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Reference
Arbitration in the America's Cup : the XXXI America's Cup arbitration panel and its decisions
FAIRE, John (Ed.), et al.
FAIRE, John (Ed.), et al . Arbitration in the America's Cup : the XXXI America's Cup arbitration panel and its decisions . The Hague : Kluwer Law International, 2003
Available at:
http://archive-ouverte.unige.ch/unige:24811
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1 / 1
ARBITRATION IN
THE AMERICA'S CUP
THE XXXI AMERICA'S CUP ARBITRATION PANEL AND ITS DECISIONS
JOHN FAIRE 1 MICHAEL FOSTER 1 DONALD MANASSE HENRY PETER (ED,) 1 DAVID TOMPKINS
KLUWER LAW INTERNATIONAL
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Table of Contents
Table of Abbreviations IX
1. Introduction
2. Deed of Gift of 24 October 1887 15
3. "The Mercury Bay Boating Club Inc. v. San Diego Yacht Club", (26 April 1990) (76 N.Y. 2d 256; 557 N.E. 2d 87; 557 N.Y.S.
2d 851 (1990)) 19
4. The Protocol Governing the XXXI America's Cup 47
4.1 The Protocol of 2 March 2000 (Conso1idated Version) 48 4.2 Clarification #1 ta the 2 March 2000 Protocol Governing the
XXXI America's Cup (30 October 2002) 73
5. The America's Cup Arbitration Panel Rules of II February 2001 75 6. The America's Cup Arbitration Panel Decisions XXXI America's Cup 81
6.1 ACAP 00/6: Royal New Zealand Yacht Squadron & Société
Nautique de Genève 82
Deed of Gift - eligibility ta challenge - annual regatta on the sea or an arm of the sea - validity of SNG challenge - no undertaking required as to where next match held.
6.1.1 Decision (5 December 2000) 82
6.1.2 Reason for Decision and Decision (17 December 2000) 84 6.2 ACAP 00/7: Société Nautique de Genève (28 February 2001) 93
Interpretation of Deed of Gift - validity of Trustees Resolutions on nationality - meaning of "domiciled in"
and "a principal place ofresidence" - hypothetical questions - mutual consent provisions of Deed of Gift - nationality rules legitimate.
Tab!e of Conten!s
VI
6.3 ACAP 00/8:
6.4 ACAP 011/:
6.5 ACAP 01/2:
6.5.1 6.5.2 6.6 ACAP 01/3:
6.7 ACAP 01/4:
6.7.1 6.7.2 6.8 ACAP 01/5:
6.9 ACAP 01/6:
Oracle Racing (30 January 2001) 99
Entity not a yacht club - only a yacht club can challenge - Panel has no jurisdiction to determine questions submitted by a body not a yacht club.
Société Nautique de Genève (30 March 2001) 103 Breach of Article 16.5 by SNG - modification to
ACC yacht without prior approval ofTechnical Director - altered yacht was not a "new" ACC yacht - fiue imposed
Seattle Yacht Club 109
Eligibility of designer - employed by another syndicate for an wrrelated event - whether breach of Articles 11.5 and 15.3(c) - confidentiality undel1aking required.
Decision (7 June 2001) 109
"Deed of Confidentiality and Undertaking"
(16 July2001) 112
Golden Gate Yacht Club / Oracle Racing
(12 July2001) 117
Purchase of generic test data from Wolfson Unit - no breach of nationality or independent design rules - ruling limited to specific facts.
Golden Gate Yacht Club / Oracle Racing 121 Design and performance information of "old"
ACC yachts - whether performance information is
"other design information" - pU1'chase infringes rule requiring separate and independent designers.
Decision "Ad Interim" on Design Information
(19 September 2001) 121
Final Decision on PerfOl1l1anCe Information
(21 October 2001) 129
Société Nautique de Genève / Alinghi
(5 September 2001) 135
Whether yacht and appendages must arrive in New Zealand at the same time - definition of "designed"
and "built" - simultaneous arrivaI not required -
appendages can be made in country of Match before or after the yacht's arrivai - entitled to construct new appendages in New Zealand after yacht's
arrival.
