America's Cup Legal settlement unshackles the next Match

by Richard Gladwell on 27 Mar 2010
All litigation in the 33rd America's Cup has been discontinued, following an acceptance of an agreement announced between the four parties today.

The dropping of the litigation will allow the formal handover of the various properties associated with the America's Cup and which are held by the Defender, in its joint role of Trustee of the America's Cup to which the custodianship of the trophy and the organization of the next Match is enshrined in the 19th century Deed of Gift which governs the event.

After losing the trophy in over four weeks ago, Societe Nautique de Geneve and Team Alinghi apparently did not execute the necessary documents, even though the trophy itself was handed over to the new winner, Golden Gate Yacht Club and BMW Oracle Racing, immediately after the finish of the second race in what was known as a Deed of Gift Match between two multihulls, each over 110ft long

It is believed that the Swiss club would not complete the transition process while it was under threat of litigation by the new Trustee. Had SNG defended the America's Cup in Valencia, it was expected that the legal action which had dogged the event since July 2007 would have continued and effectively frozen out all other competitors until its resolution.

The Challenger, Golden Gate Yacht Club, proved to be an easy winner in that Match which had been punctuated by numerous legal actions, mostly initiated by Golden Gate Yacht Club as they sought to protect their rights as Challenger, and to prevent SNG from exceeding their rights as Defender, in the yacht design and construction, and conduct of event.

Of some 14 points of litigation raised by the Challenger only one was decided in favour of the Defender - a decision that allowed the use of engines in place of manual power on board the yachts - a decision which arguably, eventually favoured BMW Oracle Racing as it allowed the US team to better use their 70metre wingsail - widely regarded as the determining factor in the performance of the two yachts.

At the time of the America's Cup being sailed there were still three actions in front of the New York Supreme Court - two over Constructed in Country one lodged by each team, that the other's yacht was not in compliance with the CiC requirements of the Deed of Gift, and the third was a Breach of Fiduciary Duty action on the part of the Swiss holder of the America's Cup over their actions taken during the period from July 2007, which the Challenger did not believe were consistent with SNG's obligations under the Deed of Gift, which they had undertaken to uphold in an agreement which they had signed and executed with the Royal New Zealand Yacht Squadron, the previous holder of the America's Cup.

The settlement reached means that all parties will drop all legal actions and will carry their own legal costs.

The keypoints in the agreement include:

1. Transfer to GGYC of the pieces of the damaged Cup that SNG recovered in 2006 from different individuals in New Zealand.

2. Transfer of ACPI (America's Cup Properties Inc) to Golden Gate Yacht Club. ACPI is the body that holds the intellectual property rights and copyright of the items knowns as the 'America's Cup Marks'. being the America's Cup silhouette, the words 'America's Cup' and other similar properties all of which had to be licensed by the defender/Trustee before they could be used under threat of legal enforcement to prevent 'passing off' etc. these properties include the America's Cup website, www.americascup.com which was still under the control of SNG/Alinghi over a month after they had lost the trophy.

3. Transfer of a new entity, to GGYC, formed by SNG/Alinghi, and the Challengers at the end of the 31st America's Cup - The Cup Heritage Trustee Limited and for the resignation of a Director, Hamish Ross, Alinghi legal adviser and noted America's Cup historian.

4. Transfer of all race management equipment that was transferred to SNG by the Challengers for the 31st America's Cup in Auckland. This gear is expected to fill at least one shipping container.

5. Dropping of all pending litigation between the parties and notification of the New York Supreme Court of this step and the release of all claims against parties arising from the 31st, 32nd and 33rd America's Cups - this is believed to remove the threat of any action against the SNG parties arising from the Breach of Fiducial Duty action bought by Golden Gate Yacht Club, and the activities cited in that action covered not just the 33rd America's Cup but also the two preceding regattas.

Not mentioned in the agreement is Report lodged by Principal Race Officer, for the 33rd Match, Harold Bennett, over the actions by some SNG appointed members of the Race Committee who refused to co-operate when Bennett decided to start the second race, against their wishes. That matter is still considered by the International Sailing Federation. Bennett would not comment on the record to Sail-World, three weeks ago, saying that he had said all that he was going to say and that as far as he was concerned the matter was 'dead and buried'.

The International Sailing Federation is not expected to take any further action against the individuals involved, none of whom were ISAF certified officials, however the opprobrium which they have brought upon themselves, and their club, will long remain, and is a greater penalty than anything that could be issued by the world body.

In a statement released by the San Francisco based, Golden Gate Yacht Club, the Commodore, Marcus Young said the Club was pleased to have reached agreement on the matter and BMW Oracle Racing CEO, Russell Coutts said the team looked forward to the 34th Match being the best ever in the history of the almost 160 year old event.

No statement has yet been announced by SNG or Team Alinghi, and it is not known whether they will participate in the next America's Cup, for which there is currently only one Challenger.

To view the signatures on the Settlement Agreement http://www.sail-world.com/pdf/100326%20Settlement%20Agreemen...pdf!click_here