Shock, surprise, bewilderment, in the face of the New York Appellant Court’s 1st Department’s (NYAC) ruling of July 29th we are left with a proverbial; “huh”? The world of the America’s Cup has been turned upside down again, because of a narrow parochial interpretation of what “having” means. Does it mean will have, or is it possessive, to own?
In the context of the sentence that it appears in, in the Deed of Gift; my grammar knowledge is about as good as Judge Leland Degrasse, who spoke for the narrow majority. All are new to the Appellant bench this year, more on that later. At some point it would have been nice if the court had at some point, considered the intent of the donors.
The Appellant Court ruled in a split decision (3-2) that the Club Nautico Espanol de Vela (CNEV) is again the challenger of record for the 33rd America’s Cup. In a ruling that has surprised everyone; most of all Team Alinghi, the Golden Gate Yacht Club has been displaced as the challenger of record and faces the prospect of either appealing to the New York Court of Appeals or facing the possibility of being barred from the next America’s Cup.
After more than a year of protracted litigation between Alinghi, representing the Societe Nautique de Geneva and BMW Oracle from the Golden Gate Yacht Club, the adversaries find themselves back to square one. This, after what was thought to be a final rubber stamp by the Appellant Court on the squabble over the dates for the 33rd America’s Cup next year.
The paragraph in question reads like this: "Any organized Yacht Club of a foreign country, incorporated, patented, or licensed by the legislature, admiralty, or other executive department, having for its annual regatta an ocean water course on the sea, or on an arm of the sea, or one which combines both, shall always be entitled to the right of sailing a match of this Cup, with a yacht or vessel propelled by sails only and constructed in the country to which the Challenging Club belongs, against any one yacht or vessel constructed in the country of the Club holding the Cup.”
The (GGYC) stated “it will carefully consider the implications of today’s ruling, before deciding on its next step.” “We are surprised and disappointed by this ruling. We will now be taking legal advice and considering the next step,” Tom Ehman, the club’s spokesman, said.
Ernesto Bertarelli, Alinghi president, comments: “We are delighted with this result; we can now continue with our vision of a multi-challenger event. The court’s decision validates our actions and enables us to put the America's Cup back on the water.”
Lucien Masmejan, SNG lead counsel, comments: “After a year of litigation interference by the GGYC, we are extremely pleased that the Appellate Division has found its challenges to SNG's conduct of the 33rd America's Cup baseless.”
“The GGYC’s actions have wasted a lot of time, effort and resources over the past year and we hope that it does not appeal. We must now evaluate whether adjustments have to be made due to the time consumed by its improper litigation initiatives.”
“The decision of the Appellate Division reads: “...the orders of the Supreme Court, New York County (Herman Cahn, J.), entered March 18, 2008 and May 13, 2008, which, inter alia, declared CNEV's challenge invalid and GGYC the Challenger of Record under the Deed of Gift, should be reversed, on the law, with costs, CNEV declared the Challenger of Record, and, in keeping with the Deed of Gift's requirement that the defender be given at least 10 months' written notice to prepare for the challenge, the 10-month notice period should be tolled until service of a copy of this order.”
So here we are with an apocalyptical nightmare America’s Cup scenario that appears to be deadlocked in an insurmountable ego driven bypass.
On one hand, there is Alinghi President Ernesto Bertarelli, whose team defended the America’s Cup last summer for SNG and who is trying to force his vision forward by usurping, for the most part, the mutual consent provision of a new protocol for the 33rd running of the world’s most prestigious yacht race.
On the other hand is Larry Ellison, the founder and chairman of Oracle. His racing team BMW Oracle had perhaps the fastest AC Class Version 5 boat in Valencia, Spain, but was virtually swept away in five of 6 races against Luna Rosa from Italy. Ellison’s team was the Challenger of Record, until they were eliminated. They lost 5-1 to Alinghi in 2003.
In an extraordinary set of circumstances the New York Court System is playing out like a bad episode of “Judge Judy”. Consider that three of the five judges on this Appellant Court are recent appointments. Judges Karla Moskowitz and Rolando Acosta were appointed by then Governor Eliott Spitzer, before his resignation for his indiscretion with in Washington DC with a high priced prostitute.
Leland DeGrasse was appointed in April, 2008 by now Governor David Paterson, who admitted his own marital infidelities. New York Court of Appeals Chief Justice Judith Kay,turns 70 on August 4th (Happy Birthday) which means mandatory retirement in the state, so this his her last term. She is also currently suing the State of New York for higher judicial pay!
What was interesting and now ironic is that the resolute, courageous Judge DeGrasse who endeavored over New York’s landmark educational reform lawsuit now has; low and behold the same firm in front of him representing Alinghi.