Seattle Yacht Club / One World (7 August 2001) 141 Approval of a "Deed of Confidentiality and
Undertaking".
Table al Contents
6.10 ACAP 0l/7: Yacht Club Punta Ala 1 Prada Challenge
(6 December 2001) 143
Racing between syndicates - meaning of "an
Official Race" - photographing yachts in non-official races.
6.11 ACAP 01/8: Seattle Yacht Club 1 One World (16 August 2002) 151 Engagement of designers - possession of design and perfomlance information from TNZ - nature of such information and whether it was used - penalty deduction of one point.
6.12 ACAP 02/1: Société Nautique de Genève 1 Alinghi
(14 March 2002) 165
Use of centerboards and sliding keels - apparent conflict between Deed of Gift and ACC Rules - Rules apply as adopted by mutual consent.
6.13 ACAP 02/2: Yacht Club Punta Ala & Royal New Zealand Yacht
Squadron (24 April 2002) 171
Nationality requirements for designers - whether two designers comply - principal place of residence - work visa not required- requirements satisfied.
6.14 ACAP 02/3: Golden Gate Yacht Club 1 Oracle Racing
(20 September 2002) 179
Meaning of "fabricated and assembled" in Article 11.8(b) - hull, deck and appendages need not be assembled as a complete yacht in country of challenger.
6.15 ACAP 02/4: Royal Ocean Racing Club 1 GBR Challenge
(20 September 2002) 183
Principal place of residence - interpretation of requirement to maintain residence in the Match Conditions - deemed to have had a principal place of residence in the UK.
6.16 ACAP 02/5: Seattle Yacht Club 1 One World (20 September 2002) 191 Designer of a withdrawn challenger - ineligible to
be engaged by another challenger as a crew member.
6.17 ACAP 02/6: Golden Gate Yacht Club 1 Oracle Racing
(20 September 2002) 195
Challenger cOllllnenced proceedings in High Court alleging breach of an agreement - breaeh of undertaking not to sue - proceedings withdrawn - no obligatory ineiigibility - penalty a fine.
Table of Contents
6.18 ACAP 02/7: Seattle Yacht Club / One World v. Royal New Zealand Yacht Squadron / Team New Zealand
(22 August 2002) 203
Allegation that RNZYS / TNZ acquired design information the property of SYC / OWC - application withdrawn and dismissed.
6.19 ACAP 02/8: New York Yacht Club / Team Dennis Connor 205 Engagement of sailing coach - wrongly declared
6.19.1 6.19.2 6.20 ACAP 02/9:
6.21 ACAP 02/10:
6.22 ACA P 02/11:
ACAP 02/12:
6.22.1 6.22.2 6.22.3
as designer for another challenger - no breach of A..t1icle 11.5.
Decision (15 October 2002)
Reasons for Decision (21 October 2002) Société Nautique de Genève / Alinghi (15 October 2002)
Application for leave to commence proceedings - application to withdraw granted.
Yacht Club Punta Ala / Prada Challenge (27 November 2002)
Multiple nationality designer's engagement terminated - challenger required to maintain nationality eligibility - must maintain a principal place of residence for period speeified in Protoco!.
Yacht Club Punta Ala / Prada Challenge &
New York Yacht Club / Team Dennis Connor Seattle Yacht Club / One World
Designer employed by SYC/OWC had in his possession design information the property of TNZ - other allegations of breaches dismissed - penalty imposed the 10ss of one point in each of Louis Vuitton semi-finals and finals and the America's Cup Match.
