Golden Gate Yacht Club Takes Dispute To The Next Level

The Golden Gate Yacht Club has taken its dispute with Société Nautique de Genève over the 33rd Protocol and choice of Challenger Of Record to the next level through a court order requiring Société Nautique de Genève to respond to its complaint.

Mindful of the large amount of opinionated and partisan comment thus far expressed throughout the media, The Afterguard has determined to simply reproduce the materials released today by Golden Gate Yacht Club without modification, enabling readers to form their own viewpoint.

Golden Gate Press Release: 22/8/07 - Download the original document from the Golden Gate Yacht Club website here.

Golden Gate granted court order to advance America’s Cup resolution

New York, NY (August 22, 2007) – The Supreme Court of the State of New York today granted an order sought by the Golden Gate Yacht Club (GGYC) requiring the Société Nautique de Genève (SNG) to promptly answer a request to speed up the legal process for resolving its proposed new rules for defending the next America’s Cup.

The San Francisco club sought the Court ruling alleging SNG is in serious breach of its fiduciary duty under the Deed of Gift that governs the Cup. It says SNG has accepted an invalid challenge from a sham yacht club, and is seeking to impose an unprecedented one-sided set of rules that hugely favor the defender to the detriment of all other competitors.

“We are very pleased with this ruling by the Court, because we believe the Cup will be irrevocably damaged if we don’t get SNG’s Protocol changed,” Tom Ehman, Head of External Affairs for BMW ORACLE Racing, the US club’s team, said.

“The new Protocol would give SNG’s team, Alinghi, radical new powers to control nearly all aspects of the event that are still unsupported by any explanation from SNG as to why they are needed,” he said.

Ehman said the syndicate whose challenge had been accepted by SNG, the Club Náutico Español de Vela (CNEV), was a shell organisation that had been formed only days prior to issuing a challenge and did not comply with the terms specified by the Deed of Gift.

“We would still prefer to negotiate a solution outside the court, but we see SNG as violating its responsibilities as Trustee, and we are fully prepared to go the legal distance if needed to stop the America’s Cup being subverted into a hopelessly one-sided event,” he said.

The Deed of Gift that protects the Cup as a perpetual sporting challenge is governed by a fiduciary trust established under New York law in 1887.

The GGYC court action also seeks a preliminary injunction to obtain critical information related to the club’s challenge under the Deed of Gift.

The American challenge is for a race next summer under the Deed’s 10-month rule. GGYC need to know where SNG intends to hold that competition and what the SNG sailing rules are. Under the Deed, the Swiss Defender is required to provide these important details to the Challenger.

GGYC filed a challenge on July 11th, and asserts that SNG must accept it. If successful in this motion, the GGYC case could be heard by the Courts as early as October 2007.

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Golden Gate Media Backgrounder: 22/8/07 - Download the original document from the Golden Gate Yacht Club website here.

BACKGROUNDER

33rd America’s Cup

Summary
The Golden Gate Yacht Club, (GGYC) has filed a suit in the Supreme Court for the State of New York seeking a court ruling on the legitimacy of the current proposed Protocol for the next America’s Cup.

We believe that the challenge that has been accepted and the proposed Protocol are legally not acceptable as they breach the terms of the Deed of Gift that governs the Cup. This is based on our view that Société Nautique de Genève (SNG) has accepted an invalid challenge from a sham contender, and is seeking to impose an unprecedented one-sided set of rules that would damage the Cup as a genuinely competitive event.

We would prefer to negotiate a solution. But we have taken this court action in order to ensure a fair contest and protect the integrity of the Cup.

We urge the adoption of a protocol similar to the one used last time which produced such a successful event. We are keen to see this issue resolved and move on to the sailing.

2007 Timeline
July 3: Alinghi, representing SNG, wins the 32nd America’s Cup.

July 5: SNG announces a radically new Protocol for the next Cup and names Club Náutico Español de Vela (CNEV), as the Challenger of Record (COR).

July 11: GGYC presents a formal challenge to SNG in Geneva. GGYC argues that the challenge by CNEV is invalid. This is based on the grounds that at the time of its challenge CNEV, which was established only a few days prior to having its challenge accepted, was not a bona fide yacht club and did not have an annual regatta, each as required by the Deed of Gift.