In the Fiscal Equity vs. the State of New York lawsuit, the plaintiffs were represented pro bono by Simpson Thacher, noble efforts aside. For DeGrasse, whose seat on the Appellant bench had warmed up to the tune of 6 short weeks, it would be tough to overlook the millions of dollars of “gratas” work by Simpson Thacher, in what is ultimately a charitable trust case involving the people of the State of New York.
This weekend the two ‘Cup powerhouses fight it out on the water in Cowes, England in the I-Shares Cup on Formula 40 catamarans. Both teams have spent the summer training on multihulls in preparation for the 33rd America’s Cup. Europe, not the United States, has become the center of the America’s Cup universe.
This summer, If your not training on cats, you’re on ‘monos in the Swedish Match Racing Tour or Med 52’s pounding it out in Italy or France. Other than distance races or small boats, America has fallen off the radar on the uber competitive match racing circuit. Unfortunately in all respects we have fallen victim to a domino effect “NASCAR Nation” ethos.
In an added twist the appeal was made by the defender in an effort to restore the challenger’s rights. CNEV didn’t even appeal after losing in court last November.
Currently, CNEV is without a team as Desafío Español terminated its relationship with the "paper" club and is now represented by the Real Club Maritimo del Abra,in Bilbao,in northern Spain. Also, Spain is now represented by another challenge; Reial Club Marítim de Barcelona and Real Club Náutico de Madrid, who have combined forces to form the Decision Challenge.
After Alinghi defended the ‘Cup in seven exciting races in probably the best America’s Cup ever, they brought in a challenger of record (COR)from Spain to sign off on Bertarelli’s vision for the next America’s Cup. Unfortunately, the new club had not fulfilled its minimum obligations to qualify as pro bono COR.
According to the strict terms of the Deed of Gift, which governs the rules, by which the America’s Cup can be challenged for the COR has had to have conducted an annual regatta and had to have been an established yacht club from a proprietary standpoint. This differs from merely being able to challenge for the ‘Cup.
The challenger of record is held to a higher standard. In past years several yacht clubs have been able to actually enter as challengers through the mutual consent clause set forth by the defender and the challenger of record. They have been held to a lesser standard since the COR is responsible for negotiating terms and organizing the challengers regatta.
The New York Yacht Club in 1887 specifically rewrote and changed the Deed of Gift to ward off inexperienced and inept challenges for the “Auld Mug” after 2 abhorrent challenges by the Canadians that tarnished the image of the regatta. The intent of the donors was very clear then as it should be now. CNEV does not have the ability to properly organize an America’s Cup challenge, nor does it process the ability to properly negotiate terms for the multiple challengers for a protocol for the 33rd America’s Cup.
Alinghi won the America’s Cup in New Zealand in 2003. The yacht club chose Valencia, Spain to host the 2007 America’s Cup. Valencia is located on the Mediterranean Sea and is one of the world’s oldest ports. The racing must take place on the sea, or an arm of the sea.
The word alinghi was made up as a child by Bertarelli. Alinghi beat Team New Zealand 5-2 in one of the most exciting America’s Cups in history. After the series was over SNG drafted the rules for the next America’s Cup. With the help of the Spanish Sailing Federation (RNEF) they created a phantom yacht club to agree to bogus new rules and represent any challengers, who might be interested in racing for the right to face to Swiss in an America’s Cup finals in 2009.
After the new rules were announced BMW Oracle and the GGYC objected to the new protocol for the next race and submitted a challenge for the America’s Cup to the SNG. When the challenge was rejected, the GGYC filed suit in the New York Supreme Court, to invalidate the Spanish challenge. The court is bound by the Deed to arbitrate all disputes relating to the America’s Cup Trophy, which is held as a charitable trust by the State of New York.
On November 27th, 2007 the Honorable Judge Herman Cahn ruled in favor of the Golden Gate Yacht Club (GGYC) and declared them to be the true challenger of record.
In Judge Cahn’s ruling, he was very clear on CNEV’s lack of qualifications as a bona fide challenger of record. It goes beyond having not run an annual regatta, to its charged responsibility of running an America’s Cup regatta. If you haven’t even run races for cases… of beer, what would possibly qualify a club to run the biggest regatta in the world?
Prior to that, BMW Oracle submitted nine amendments to the protocol and has support of most of the other seven challengers at this point. By in large, Bertarelli’s original vision for the protocol of the 33rd America’s Cup remains intact.