Decision (9 December 2002)
Clarification of the Decision (9 December 2002) Reasons for Decision (21 December 2002) 7. The Protocol Governing the XXXII America's Cup
(2 Mareh 2003) 8. Keyword Index
Vlll
205 206 211
213
221
221 224 226
233
261
Table of Abbreviations
(Yacht Clubs and Syndicates)
GGYC
GSYS
NYYC
RNZYS
RORC
RYCCS
SNG
SYC
UNCL
YCPA
Golden Gate Yacht Club, United States Syndicale: Oracle BMW Racing; Gamla Stans Yacht Siillskap, Sweden Syndicale: Victory Challenge;
New York Yacht Club, United States Syndicale: Team Dennis Canner;
Royal New Zealand Yacht Squadron, New Zealand Syndicale: Team New Zealand;
Royal Ocean Racing Club, England Syndicale: GBR Challenge
Reale Yacht Club Canoltieri Savoia, Italy Syndicale: Mascalzone Latina Challenge;
Société Nautique Genève, Switzerland Syndicale: Alinghi Swiss Challenge;
Seattle Yacht Club, United States Syndicale: Oneworld Challcnge;
Union Nationale pour la Course au Large, France Syndicale: Le Défi Areva;
Yacht Club Punta Ala, Italy Syndicale: The Prada Challenge.
,1,1
1
1. Introduction
1THE BOOK
La Coupe est morte, vive la Coupe. The America's Cup XXXI ended on 2 March 2003. The America's Cup XXXJl immediately started with a new challenge being presented by the San Francisco Golden Gate Yacht Club to the new defender, Société Nautique de Genève.
Even tbough each Cup is govemed by its own rules, the members of the Ameriea's Cup XXXI Arbitration Panel thought that their experiences might be helpful to future participants. They have thus deeided to end three years of almost day-to-day collaboration by assembling, organising and publishing their decisions.
Choices have been made. This book con tains what they believe to be the most relevant documents.2 They include the America's Cup Deed of Gilt of 1887, the Protocol governing the America 's Cup XXX! and the decisions of the Arbitration Panel.
Alter this brief introduction, the documents are presented in an organized and, in respect of the decisions, chronologica! manner. The book concludes with the America's Cup XXXIT Protocol and a keyword index.
FORMATION OF AN ARllITRATTON PANEL
The appointment of an Arbin'ation Panel as one of three bodies to determine disputes relating to the XXXth America's Cup, was fust set in place following the victory of the Royal New Zealand Yacht Squadron in the America's Cup on 15 May 1995. So began a new process for the resolution of disputes relating to the selection of challengers for an America's Cup match and the determination of an America's Cup match itself, as weIl as other matters set out in the Protocol agreed between the Defender and the Challenger of Record.
1. The authors would like ta cxtcnd theÎr thallks ta Mr. Stefano Perucchi, associale of Prof. Henry Peter, for his precious collaboration in prcparmg Ihis book and to Mr. Mélrtin Foster, the Arbitra·
lion Panel's Registrar, for his help throughout the XXXI America's Cup and in respect of collecting the relevant material for Ihis work.
2. Sec dctailed table of contents, page v of the present book.
Introduction
The America's Cup Arbitration Panel for the America's Cup XXXI was established by a ProtocoP entered into by tbe Royal New Zealand Yacht Squadron as the defender, and the challenger of record, the Yacht Club Punta Ala.
BACKGROUND
The history of the America's Cup began with a group of members of the then fledgling New York Yacht Club. Excited by news that the first of the great Royal Expositions was to be held in England in 1851, they decided that an appropriate part of the festivities would be to demonstrate the superiority of American yachting. The New York Yacht Club commodore, John C Stevens, wrote to tbe commodore of the Royal Yacht Squadron, the Earl of Walton, suggesting a race between the best yachts of both nations. His Lordship not only approved the idea but dropped hints of large cash wagers on the contest. His response was weil received by the New Yorkers.
The Americans held trials. They selected a yacht which proved to be remarkably fast. The British heard how fast "America" was. While they were most hospitable, they were very slow to arrange races and less enthusiastic to agree to wagers. Tt was decided that a race would be conducted in conjunction with the Royal Yacht Squadron's regatta to be sailed on 22 August 1851. "America" competed against 15 English cutters and schooners ranging in size from 47 tOlme "Aurora" to 392 tOlme "Brilliant".
