Gladwell's Line- America's Cup Poker- 'Your one and up one'

by Richard Gladwell on 17 Oct 2009
What started with a complaint to Justice Shirley Kornreich, by the America's Cup Defender, that the US Challenger had been rather economical with the truth, escalated a few days later with the reply from the Challenger.

In their letter Societe Nautique de Geneve claimed 'If the press reports are correct, GGYC may have made false statements to the United States Coast Guard, thereby subjecting its challenging vessel to seizure. Alternatively, if GGYC did in fact already send its vessel to the U.A.E. - then it appears that GGYC’s alleged 'grave safety concerns' and other matters raised in its pending motion are unfounded.'

And SNG concludes with the comment 'SNG has dealt until now with GGYC’s unsportsmanlike conduct as best it can, and unfortunately, will likely have to continue dealing with it.'

The issue relates to the provision of the Customs House Registry required to be provided by the 19th century Deed of Gift for the America's Cup, and for that document to be provided by the would-be Challenger to the Defending Club, 'as soon as possible' confirming basic measurements.

In an earlier ruling, Justice Shirley Kornreich ruled that the phrase 'as soon as possible' could mean anytime up to two weeks before the scheduled commencement of the Match in Ras al Khaimah, UAE on 8 February 2010.

Golden Gate Yacht Club then provided the contentious document ahead of this time, when it surprisingly forwarded the modern day CHR equivalent, a Certificate of Documentation, a week or so after the Court's ruling.

Yesterday Golden Gate Yacht Club, in an open letter to SNG, advised that it was considering action against Societe Nautique de Geneve for Breech of Fiduciary Duty (BFD) in its role as Trustee of the America's Cup.

Such an action would be unprecedented in the history of the America's Cup, an event not exactly noted for fair play and sportsmanship despite words to the contrary in the Deed of Gift.

In that letter Golden Gate's newly acquired uber-lawyer, David Boies, confined his comments on the potential BFD action, to the perceived security issues surrounding the venue in Ras al Khaimah. Allegations which are strenuously denied by the Defender and RAK state itself.

In the latest note Boies cites a broader list of shortcomings by the Swiss club commenting: 'counsel for SNG accuses GGYC of 'unsportsmanlike conduct'. I think it is fair to point out that it was SNG, not GGYC, that engaged in such 'unsportsmanlike conduct' as attempting to avoid a legitimate challenge by agreeing to race a sham yacht club; promulgating a set of rules so one-sided as to virtually guarantee victory by the defender; refusing repeated offers to negotiate an agreement on the terms for the next match with (JGYC as has been done in nearly every America’s Cup in modern history; entering into a secret agreement with the International Sailing Federation ('ISAF') that secures for SNG a veto over the appointment of all racing officials and eliminates any redress to a neutral authority for improper rules changes or decisions by SNG; issuing measurement rules designed to disqualify GGYC despite an explicit assurance to the Court that this would not happen; and selecting a venue that violates the Deed of Gift and subjects GOYC to unnecessary danger.'

It is uncertain as to whether this matter will escalate further. Or, if it will be pursued at all - and is just a negotiating ploy to force some elements of mutual consent into the arrangements for the 33rd Match for the America's Cup on 8 February 2010 between two 90ft LWL multihulls.

In the latest letter, Boies has given an undertaking that a decision will be made on the BFD matter within 10 days.

Meanwhile two further matters relating to the Rules for the event and Venue chosen by the Swiss club, will be heard in the New York Supreme Court on 27 October 2009.

From Golden Gate Yacht Club to Justice Shirley Kornreich on 16 October 2009

The Honorable Shirley W. Kornreich
The Supreme Court of the State of New York
County of New York
Part 54
60 Centre Street, Room 418
New York, New York 10022

Re: Golden Gate Yacht Club v. Société Nautique de Genève, et at.
(New York County Clerk’s Index No. 602446/07)

Dear Justice Kornreich:

We represent Golden Gate Yacht Club ('GGYC') in the above-referenced action. I write in response to Jonathan Youngwood’s letter to the Court dated October 9, 20)9, which is the third letter submitted by Société Nautique de Genêve ('SNG') to this Court during the last two weeks.

SNG’s speculation that GGYC 'may have made false statements to the United States Coast Guard' is unfounded. As the Court is aware, SNG has been demanding for many months that GGYC provide its Certificate of Documentation
('COD') immediately. As this Court recognized in its September 18, 2009 Order, GGYC was unable to obtain a COD until it had received a builder’s certificate from the boat-builder. Upon receiving this certificate, GGYC immediately applied for the COD, requesting 'priority handling' of its application. Such an application required a planned departure date and intended destination.

At the time, GGYC had noted its objections to the Ras al-Khaimah venue but was hoping a mutually agreeable resolution could be achieved. Holding back the completion of the application until it was certain when, and to where, GGYC’s vessel would be shipped could have delayed receipt of the COD.

Although GGYC’s vessel did not ultimately depart for the UAE on September 25 (due, among other things, to the security concerns GGYC has identified), there was nothing improper about GOYC’s application.

Second, SNG’s allegation that GGYC’s failure to disclose that it had obtained a 'tonnage certificate' on June 12, 2009 'wasted valuable Court resources' is likewise unfounded. As SNG recognizes, the tonnage certificate is only one of the prerequisites for obtaining a COD. As noted above, GGYC did not yet have the builder’s certificate, the other prerequisite. GGYC never suggested to the Court that it did not have a tonnage certificate, and SNG has failed to demonstrate why it would have mattered to the proceedings that GGYC did have a tonnage certificate.

Third, counsel for SNG accuses GGYC of 'unsportsmanlike conduct'. I think it is fair to point out that it was SNG, not GGYC, that engaged in such 'unsportsmanlike conduct' as attempting to avoid a legitimate challenge by agreeing to race a sham yacht club; promulgating a set of rules so one-sided as to virtually guarantee victory by the defender; refusing repeated offers to negotiate an agreement on the terms for the next match with (JGYC as has been done in nearly every America’s Cup in modern history; entering into a secret agreement with the International Sailing Federation ('ISAF') that secures for SNG a veto over the appointment of all racing officials and eliminates any redress to a neutral authority for improper rules changes or decisions by SNG; issuing measurement rules designed to disqualify GGYC despite an explicit assurance to the Court that this would not happen; and selecting a venue that violates the Deed of Gift and subjects GOYC to unnecessary danger.

Finally, I understand that the Court indicated on a teleconference with the parties (which I was unable to attend because I was in Pakistan) that it would like to be notified as soon as possible if either of the parties presently intends to file any additional motions. Although GGYC does not presently intend to file any additional motions, as SNG is aware, GOYC is considering filing an action alleging that SNG’s conduct constitutes a breach of its fiduciary duties as trustee and seeking the removal of SNG as trustee. Such action remains under consideration. If such an action is filed it will be filed in the next 10 days.

Respectfully submitted,
David Boies

From Société Nautique de Genêve to Justice Shirley