New York Yacht Club Asks New York Attorney General to Protect the America's Cup Deed of Gift

“America” artist unknown, c. 1851. Oil on canvas, 28 1/4 by 35 1/2 inches © Ellen McDermott / NYYC Collections

Club contends that a new perpetual governing body is incompatible with the charitable trust that has governed the Cup for more than 160 years.

New York Yacht Club Commodore Clare Harrington announced today that the Club has asked the New York Attorney General's Charities Bureau to examine whether the newly created America's Cup Partnership ("ACP") can be reconciled with the Deed of Gift—the 1887 charitable trust instrument that has governed the America's Cup since the trophy was first placed in trust in New York.

The New York Yacht Club ("NYYC") has submitted a request to the Charities Bureau of the Office of the New York State Attorney General, which supervises charitable trusts in this State, to review the newly created ACP in light of the terms of the America's Cup Deed of Gift (the "Deed").

At the heart of the matter is the essence of the competition itself: whether the America's Cup remains, in the words of the Deed, a "perpetual Challenge Cup for friendly competition between foreign countries," or whether it can be converted into a centrally managed, commercially controlled regatta run by a standing body of incumbent competitors.

The America's Cup trophy was won by the schooner AMERICA (above) in 1851 and given by Deed of Gift to NYYC in 1857 to be held in trust as an international challenge trophy. Under the Deed of Gift, the club that holds the Cup serves as its trustee, and the terms of each match are agreed cycle by cycle, by mutual consent, between that club, referred to as the Defender, and the first qualifying challenger, referred to as the Challenger of Record. NYYC notes that this deliberately narrow, two-party structure—renewed each cycle by whichever clubs then hold and challenge for the Cup—has defined the event for more than a century and a half, and that the Deed has been altered only a handful of times, each time by order of the New York courts.

NYYC contends that the ACP—established under the Protocol for the 38th America's Cup and a purported set of related "Partnership Agreements" that have not been made public—departs from that structure in several fundamental respects. NYYC's principal contentions are:

• A permanent authority the Deed never contemplated. The ACP is designed to govern the organization, rules, and commercial rights of all future America's Cups, regardless of which clubs hold or challenge for the Cup. NYYC contends the Deed vests governance in the Defender and Challenger of Record of each cycle and does not authorize any standing body apart from them.

• A potential barrier to the right to challenge. Under Article 13.1 of the Protocol, a qualified club that declines to join the ACP may have its challenge rejected absent the unanimous approval of the ACP Board. NYYC contends this subordinates a right the Deed grants freely to any qualifying club to the discretion of a private body made up of existing competitors.

• Rule-making for matches not yet challenged. NYYC contends that a body purporting to fix the terms of future matches—between clubs not yet identified—displaces the mutual-consent mechanism the Deed requires.

• Lack of transparency. NYYC contends that a restructuring of this magnitude has proceeded without disclosure of the Partnership Agreements to interested yacht clubs or, so far as the NYYC is aware, to the Attorney General, and without the approval of the New York courts.

• A potential change in the essential purpose of the trust. NYYC contends that, taken together, these changes would transform the America's Cup from an open challenge trophy into a periodic, centrally organized regatta—an alteration of the trust's charitable purpose that, in the Club's view, cannot be made without modification of the Deed and approval of the New York courts.

"The America's Cup has endured for more than 170 years because the Deed of Gift provides a durable legal framework that cannot simply be reorganized at will," said Commodore Harrington. "We hold the deepest respect for the competition and for every club that has held the Cup. Precisely because of that respect, we believe these questions deserve careful review under New York law—so that whatever governance the Cup carries forward rests on a sound legal foundation and preserves the open challenge that makes the Cup what it is."

Commodore Harrington emphasized that the Club's concerns are directed at the legal structure of the ACP and the process by which it was adopted—not at the sportsmanship of any competitor—and that it is seeking review and clarification of the Deed, in light of the ACP, under New York law.

"We are asking the Attorney General's Charities Bureau to review the trustee's administration of the trust and to obtain the undisclosed Partnership Agreements for examination," said Commodore Harrington.

The Club has asked the Charities Bureau to consider whether the ACP structure is consistent with the rights and obligations established by the Deed and whether further action or judicial review may be appropriate.