"America" won the race with "Aurora" by 8 minutes. The race was not witbout con- troversy. A protest was lodged that the "America" had sailed on the wrong side of the Nab Lighthouse and had, as a result, cut the corner. The protest was dismissed. Jt was found that the sailing instructions did not specify which side of The Nab was to be passed and accordingly the win stood.
The history of the Cup which followed is full of rule changes, disputes, alleged manipulation of protests and the like. Il is not the purpose of this introduction to review that history.
THE PRESENT DEED OF GlFT
The Cup fust known as the One Hundred Guineas Cup and later as the America's Cup was donated by the six owners of the yacht "America" to the New York Yacht Club in 1857. Tt was twice returned to George Schuyler, the sole surviving donor, when ques- tions arose as to the terms of the trust in which the Cup was to be held. The present Deed of Gift4 was executed in 1887. That deed donated the Cup to the New York Yacht Club to be held in trust upon the condition that
3. Sec page 47 of the present book.
4. See page 15 of the present book.
2
Introduclion
any organized Yacht Club of a Foreign country ( ... ) having for its annual regatta on ocean water course on the sea or on an arm of the sea ( ... ) shall be entitled to the right of sailing a match for this Cup, with a yacht or vessel propelled by sails only and constructed in the countTy to which the Challenging Club belongs, against any one yacht or vessel con- structed in the country of the Club holding the Cup
and that
it shaH be preserved as a perpetuai Challenge Cup for friendly competition between Foreign countries.
Under the Deed of gift the holder of the Cup is its sole trustee. Provision is made in the Deed for the defender and the challenger to agree on the terms under which a challenge is to be held. If the parties do not agree the Deed specifies how the challenge is to be completed.
NEW TRUSTEE
The Cup remained with the New York Yacht Club until 1983. As had by then become customary, a selection series was held. A fter a three stage round robin contest
"Australia II'' won thraugh. The challenge was throwo ioto controversy with claims of breaches of the rules. The contest, however, was run and "Australia Tl", with John Bertrand at the helm, came from behind after losing the first three races, to win the America's Cup. For the tirst time in its history, a new trustee became responsible for running the defence of America's Clip matches.
In 1986 and 1987 thirteen yacht clubs representing six nations competed to deter- mine which would challenge the Royal Perth Yacht Club of Australia for sports' oldest trophy. Dennis Conner, sailing "Stars and Stripes 87" from the San Diego Yacht Club, both won the challenger elimination series and then went on to defeat the defender
"Kookaburra III" sailing for the Royal Perth Yacht Club, four races to none.
The America's Cup again had a new trustee, the San Diego Yacht Club.
THE MERCURY BAY BOATlNG CLUB CHALLENGE
The San Diego Yacht Club planned to defend the Cnp in 1990 or 1991 with the interna- tional 12 melre class yachts. Before arrangements were finalised, a New Zealand Yacht Club, the Mercury Bay Boating Club, issued a notice of challenge to the San Diego Yacht Club. For previous Cups, the New York Yacht Club, as trustee, had followed the practice of issuing an announcement during the course of a match that if it were success- fui in defending the Cup, it would hold the next race at a certain rime and at a certain place.
lt also announced that the match would be sailed in the 12 metre class of yacht and that ail challenges received by a given date would be treated as received simultaneously.
Introduction
The San Diego Yacht Club did not follow this course. By failing to take that step it opened the way for a challenge by the Mercury Bay Boating Club, which demanded to sail in a new type of boat, a 90 footer, that became known as the Big Boat.
The reason was described in the judgement of New York State Supreme Court Judge Carmen Beauchamp Ciparick that:
The San Diego Yacht Club was apparently delaycd by disagreements with its contractual agents for the defence of the Cup, sail America Cup. and how the defencc should be handled.
