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America's Cup: Emirates Team NZ wins Arb Panel confidentiality complaint

by Richard Gladwell/Sail-World.com/nz 9 Mar 13:50 PDT 10 March 2020
Te Aihe in a higher flight mode - again the degree of immersion of the rudder wing foil can be deduced by comparing the 'Steinlager' writing with the water level and referencing that back to the launch photo at the top of this story © Richard Gladwell / Sail-World.com

Emirates Team New Zealand has been exonerated following a complaint that the Kiwi team had breached confidentiality restrictions surrounding the Match Conditions for the 36th America's Cup.

The complaint was lodged by the Challenger of Record, Luna Rossa Prada Pirelli after it became known that there was a dispute between the Italian team and the Defender Emirates Team New Zealand - who are the two parties who negotiate the rules and conditions for the America's Cup Regattas.

The final sticking point was over the negotiations of the Match Conditions and specifically the wind limits that would apply. The media were tipped off that there was an issue when it became plain that a deadline of December 20, 2019 would not be met for publication.

It emerged that the two parties could not agree on wind limits that should apply when the deadline was missed. Sail-World broke the story on December 22, carrying a quotation from Emirates Team New Zealand's long time and highly experienced rules adviser Russell Green.

It soon emerged that despite a requirement in the Protocol for the Challenger of Record (the first to lodge a Letter of Challenge required under the 19th century Deed of Gift which governs the conduct of the America's Cup) to "represent all Challengers" had not been met in its wider sense when the New York Yacht Club's American Magic stated in an interview with Associated Press that Luna Rossa had not consulted them as to their views on the wind limits that should apply.

That news surprised Emirates Team New Zealand who had apparently assumed that the other three Challengers would be consulted n this vital issue.

On January 9, 2020 (NZT) the New Zealanders issued a statement on their EmiratesTeamNZ.com website expressing the view "Under the AC 36 Protocol, the Challenger of Record has the responsibility to represent all Challengers and that responsibility involves consulting with other Challengers before taking a position with the Defender on issues such as race conditions."

That put the Challenger of Record in the same position of Artemis Racing in the 2013 America's Cup who frequently pushed their own views as a Challenger of Record and were opposed in Hearings by the majority of the Challengers - ETNZ and Luna Rossa. The Italians have been on the receiving end of some very unfair actions, and at times disgraceful actions, by the Challenger of Record, and it was surprising to hear they had acted without consultation.

The Italian response was to go to the Arbitration Panel complaining that ETNZ was in breach of the Protocol and the Rules of Procedure established by the Arbitration Panel, which is binding on all parties.

The Arb Panel noted that the provisions of the Racing Rules of Sailing (America's Cup version) are not relevant to the case as the Challenger of Record/Defender has not adopted them.

To the surprise of no-one, there is no "Dalton Clause" in the current Protocol. The clause, effectively a gagging order, was a feature of the last America's Cup Protocol and stopped teams expressing a view that was at variance with the dictates of the Defender or the Event. "The [curent] Protocol does not contain a general obligation of confidentiality," said the three-man Arbitration Panel in its Decision.

The Panel further noted that under its Rules of Procedure proceedings "will be transparent and not confidential between the Parties" unless a confidentiality order was explicitly made by the Panel "in exceptional circumstances". No such order was made before January 10.

According to the Decision issued by the Arbitration Panel, Luna Rossa also tried to claim that the "friendly competition between foreign countries" phrase in the Deed of Gift was a defacto confidentiality order. That view is quite a stretch given that the only two disputes that have gone before the New York Supreme Court have been decided within the "four corners of the Deed". If it were to be upheld, Luna Rossa's claim would have required NYSC to have determined the intent of the donor - which is an area that has not been necessary to support a previous ruling by the Court.

The Arbitration Panel found there were no grounds to uphold any aspect of the Complain, and it was summarily dismissed.

"Confidentiality did not apply until such time as the Sole Mediator issued its confidentiality order under Art. 7.2 of the RoP by way of its Directions 02 dated January 10 2020," the Arbitration Panel wrote in its Decision. "The media statements that the Applicant complained of in its Application (i.e. the 1st Stuff Article and the Media Statement) both occurred before such confidentiality order was made. As a consequence, the Respondent did not breach its obligations under the Deed of Gift, the Protocol, the RoP, The Mercury Bay decision or its fiduciary duties."

Submissions on costs were to be made by March 5, and a decision on the amount and liability for those has yet to be announced by the Arbitration Panel.

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