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America's Cup: Most issues with Late Challenges resolved

by Richard Gladwell/ 4 Mar 2019 15:29 PST 5 March 2019
America's Cup in Auckland © America's Cup Media

Most of the issues which had been placed before the Arbitration Panel for the America's Cup have been resolved ahead of the formal Hearing which was scheduled for next week.

One issue is believed to be still outstanding, which is expected to be resolved by an exchange of written submissions, rather than a Hearing.

Agreement on late Entry Fee and Performance Bond payment dates was reached last week following a meeting between the Defender and Challenger of Record in Auckland. The meeting was attended by Mr Patrizio Bertelli, the Team Principal for Luna Rossa, the team of Circolo della Vela Sicilia, the Challenger of Record for the 36th America's Cup. The agreement to the Protocol change is dated February 28, 2019.

The written release just issued by America's Cup Media does not address some of the wider issues, which have been covered previously in Sail-World. They were centred around the acceptance of three late Challenges by the Defender Royal New Zealand Yacht Squadron.

The accompanying Protocol Amendment covers the timing of payments of Late Entry fees and Performance Bond along with a requirement for all Challengers to share equally in the costs of Preliminary Regattas (America's Cup World Series). The change in the Protocol requires any financial call on the teams by the Challenger of Record to be approved by Royal New Zealand Yacht Squadron.

The motive for the Applications originally being taken to the Arbitration Panel is believed to have been aimed at having one or more of the challenges declined, in that the extra teams made the Prada Cup or Challenger Selection Series more problematic for the three well-funded "Super Teams" from USA, Italy and UK.

Regardless of the outcome of the applications, their lodgement has impacted the three new teams at a critical time of their campaigns, when they are seeking to engage key team members, expecting backers to pay for non-refundable entry fees, and are making approaches to potential sponsors.

The crunch time for the new Challengers will come in three weeks on April 1, 2019, when they are required to pay the non-refundable $250,000 first instalment on the Late Entry Fee. Failure to make that payment on time would mean a further application to the Arbitration Panel to have the team excluded from the competition.

America's Cup Defender, Emirates Team New Zealand's offer of a basic design package to Challengers for a substantial fee was not well received by the three "Super Teams" who entered ahead of the initial closing date for entries. They reasoned that those who took up the Defender's design offer would effectively mean that the Challengers were part-funding the Defence effort. However the Protocol is silent on this matter - and it is not a breach of the Protocol.

Three teams are expected to take up the design package offer, with one, Stars & Stripes Team USA saying they would take design packages for both Emirates Team New Zealand's first boat and also their second.

The other two teams, DutchSail and Malta Altus Challenge, are expected to be one boat teams and would only buy one design package from Emirates Team New Zealand.

DutchSail has advised that their timeline for a boat launch is March 2020.

Also missing from the release and Protocol amendment is a comment on whether the first America's Cup World Series event announced for October 2019 for Cagliari, Italy will proceed - with either some teams attending - or will be postponed until 2020. Given the silence on the matter and the fact that the two one boat teams have not started building, it must be assumed that the first ACWS event will not be held until April 2020, and at Cagliari, Luna Rossa's home base. A schedule of ACWS events is expected to have the boats track towards New Zealand arriving in October/November 2020 ready for the Christmas Cup in mid-December 2020 in Auckland.

Also missing from the media statement is any comment on whether the DutchSail team will be granted an ACWS event to be held at The Hague, as proposed in their challenge statement and showing on their timeline published on their website. Despite claims made in the media that the ACWS event was a condition of the Dutch entry, the context of the event allocation was a request, if possible, only.

The view that as what is known as a "Protocol Challenger" seems to have been accepted by Cor/D (Challenger of Record and Defender). One of the implications of that is that the Dutch will be able to enter under dual clubs, and also by default acceptance of that concept also sanctions Ineos Team UK entering under a company name - Royal Yacht Squadron Ltd.

In a previous decision from the Arbitration Panel, how a sailing crew member could satisfy the requirement to be a "national of that country" was determined to mean a passport holder of the nation of the Challenging/Defending team would be sufficient to satisfy this requirement. All of the sailing crew must comply with the "100% Nationality" rule. The decision has not been incorporated in the Protocol and will stand as an interpretation by the Arbitration Panel. However, this change mainly benefits the Malta Altus Challenge while the other six teams had intended to comply with the Protocol as it was initially published.

Mr Bertelli had not been in New Zealand since 2017 and the Protocol signing. Part of the reason for his visit was to view the plans for the America's Cup bases and progress. He was also expected to show the Mayor and others the plans for the Luna Rossa base, said to be spectacular, which will be located on Hobson Wharf extension, which is under construction.

The statement issued today reads:

The plans for the 36th America's Cup presented by Prada are progressing, with clearer guidelines now set for the future.

Following on from meetings held in Auckland last week between the Defender and Challenger of Record, an agreement has been reached to resolve a series of issues in the best interest of the event.

Patrizio Bertelli, CEO of the Prada Group and Chairman of the Challenger of Record met with the Defender, Emirates Team New Zealand, in Auckland and an agreement was reached to resolve a number of pending issues, some of which were already before the Arbitration Panel.

Together they have agreed all current outstanding issues including a mutually agreed settlement to the America’s Cup Arbitration case filed on the 12th of February 2019 regarding the dispute on the validity of late entries. Under the settlement agreement, an amendment to the Protocol allowing the deferred payment of the late entry fee has been agreed and the validity of the three late entry challenges accepted.

The settlement, therefore, clears the way for the Defender and Challenger of Record to continue to work progressively on planning the 36th America’s Cup presented by Prada as well as all associated events between now and the end of the event in March 2021.

“We welcomed Mr Bertelli and his team to Auckland and appreciated his positive engagement to the event. We share an overarching desire for this event in 2021, as well as all lead up events, to be remembered as the best America’s Cup ever,” said Emirates Team New Zealand CEO, Grant Dalton.

“It is no secret there have been some outstanding issues that needed to be resolved, but the fact that Mr Bertelli took the time to personally come down to Auckland is testament of the mutual respect between us, which bodes well for the event in general. The path is therefore now clear for the late entries to continue building their respective campaigns to try to participate and the Defender and Challenger of Record will give whatever support they can.”

Mr Bertelli and Grant Dalton also met with the Hon David Parker and Mayor of Auckland, Phil Goff to discuss the plans for the event and presented Mr Bertelli’s vision for the America’s Cup village which were well received, details of which will be released in due course.

“It was an honour and a pleasure to meet the Hon David Parker MP and Mayor Goff, to share the Challenger of Record’s vision for the Event Village of 36th America's Cup. This time spent in Auckland was very important for me to understand how to best integrate our event with the New Zealand culture and with its unique waterfront. It sends a strong signal of friendship and cooperation for the months to come,” said Patrizio Bertelli.

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