America's Cup hit by Perfect (legal) Storm

by Richard Gladwell on 14 Dec 2007
Overnight (NZT) came re-confirmation that the Defender of the America's Cup, Societe Nautique de Geneve (SNG) had engaged a new legal team to both Appeal the decision of Justice Herman Cahn, and also seek a Delay in the settlement order he is about to sign.

The move comes after previous claims by the head of Alinghi, Ernesto Bertarelli, that he would win the case bought by Golden Gate YC because 'we've got the best lawyers'. Clearly there has been a change of thinking on that issue.

Sail-World also understands that the ex-Challenger of Record, Club Nautico Espanol de Vela (CNEV) is supporting the delaying moves by Alinghi and SNG. This comes despite a release, yesterday, from their team, Desafio Espanol, where they said 'The delay in making decisions about the format and dates for an event in which teams can participate other than the Defender and new Challenger of Record is alarming.'

Far from seeking to shorten and hasten the next Match, Desafio Espanol's club, CNEV, is supporting moves by the Defender to both Appeal the Decision, and if those are unsuccessful to effectively delay the multihull Match, in the yet to be signed Settlment Order, until May 2009. CNEV seeks to have the actual dates of the racing determined by Mutual Consent, rather than specific Court Order. Given the ability of the two parties (SNG and GGYC) to determine anything under Mutual Consent, the CNEV view is naive, and would effectively stretch the date of future racing even further.

If SNG were the successful in their Defence, then that would see a properly organised 34th Match, with full Challenger participation in 2011 or later. Of course the way is still open for the multihull challenge to be abandoned, and for the 33rd Match to be sailed in the AC90 class in July 2209, however that option does not appear to be on the agenda of SNG.

Clearly, on the basis of the correspondence, there is a huge split between the Desafio Espanol team and their Challenging Club, CNEV, which calls into question the motives of CNEV, given the clear disconnection between them and their team, and the rest of the Challengers.

The actions by Alinghi centre on a possible Appeal of the Decision of Justice Herman Cahn, and seek also to delay the date of the multihull match to May 2009.

Now represented by the New York law firm of Simpson Thacher and Barfleet, SNG disputes the Court's right to select a Challenger (GGYC) and dictate the schedule for the Match. While the New York Supreme Ciourt may have had the right to determine the legitimacy of CNEV as Challenger of Record, SNG would appear to have the view that Justice Cahn exceeded his powers in ruling that GGYC were the new Challenger of Record, and neither do SNG appear to believe Justice Cahn can set the dates of a match in his settlement Order.

The former point again seems to override previous comments by Alinghi, after the decision of Justice Cahn in which they accepted that GGYC was the new Challenger of Record. It would seem that SNG have had subsequent legal advice to the contrary, resulting in the change of tack. The 10 month period is clearly stated in the Deed of Gift, and runs from the date of the Challenge along with other requirements, should the parties not be able to agree on the conduct of the Match.

In Deed of Gift, the Challenger can chose the dates for the Match. In the proposed Settlement Order, SNG believe that the dates chosen by the Challenger of Record, Golden Gate YC for the multihull match (now October 2008) are not viable due to the Formula 1 Grand Prix race commitments between August 2008 and early September 2008 (there is no access to bases between 20 August and 4 September).

SNG, as Defender have the right to specify the Match venue, but have so far refused to name the venue for the multihull match. So to predicate their arguments around the considerations of a Valencian venue is an interesting development - but they do have a contract in place with the Valencian authorities to conduct America's Cup regattas in the city through to 2011. Of course, as the venue for a match is the prerogative of the Defender, their concerns could easily be resolved by shifting to a venue which doesn't have the conflict with Formula 1 etc.

SNG also claim that GGYC's very Challenge, which has been accepted by the New York Supreme Court, is in fact invalid, and because of this the requirement for a Match to be staged in 10 months time is also invalid.

Again this view will not doubt be amplified on Appeal, however the requirements of the Deed of Gift did appear to have been met in the original challenge lodged on 11th July 2008. SNG are now claiming that in addition to this information (and the later supply of a measurement certificate) that GGYC must state the number of hulls for the Challenger, if more than just a monohull, and that the dimensions of each in terms of length etc must be stated.

In the original Challenge lodged with SNG, the length and beam were each stated as 90ft. SNG have subsequently stated that they believe these dimensions only apply to the Challengers and the Defender can race in a smaller yacht (provided that it is longer than 44ft on LWL).

The outcome of the latest legal volley from SNG, backed by CNEV, is that the uncertainty surrounding the America's Cup has increased substantially, and that it is clear that the Defender wishes to delay the multihull Match for as long as possible, and if still in control, the 34th Match to 2011 or beyond.

The move will cause maximum hardship to other Challengers, of which 14 were represented in a recent Challengers meeting hosted by the new Challenger of Record, Golden Gate Yacht Club.

It will not be until Justice Herman Cahn has finally signed the Settlement Order that the intentions of SNG and CNEV will be known. Once that document is signed they have 30 days in which to lodge an Appeal, which would appear to be mid- January 2008.

Golden Gate YC have consistently stated their intentions are to hold the 34th Match for the America's Cup in Valencia in July 2009, which would give the required certainty to Challengers. But to achieve that goal, they would have to be able to sail the 33rd Match in July or October 2008, become the Defender, and then roll into a full America's Cup, with a Challenger Selection series the following year, in Valencia.

Subsequent to writing this story, Sail-World received the following response from Golden Gate Yacht Club to the New York Supreme Court after the new legal team from Societe Nautique de Geneve wrote to the Court seeking changes to the draft settlement order being written by Justice Herman Cahn. The effect of the letter is for the outcome to be further delayed until a hearing on 14 January 2009 which maybe determine the final Settlement Order. However it would also seem that an Appeal will be lodged by SNG. The process is then for the Appellate Court to decide whether the Appeal has merit, and if so a Hearing date and process will be set in place. If not it will be declined, and the Settlement Order will be binding.