NYYC also tweaked their interpretative resolution to allow the yachts and sails to be modified when the yacht was in the country of the match.

These interpretative resolutions were all swept aside by SNG when they won the America’s Cup in 2003. All new Defending clubs did this to avoid conflict with any new Protocol agreed under the Mutual Consent provisions of the Deed of Gift prior to the adoption of the new Protocol with the new Challenger of Record. Except in this 33rd Match, there is no Protocol, now Mutual Consent, just the words of the 18th century Deed of Gift, modified by the New York Supreme Court on three applications by previous Defenders/Trustees (one at the behest New York YC the other two by Royal Perth YC in 1984/85).

In 2010, we have just the bare bones of the Deed of Gift applying to the 33rd Match with no mutual consent, and no Interpretative Resolutions, no Protocol - hence the confusion over the proper meaning of 'Constructed in Country'.

On a separate but related issue, the Deed of Gift does not make a provision for the modification of a Challenger in the country of the Match. Neither does it with the venue being a place other than the waters of the Defending club, allow the Defender to modify their yacht in the country of the Match, in this case Spain.

Alinghi would appear to have infringed the Construction in Country requirements when they carried out modifications (fitting of a new bowsprit/spine) to their yacht in Ras al-Khaimah, as this was outside of their club/country of origin, and described as 'another step in the development of Alinghi 5' http://www.alinghi.com/en/news/news/index.php?idIndex=200&idContent=21014!click_here for the details. It is believed that repairs/strengthening to the port hull also took place in the same facility.

Did this infringe the 'Constructed in Country' provisions of the Deed of Gift? Only the Int Jury and maybe the the New York Supreme Court can definitively say.

BMW Oracle Racing and Alinghi will have a similar issue if they carry out any form of modification to their yacht in Spain.

While all this does sound tremendously nit-picking and technical remember that in 1992 NZL-20 was disqualified from a race for wrongly sheeting a sail during a gybe. Don’t forget too the shenanigans that continued for months in 1982 and 83 over the nationality and respective inputs of the designers involved in Australia II.

The same could happen again in 2010.

Like we said - it's complicated!