Gladwell's Line- ISAF to be dragged into America's Cup legal wrangle?

by Richard Gladwell on 30 Aug 2009
Last Thursday's advisory from 'ecourts', the automated case tracking system run by the New York Supreme, was short and cryptic.

Under the short heading 'Attorney/Firm for the Plaintiff' a new law firm appeared 'Boies, Schiller & Flexner LLP'. The name was highlighted in the colour red, as all changes are.

The Court note was not new, but underlined the news of a week or so ago that US legal heavy hitter, David Boies, had joined the Golden Gate YC legal team. Quite why Boies has come aboard is not clear. However he’s not the guy you hire to fetch the coffee.

Some inkling of what is widely expected to break on the legal front can be gleaned from a recent interview with team boss, Larry Ellison, published in Sailing World on the occasion of the Team Presentation staged recently in San Diego, by BMW Oracle Racing.

Ellison was clearly irritated by the agreement signed between the International Sailing Federation, the world governing body of sailing, and the organisers of the next America’s Cup, Societe Nautique de Geneve. The Swiss club is also a competitor in the match they are charged with organising.

That agreement is bound by confidentiality, or non disclosure agreements, signed with the New York Supreme Court, meaning that while ISAF, SNG and recently Golden Gate YC know the contents of the document, they are not allowed to reveal its contents because of a confidentiality clause enforceable by the Court.

If you believe the two parties, the Confidentiality Clause is an orphan.

SNG/Alinghi has said they didn’t request the confidentiality, ISAF was happy for the agreement to be released, according to an affidavit lodged by Golden Gate YC. So what’s the problem?

ISAF were quick to claim that they regularly signed similar agreements with other major event organisers which were also confidential. However SNG soon revealed that in contrast to the deal earlier offered by Valencia of EUR50million for the 33rd America's Cup, as reported by Valencia Life Network, Ras Al Khaimah would not be required to pay a venue fee for the 33rd America's Cup 'because the venue is already making a considerable investment in infrastructure,' according to a statement on Alinghi.com. Valencia made a substantial investment in infrastructure for the 32nd America's Cup, but still paid a substantial venue fee to the event manager.

Ellison was clearly aware that he was trading thin legal ice when he spoke with Sailing World's Stewart Streuli, but it seems he had decided he had little option other than to vent his concerns with powers granted to his competitor, by ISAF.

'We're just worried about Alinghi being able to change the rules up to a minute before the race starts, ' Ellison told US national sailing magazine, 'I don't understand how that could possibly work. Plus we understand that Alinghi is going to control the jury and the on-water umpires. So in other words, we can win if they let us…if they decide not to disqualify us. But as of right now we're going to end up back in court because I don't understand how they can change the rules right up to before the race starts. But even worse, if they control the umpires on the water and they control the jury, they can, you know, give us 10 penalties, give us 10 more circles.'

'We're trying to figure out our legal strategy right now. I can't talk about ISAF agreement, the secret ISAF agreement. The court has said I cannot talk about it.

'I almost have to have a lawyer here to respond…we would love to have that ISAF agreement made public.'

'Let me say that Alinghi's plan is to run the race with them in complete control of the umpires on the water and the jury. In other words Alinghi will decide if they won or lost the race. Alinghi will be the sole decider of if they won or lost the race. That's the current protocol.'

'It's very clear that Alinghi's plan to go into the race with them in complete control of the umpires on the water, and complete control of the jury and with no appeal other than to Alinghi. So we could beat them by five miles and they would look at their main and said, illegal main, you lose that race. See you in two days.'

ISAF has been quick to defend its controversial agreement with the Defender claiming that it signs such agreements with event organisers on a regular basis, and without putting the details into the public domain. However in this instance the race organiser is also a competitor, and is not independent of the competitors, as is usual with an event organiser.

In the America’s Cup these agreements are always required, as they are essential to the conduct of the event, since ISAF under its regulations has taken for itself the ability to appoint Juries and key officials at a number of significant yacht racing events, including the America’s Cup, Louis Vuitton Cup, Olympics and others.

The nomination for the appointment of officials usually comes from the Appointments Committee of ISAF, which makes its recommendations for approval by the ISAF Executive Committee. The officials are usually highly experienced and from various ISAF officials certification programs.

The key word here is 'appoint'.

In the previous America’s Cup, the event manager was a company 'America’s Cup Management Ltd' (ACM) formed as a limited liability organisation to run the event. Controversially, while ACM engaged, and paid the officials, it was also given the right to dismiss officials, as would be common in any services contract. Many were not happy about that ACM having that power, however despite close ties to the Swiss club, ACM was not a competitor in the event and an 'arms length' relationship did exist.

Roll onto 2009, and it would seem from Ellison’s outburst, that a different deal has been done. The difference being that while ACM was a distanced from the Defender, SNG, in 32AC, that is not the case in the 33rd America’s Cup, to be sailed in early February in 90ft x 90ft multihulls. In that event, America’s cup Defender Societe Nautique de Geneve is both a competitor and event organiser.

And there lies the problem. While ISAF can appoint officials, SNG, a competitor, would seem to have been given the right to fire.

ISAF has always stood as the bastion of fair play in the sport of sailing. Competitors have always been happy that no matter what the issue, it will be dealt with fairly and impartially, by the world body. No question.

But that quality seems to have been signed away for the Multihull Challenge. Many believe that appointment, dismissal and control of officials should have remained solely with ISAF and not be assigned to one of the competitors.

Sail-World has received information which would indicate that an Event Director has been appointed by SNG and that same individual will also be appointed Principal Race Officer for the 33rd America's Cup. Under ISAF Regulations, the world body has the right to appoint Judges and Umpires, and may appoint, but must approve of the Measurer, however the way would seem to be clear to have a person contracted to the Defender as Principal Race Officer for the Match.

Whether there are other clauses in the agreement which are, shall we say, 'non-standard' remains to be seen.

Many also believe that the International Sailing Federation - a Federation of all the countries involved in sailing, should have taken the opportunity afforded by the requirement for a sanctioned event agreement, to require the parties to cease hostilities, and get the event through on the current timeframe - meaning that the 34th America's Cup would be conducted on a multi challenger, mutual consent basis in July 2011.

Such a stance would have confirmed to the other 19 America's Cup Challengers that the ISAF was acting in the wider interests of the sport, exercising leadership and was using its considerable powers to get the premier event in sailing off th