America's Cup- Challenger and Defender take Kiwi-Italian deal to Jury

by Richard Gladwell on 17 Nov 2011
The Challenger of Record and the Defender for the 34th America's Cup, have both protested the announced partnership agreement signed between Italy's Luna Rossa and the New Zealand entry, Emirates Team New Zealand.

The specific grounds for the protest, or 'application', are not specified by the Challenger of Record or Defender, however Sail-World believes these relate to the significant advantage both teams would gain through a combined effort, until the date specified in the Protocol - 31 December 2012, when joint design effort is prohibited.

The key benefits of the partnership arrangement were disclosed in Sail-World the day after the Challenge by Luna Rossa, a three times America's Cup Challenger, was accepted by the Defender, Golden Gate Yacht Club. That analysis can be read by http://www.sail-world.com/UK/Americas-Cup:-Plenty-of-upside-with-innovative-Twin-Team-strategy/90286!clicking_here.

Sail-World read the relevant provisions of the 34th Protocol at the time of the announcement and could see no areas of transgression, based on what was said at the time and the concept of the partnership.

It was clear at that time that a significant gain was possible on several fronts over that which would normally be possible in the more traditional scenario where a team worked in isolation.

The most significant of these was that both Team NZ and Luna Rossa effectively each gained an extra AC72 platform, by virtue of being able to run a joint program in a one design AC72, through until 31 December 2012 - before the teams split and did their second boat which would be expected to be designed using knowledge gained from the identical boat program.

Without such a co-operation agreement, a team is limited to building just two AC72's, and clearly had the option, as has existed in previous America's Cup of doing an initial boat and then a development boat, or building two identical boats and running a two boat program off that base.

In reality most teams, that have the budget, build two boats which are similar but slightly different and then race the second enhanced boat in the Challenger Selection Series.

The Kiwi-Italian agreement allows the teams to run both the identical and development options and at reduced crew cost, in the initial period allowing them to spend more budget on research and development.

In an extension to the co-operation arrangement, Emirates Team NZ is expected to bring their AC45 back from San Diego to Auckland and train for the New Zealand summer against Luna Rossa, which is establishing a base in Auckland, and will be launching their AC45 in Auckland.

There will be no America's Cup World Series in late 2011 or early 2012, as all the Oceania options have fallen over. The next event will not take place until April in Italy, allowing almost five months of work up for both teams in Auckland during the Kiwi summer.

The deal allows the teams to run a single AC45 each, but again with the benefits of a two-boat two-crew program. They would also be able to run Emirates Team NZ's SL33's in a similar program.

There is no limitation on sailing days allowed with the SL33's or AC45's however the days allowed in the AC72's are heavily restricted.

Oracle Racing has four AC45’s at their disposal, all the other entered teams have just one each.

The Protocol under which the Swedish teams are basing their complaint was negotiated between themselves and the Defender, following the withdrawal of the first Challenger of Record, Mascalzone Latino, who signed a similarly couched document.

While there have been some modifications to the agreement, the Challengers as a group have no specified rights in terms of setting the conditions in the agreement. The Challenger of Record does have the power of veto over provisions and changes sought by the Defender. In theory, both the Challenger of Record and Defender could act in concert and bring in retrospective changes to the Protocol to curb the Italian-Kiwi partnership, without reference to any other party.

Some would say that the Defender and Challenger have been hoist by their own petard.

It is a little difficult to see how or why the International Jury should assist the Challenger or Defender out of a situation that is of their own making.

The stated intention of the Defender has been to reduce costs of the teams, and have made some moves in that regard with the AC45 program allowing an entry level program, and the offering of a common one design AC72 package.

The Itiwi co-operation deal takes the cost reduction up a new path, in that it doesn’t really reduce costs, but does allow a lot more bang for the dollar or euro – essentially allowing the two teams to do more for the same money.

It is also an obvious move for other teams, now faced with a five month gap in their programs to pair off in similar co-operation arrangements, and use the downtime to lift their game and knowledge base, without increasing costs.

Quite what Oracle and Artemis expect the International Jury to do is a little difficult to understand.

Followers of the Cup since the 1980s will be aware of the issues that have arisen over dilution of nationality rules and the controversy over the input of others such as the Netherlands Ship Basin and Peter van Oossanen into the Australia II campaign. Similar but different was the migration of design talent from Team New Zealand to One World in 2000, and then the alleged offering of design information from One World to BMW Oracle Racing in that same cycle.

One of Oracle Racing’s objectives in the current America’s Cup was to simplify, and eliminate if possible the spiderweb of rules and sea-lawyers, that hard become part of the Cup game. To some extent that objective has been achieved with some clear lines in the America’s Cup sand which cannot be crossed invisibly, and are therefore reasonably easy to enforce. They might be softer than some would like, but they are easily enforceable as they are both simple and are easily spotted if transgressed.

The difficulty with the fishing expedition on which the International Jury has now been invited, is that some rules body will have to put in place parameters around intentions of the parties – and that is always a very fraught exercise, akin to trying to nail jelly to the ceiling.

The other approach to enforcement is to work retrospectively, deal with the actions, rather than the intentions, of the parties and determine whether they measure up to some template devised by the International Jury or one of the America’s Cup Management tentacles. The America’s Cup is trying to shake off its mantle of being litigious. Delving retrospectively into who made what contribution in a design team, is another fraught exercise which has not served the event well in the past.

The line in the Artemis Racing statement that the arrangement should be cleared before a significant investment is made, is a little tenuous in that the proposed joint arrangement is more cost effective than had the teams worked in isolation. Is the Challenger of Record trying to save the Itiwis from themselves?

In the statement on americascup.com, the International Jury says it will invite submissions from the parties and will make a ruling in three or four weeks.

Another twist in the americascup.com statement is the request by the Challenger of Record, Artemis Racing for the two applications to be heard separately. It is normal protest committee and Jury practice when multiple protests are received on the same incident, for them to be heard together. Why that would not be the case in this situation is a little hard to understand.

The statement issued by Artemis Racing reads:

Challenger of Record Artemis Racing representing Kungliga Svenska Segel Sällskapet (KSSS) has filed an application to the Jury requesting an interpretation of the Protocol governing the 34th America’s Cup with regards to the cooperation agreement between Emirates Team New Zealand (ETNZ) and Luna Rossa Challenge 2013.

Artemis Racing believes that it is in the best interest of all competing teams to understand if all of the elements of the agreement are permissible before any party makes a significant investment.

KSSS/Artemis Racing welcome the involvement of Luna Rossa Challenge 2013 in the 34th America’s Cup events and look forward to competing against the Italian team.

And from americascup.com:

The Jury for the America’s Cup has received two separate applications for interpretation of the Rules as they apply to the sharing of information and collaboration between Competitors.

Oracle Racing and Artemis Racing have separately submitted applications to the Jury, requesting clarification of how much design information competitors are allowed to share, and how closely they can work together between now and the beginning of the Louis Vuitton Cup and America’s Cup Finals in 2013.

'Both of these applications are similar in nature,' said Jury Chairman David Tillett. 'Artemis Racing has asked the Jury to not issue directions on their Application pending the giving of answers on the Oracle Racing Application, as in responding to those questions, we may cover some or all of the ground in the Artemis request.'

Tillett says the full five-person Jury will hear the applications promptly. He anticipates the Jury, after receiving written submissions and answers from all parties, will provide an answer in three to four weeks.