July 20: GGYC files suit in the Supreme Court for the State of New York, which presides over the Deed of Gift, seeking a ruling to have the CNEV challenge discarded as illegitimate and the GGYC’s challenge accepted.

August 22: The court grants an order sought by GGYC requiring SNG to promptly answer a request to speed up the legal process for resolving its proposed new rules for defending the next America’s Cup.

CNEV challenge
Our concerns about the validity of CNEV and its challenge include the facts that:
• It is not a bona fide yacht club.

• It was created and is controlled by Real Federación Española de Vela (RFEV), which is itself not a yacht club.

• It was formed for the sole purpose of making a challenge only days before its challenge was made and accepted.

• Contrary to the Deed it has never held an annual regatta anywhere, and

• It appears to have accepted the loss of Challenger rights in the new Protocol in a way that no genuine Challenger who was seeking a fair contest would.

The Protocol
We believe that the protocol must be rejected in order to protect the status of the America’s Cup as a genuine sporting contest.

We do not believe this protocol is valid, fair, or in the spirit of racing that the Cup stands for. It is clearly not the result of the mutual consent process between a defender and a legitimate challenger that is prescribed in the Deed of Gift.

Our chief concerns about the Protocol are:
• It is invalid because SNG entered into it with an invalid Challenger, CNEV.

• The defender, through the company it has formed to manage the event, America’s Cup Management (ACM) can reject any entry – even if it complies with all requirements. Once disqualified, there is no provision for the challenger to contest this ruling. See AC 33 Protocol clauses 2.7 (d), 4.4

• ACM have the power to appoint the event authority, and all officials. (The Challenger of Record (see below) can only object on grounds of neutrality of judgment. See Protocol clause 5.4

• ACM can impose any rule on any team. See Protocol clause 5.4 (b)(d)

• The new Protocol does away with the independent Challenger Commission which represented well all challengers in AC 32. See Protocol clause 10.1

• The defender will unilaterally create a new design rule governing the boats to be raced, with seemingly only very minor input from the COR; and can develop this rule well in advance of advising challengers so that they have a much shorter window to develop a rival boat. See Protocol clause 14.1

• The Defender gains the right to gain valuable information and advantage by participating in the Challenger selection series, but Challengers will not be permitted to participate in any Defender series. See Protocol clause 13.5



Other references:
The issues raised by the Protocol have been reported on and covered independently by leading yachting media who have widely criticized it as leading to a one-sided event. These include:
Seahorse September 2007
Sailing World September 2007
Yachting World September 2007
Sail-World.com website

Q&A
Q: Other syndicates have signed up for the next event – how can the new Protocol be so bad if they are already in?

A: It is up to individuals to decide whether they sign up and they will have their reasons. Our belief is that the Protocol is legally unacceptable under the terms of the Deed and will produce a one-sided event. This is not about “taking sides”. This is about protecting the Cup and keeping to a spirit of genuine and close competition.

Q: Isn’t this just a case of you and the Defender each simply trying to gain an advantage for yourselves before the next event?

A: We are not the only ones unhappy with the new Protocol or who favor an event that is legal under the terms of the Deed and is equitable to everyone. The changes we are calling for would apply to all Challengers equally. Any gains on the Defender’s side apply to them alone. That is the fundamental issue, we are fighting for a fair and even contest.

Q: What do you think should happen?

A: We want to see an event that has neutral rules and preserves the rights of the Challengers by reinstituting a Protocol substantially the same as AC 32.

Q: Are you opposed to any changes in the Protocol?

A: No. We simply want to see any changes introduced in a way that is open and treats all competitors equitably, as opposed to springing a radical change on the event with effectively no consultation or justification.

Q: Shouldn’t the competition be decided on the water? Isn’t court action against the spirit of true sportsmanship?

A: We would prefer to negotiate, but going to court may be the only way we can effectively contest the new Protocol.

Q: Will you drop your court action if a Protocol like the one governing the last event was re-introduced?

A: Yes.

Q: Are you asking for essentially the same things Mascalzone Latino have asked for?

A: Yes, we support the proposal recently made by Mascalzone Latino which is about ensuring a fair competition and also calls for a Protocol along the lines of the one used for the last event.

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