Gladwell's Line- Black Friday significant for the America's Cup

by Richard Gladwell on 13 Nov 2009 The America’s Cup re-enters the rarefied air of the New York Supreme Court today, with a further filing deadline on matters being dealt with by Justice Shirley Kornreich. These are replies, or responses to replies, on matters already before the two levels of the New York State judicial system.

Elsewhere in the same Court’s Appellate Division Appeals are also proceeding on two matters which have been Appealed.

And looming over them all like the gigantic alien mothership in the movie Independence Day is the Breach of Fiduciary Duty (BFD) action, the second filed against the America’s Cup Defender, for its actions as Trustee of the America’s cup.

Black Friday, 13 November 2009, is the date on which Justice Kornreich's office will receive further documents on matters which have already been heard in Court. In the near future she is expected to make a final ruling on the venue, which she is expected to confirm as for Valencia, Spain, consistent with the Court’s original Order given by Justice Herman Cahn. That's really her only option.

Two weeks earlier, Kornreich ruled from the Bench that the venue announced by the defender, Societe Nautique de Geneve was not in compliance with the Deed of Gift, and that SNG could only chose Valencia in the Northern Hemisphere for a Match in February 2010.

SNG's original choice, Ras al-Khaimah (UAE), is in the northern hemisphere and is not allowed by the 19th century Deed of Gift governing the America's Cup, for a match between the months of November and April.

Last Friday, SNG announced that they had chosen Valencia as the venue for the Match, but made a curious offer in the media release, saying that it was prepared to consider a Match Venue on one of two Australian locations, provided that Golden Gate Yacht Club dropped all litigation (including the BFD action) and gave that assurance by Black Friday 13 November 2009.

Golden Gate YC is believed to have responded favourably to that offer, in writing.

SNG also filed an Appeal, not so much against the choice of Valencia as the venue, but their right as Defender of the America’s Cup to choose any venue they liked based on Cahn’s ruling which said the venue could be 'Valencia or any other location chosen by SNG'.

In a replay of previous America's Cup litigation involving the meaning of a single word, SNG believe this ruling gives them the right to chose any venue, regardless of the provisions of the Deed of Gift.

Kornreich did not believe this to be so, and believed that any venue chosen by SNG still had to be compliant with the provisions of the Deed of Gift - meaning it had to be in the Southern Hemisphere if sailed between November and April inclusive.

Compounding the Venue issue is the fact that the Deed of Gift does not state specifically that the Defender has the right of choice of the venue. This right is inherent in the Deed of Gift with the implication that the Defending Club will sail the Match on its home waters using its own Rules. The ramifications of this view are endless in the context of a club based on a Swiss lake, but the point was circumvented by Cahn when he gave the Defender the right to chose the venue on the basis stated above.

Of course, the Challenger and Defender could collapse the whole legal house of cards by mutually agreeing on a venue (probably in Australia) in accordance with the GGYC offer. That avenue would stop all litigation, would have the Match sailed in a warm venue, with flat water, in the country of a previous holder of the Cup. Such a paradise would be idea for multihull racing, in two of the most magnificent craft seen in sailing, and would repair to some extent the enormous damage that has been done to the event and sport generally over the past two years.

Another view has it that the whole question of a venue is now moot (effectively overtaken by event) given that SNG have subsequently announced a venue. But that is not their fine legal point, the subject of this particular Appeal, which is that they, as Defender, have the right to announce any venue.

If this view were upheld by the Appellate Division then it is expected that Ras al-Khaimah would be re-installed by SNG as a venue. In which case presumably Golden Gate Yacht Club would take that decision to the Court of Appeals following the same cycle as for they did to have that legal adjustment of a yacht club, Club Nautico Espanol de Vela declared to be invalid as a Challenger under the Deed of Gift.

Looking back in to the legal swill bucket, there is still plenty of floaty bits for the legal teams.

SNG’ has picked up one of these which is that the Expert Panel (a group of three former America’s Cup Jurists) assembled at the behest of Justice Kornreich to advise her on five key technical issues governing measurement, rules and the Valencian weather. They are reporting directly to Kornreich, and will not be cross examined in Court.

The Swiss believe that the Expert Panel Report (seen by the Challenger and Defender, but not the sailing public) goes beyond the five Questions, and asks that the Court does not adopt the report until SNG have been heard on these concerns.

Quite where this one is headed is anyone’s guess. It could be snuffed out anytime. It could be the start of yet another motion to be put on Appellate Court menu.

That Court will also be hearing another Appeal, also bought by SNG, this time on the subject of the inclusion of rudders in the Load Waterline Length measurement. This was another recent ruling from the bench by Kornreich, which accepted the view, in the absence of any persuasive evidence produced by SNG, that such appendages should not be included in this measurement, which is almost unique to the America’s Cup. This Appeal will be heard before the end of November, with a Decision before Christmas.

Because of their 3-2 decision in SNG’s favour on the question of Challenger legitimacy, a Decision overruled 6-0 by the Court of Appeal, the Appellate Division is regarded as many as wild card in this game of legal poker. Any matters referred to it, could result in a surprise decision, the a precursor to shifting the matter to the Court of Appeal in Albany.

Perhaps the only surprise, or rather bewilderment - for the rest of the sport, is how, on one hand, two teams can produce such beautifully advanced sailing technology, can on the other hand, descend into such a legal quicksand, from which there is no apparent escape, save by accepting a mutual consent deal on rules, venue and basic details of the match.

Perhaps even more bewildering is the role of the International Sailing Federation, which seems to be absolutely powerless to bring the players to their senses, or is unwilling to use their powers to force a resolution of the matter. Any other world sporting body would have taken very public action a long time ago, as many have done when faced with similar crises to their shop-window events.

On the surface to many the America's Cup appears to be getting back on track. The reality is that belief may be correct. Or, the event is on the edge of a legal vortex which triggers the disintegration of most of the other America's Cup teams.

That's a situation the sport can ill-afford.