There is agreement on the new 90 ft. AC boat, the defenders are allowed to sail in the regatta; the dates, venue are unchanged and other than egos, the remaining point of contention would appear to be the 2 boat issue. In spite of Alinghi’s contention, this has little to do with sour grapes on Ellison’s part and more to do that many on his team are very well versed and rehearsed on rules that regulate the America’s Cup.
In order to keep costs under control, Bertarelli wants to limit construction of the new ‘Cup class and the inherent expense escalator of 2 boat testing.
The original contest for the One Hundred Guinea Cup took place off England's Isle of Wight in 1851. The contest was won by the yacht America, against 18 British challengers. Aboard, was New York Yacht Club Commodore John Cox Stevens, who later presented the trophy to the Club in 1857.
America dominated the event to such an extent, that Queen Victoria was said to ask, "Who's in second?” In which she was told, "You’re Majesty, there is no second!" In an act of conveyance, the original members of the “America syndicate” placed the ‘Cup in a charitable trust to the State of New York as a perpetual challenger’s trophy.
The deed of gift, which is the bylaw that governs the race, was amended by the last surviving member; George Schuyler in 1887. The defense of the “Auld Mug” for the most part, takes place every few years. It has changed hands several times between America, Australia, New Zealand and now, Switzerland.
Since the legal debacle in 1988, the Deed has generally been usurped of its authoritative grip on the rules by mutual agreement provisions called the America's Cup Protocol. The protocol's enabling resolutions allow the Challenger of Record to establish the rules and regatta format to determine who will challenge the defending boat for the America's Cup.
As to SNG and GGYC, it is time to settle this like sailors, on the water. With no legal “tolling” in place, the dates of the match were set in GGYC’s challenge for July 4, 6 and if necessary July 8th , 2008. In Judge Cahn’s ruling on March 17th he was very clear in emphasizing that; “Contrary to SNG’s assertion, that parties wound up entangled in legal proceedings, which “interrupted” the 10-month period (notice given for match by challenger, GGYC), does not invalidate the Notice of Challenge.”
With no legal “tolling” (timeout) agreement in place and in spite of BMW Oracle’s own internal toll timeline of 30 days after your court ruling of November 27, 2007, when on December the 29th they announced a commitment to a Deed of Gift challenge and proclaimed race dates 10 months hence in October of 2008, nothing precludes or interrupts the fact that the challenge was set for July of 2008.
For Alinghi, it is time to realize that they still have tremendous advantages as the defender. You can be 99% certain of what type of multi-hull BMW Oracle has designed and for what conditions it was built for. Also as the Deed declares: “if of one mast”…… So, Ernesto man up and start building. To the “Ecstasy of St Theresa”, take a page from your own families’ past, when Serano’s founders took the initiative and started extracting urine from all those nuns to start what became; your business.
In the words of the Honorable Judge Sol Wachtler, who concurred with the majority in the New York Court of Appeals ruling in MBBC vs. SDYC when he wrote: “This case has little or no significance for the law, but it has caught the public eye like few cases in this court’s history. Much of the reason for this attention, apparently, is the supposition that here at stake are grand principles – sportsmanship and tradition – pitted against greed, commercialism and zealotry that threaten to vulgarize the sport. In the end, however, the outcome of the case is dictated by elemental legal principles.
In an ironic twist of fate the litigants come up against the honorable Judge Carmen Ciparick again…and we all know how she feels. She has little or no tolerance far all of this. Before this is over she will weigh in, heavily and with Chief Justice Judith Kaye pining for more dollars I can’t see where she will have much patience for the billionaire litigants, maybe she’ll revoke to charitable trust.
In 1989 Judge Ciparick disqualified the SDYC and awarded the America’s Cup to the Mercury Bay Boating Club. Ciparick ruled that the San Diego Yacht Club had “violated the spirit of the deed” when its “clear goal to was to retain the cup at all costs.”
In her ruling she wrote; “the defender of the America’s Cup is more than the current champion yacht club. The yacht club winning the America’s Cup becomes the sole trustee under the deed of gift and has an obligation there under to insure a fair competition. The holder of the America’s Cup is bound to a higher obligation than the victor of the Stanley Cup or Super Bowl. In organized sports such as hockey or football there is a central authority for the development and enforcement of competition rules. The defender of the America’s Cup, as trustee, is charged with the responsibility of insuring that a subsequent defense is carried out in accordance with the letter and spirit of the deed of gift. San Diego clearly fell short of its obligations as trustee of the deed of gift.”
It is in the spirit of that passion dream drama that vaporized, that many are now wanting for wonder, a bonus America’s Cup next summer. At this point who doesn’t want to see at least one high tech parley of tri-hulled foils ripping it out on the Mediterranean?
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