America's Cup Arbitration Panel steps into Dispute

by Richard Gladwell, Sail-World on 30 Jul 2007
A letter has been posted on the Golden Gate Yacht Club website responding to notice apparently given by the Challenger and Defender of the America's Cup, of their intention to submit the validity of the Challenger of Record (Club Nautico Espanol de Vela) to the yet to be publicly announced Arbitration panel for the 33rd America's Cup.

The text of the letter follows, which was sent in response an unsigned note from Professor Henry Peter (SUI) received by Golden Gate Yacht Club, advising of the intentions of both the Defender and Challenger. The intention was also referred to by Alinghi officials at the America’s Cup press conference in Valencia earlier this week.

The Arbitration Panel is appointed under 24.2 of the Protocol for the 33rd America's Cup, and were agreed between the Defender and Challenger at the time of the announcement of the Protocol, two days after the conclusion of the 32nd America's Cup. One of the other Panel members is believed to be Graham McKenzie (New Zealand) and a member from the Host country, Spain.

Several outcomes are possible from the Hearing, one of which may be to refer the matter for determination by the Courts, as Societe Nautique de Geneve SNG is entitled to do so, as Defender under Clause 35 of the Protocol. SNG is also the Trustee for the America's Cup under the Deed of Gift for the trophy. It is not known whether SNG has consulted with past trustees, New York YC, San Diego YC, Royal Perth YC and Royal New Zealand Yacht Squadron.

The initiation of proceedings to the Arbitration Panel could also be the opening gambit in a move to exclude Golden Gate YC from the 33rd America's Cup, as if the panel elect not to send the matter onto the New York Supreme Court but make a determination in the matter themselves, then SNG could invoke Sections 35 and 2.7(d) of the Protocol which prohibit any Challenger from resorting to any other court or tribunal. And, the latter Clause gives SNG the contentious right to disqualify and Challenger if they dispute the binding effect or the Protocol.

Another outcome could be that the Arbitration Panel decides that CNEV are not qualified to be the Challenger of Record. In this case Clause 3.3 of the Protocol would come into effect, where CNEV would either withdraw or be disqualified as COR and then either a new or existing Challenger can be selected by SNG. Or, the next Challenger to submit a Notice of Entry would be selected.

Presumably SNG would select Royal Cape Yacht Club of South Africa, who could endorse the existing Protocol, or negotiate a new Protocol for the 33rd Match. RCYC is a well established club in yachting circles with a long and proud history in keelboat sailing. However the Challenge from Golden Gate YC was lodged ahead of RCYC, and this would just shift the ground in their dispute with SNG. Royal New Zealand Yacht Squadron (Emirates Team NZ) is another option. RNZYS is a Trustee of the America's Cup, their attitude to the current Protocol has not been publicly stated, however Emirates Team New Zealand spokesmen were on record earlier in the week as having a number of issues with it.

Were GGYC to be selected as the new Challenger of Record, then there is no doubt that a Protocol similar to that which governed the 32nd Match would be put in place, and this is the only real way to avoid further acrimony and get the event back on track with a full entry of the top teams. However from the tenor of Ernesto Bertarelli's comments on Thursday, this outcome would be rather optimistic.

Emirates Team New Zealand's late entry into the 33rd America's Cup, and its announcement as Challenger by SNG, places it in an interesting position in the matter. While teams who have not entered the event are not normally entitled to be present at an Arbitration Panel or Jury Hearing, it is normal practice for all teams/competitors to be granted the right to make submissions if they are affected by the matter or outcome.

There is no real benefit in being the Challenger of Record aside from being able to negotiate a Protocol with the Defender. In the past the role has proven to be a real Poisoned Chalice with New York YC suffering major structural issues with one of their yachts in 2000 and being bundled out before the Semi-Finals; in 2003 it was Punta Ala's turn when Prada who was eliminated in the Semi-Finals; and then in 2007, Golden Gate YC's BMW Oracle Racing was CoR and dropped out of the semi-finals 5-0.

The America's Cup is essentially a time management exercise, which assumes that teams start off the same point on the timeline, and whoever has been able to produce the fastest boat and best crew in the time available will win. Some start the game with better inventories than others, however given the usual four year window, it is possible to catch up. A two year window is pretty tough, but possibly eased by the new 90ft class, but made more difficult by the need for new teams to run an ACC V5 campaign as well.

In the current circumstances, it is evident that the moves last week by Emirates Team New Zealand have given them a huge jump overall their competitors. Remember the America's Cup is not about being fair - it is about getting every advantage you can over the other competitors.

For Emirates Team New Zealand, the stand-off between the Defender and the BMW Oracle is of little consequence given the undertaking given by Larry Ellison, to return to Valencia in 2009, if Golden Gate were successful in their Case and were granted a Challenge against Alinghi in July 2008, and won the America's Cup from that Match. From Emirates team NZ's perspective the Court battle is really about who will be the Defender in 2009 (Team Alinghi or BMW Oracle Racing).

The other two advantages the New Zealanders have that they can devote their entire design and development effort into just a 90fter, while the other two will have to work on the 90fter for 2009 and a catamaran, trimaran or hydrofoiler for 2008, plus all will have to run ACC Version 5 boats in the Qualification regattas in 2008.

The second area of advantage for Emirates Team NZ is that in opting to be an early challenger, and negotiating a two month preview of the new 90fter rule they will gain a longer design and development period for both boats.

The text of the letter from Golden Gate YC sets out their views of the matter fairly clearly. A full copy is also available on the Golden gate YC website www.ggyc.com)

Professor Henry Peter, Chairman
America’s Cup Arbitration Panel 33
Bd du Pont d’Arve 40
Geneva 1211
Switzerland

Dear Professor Peter:

The Golden Gate Yacht Club ('GGYC') has received notice that Societe Nautique de Geneve ('SNG') and Club Nautico Espanol de Vela ('CNEV') plan to submit to arbitration the validity of the challenge of CNEV.’

The format and process set up for this arbitration in The Protocol Governing the Thirty Third America’s Cup ('Protocol') violate the most basic principles of justice and independence common to all legitimate adjudicatory bodies and are an affront to the most basic sensibilities common to all law abiding people. A dispute resolution proceeding in which the parties to the proceeding are in agreement (in this case CNEV and SNG), and in which the judges may be removed, and the rules of procedure may be changed, at any time and for any reason by the parties to the arbitration, will be viewed by the public and the sailing community as nothing more than a kangaroo court.

The arbitration process will further damage the sport of yachting as it will be viewed with no more validity, and no less frivolity, than CNEV’s attempt to meet the annual regatta requirement for the Challenger of Record by holding a sailing school. Its continuation day to day will provide compelling on-going proof that SNG’s Protocol for the 33rd America’s Cup was designed by SNG to