There followed a series of Court applications. The Mercury Bay Boating Club commenced an action in the New York State Supreme Court which has j urisdiction over the Deed of Gift, seeking a declaration tbat its challenge was valid and an injunction prohibiting the San Diego Yacht Club from considering other challengers until the Mercury Bay Boating Club challenge was decided. The San Diego Yacht Club COI11-
menced an action seeking an interpretation of the deed of gift authorising the continua- tion of the traditional 12 metre yacht elimination series which had been employed by the New York Yacht Club and later by the Royal Perth Yacht Club. The San Diego Yacht Club application was rejected by the Court. The Mercury Bay Boating Club challenge was found to be valid.
The Court went on to hold that the San Diego Yacht Club's options were:
To accept the challenge, forfeit the Cup, or negotiate agreeable terms with the challenger.
Attempts were made to negotiate tenns. Nothillg came of those negotiations. The result was that in late January 1988, the San Diego Yacht Club announced its decision to race a catamaran who se dimensions were considerably smaller than the mono-hull yacht which had been notified in the Mercury Bay Boating Club challenge. The parties wen! back to court. The Mercury Bay Boating Club asserted that the San Diego Yacht Club was in contempt of Court and argued that the use of a catamaran made meaning- less the match to which it was entitled un der the deed of gift. The Supreme Court denied the application and directed the parties to reserve any protests until the com- pletion of the America's Cup races. Those races were held on 7 and 9 September 1988 and resulted in the San Diego Yacht Club's catamaran skippered by Dennis Conner defeatillg by Iwo races to nil the Mercury Bay Boating Club's mono-hull "New Zealand"
skippered by David Barnes.
The parties again went to court. The Mercury Bay Boating Club moved to have the results of the race set aside and itself declared the winner. On 28 Mareil 1989, Judge Ciparick awarded the America's Cup to the Mercury Bay Boating Club. The San Diego Yacht Club lodged an appea!. In September 1989 the Appellate Division of the Supreme Court reversed Judge Ciparick's decision and found that the San Diego Yacht Club's catamaran was an eligible vessel and that therefore the San Diego Yacht Club was the rightful holder of the America's Cup. The Mercury Bay Boating Club lodged an appeal to the State of New York Court of Appeals. That Court, in a decision with
4
Introduction
five opinions in support and two opposing,' concluded that nowhere in the deed of gift had the donors expressed an intention to prohibit the use of multi-hull vessels or to require the defender of the Cup to race a vessel of the type to be used by the challenger. It also rejected the Mercury Bay Boating Club's contention that the phrase
"friendly competition between countries" denoted a requirement that the defender race a vessel of the same type or even substantially similar to the challenging vesse!. The Cup remained with the San Diego Yacht Club. The way the match occmred, ending up spending more time and energy in court then on water, however proved to be not only highly unsatisfactory but indeed damaging for the image and spirit of the venerable institution.
The Mercury Bay Boating Club challenge marked the beginning of the modern America 's Cup. Although the challenge is to be made by yacht clubs, it was becoming evident that both a defence of and challenges for the America 's Cup might weil be dominated by one or several individuals who were providing the funding. In the Americas Cup XXVll, in the ~fficial record of 1988, the authors conunen!:
We can expect more challenges from 'token' yacht clubs such as Secret Coye (Canada) and Mercury Bay (New Zealand), dominated by one or several individuals. The challengers won 't always corne from a yacht club with the traditions and stature of the past and present defending clubs.
THE SAN DIEGO PROTOCOLS
Not surprisingly, following the conclusion of the Court cases, the San Diego Yacht Club established a protocol on 8 September 1988 covering its defence. Because San Diego is a region of light winds, the Club decided that the international 12 metre class was not a viable boat. An international group of designers developed the new Inter- national America's Cup class. In short, there were two new developments. First, a formai protocol to which ail challengers had to subscribe. Second a new international ciass with its Qwn class fuIes and measurement requirements.
After successfully defending the America's Cup in 1992, San Diego Yacht Club adopted a new Protocol on 13 May 1992. Both Protocols established by the San Diego Yacht Club formed a trustees committee comprising representatives appointed by each of the former trustees, namely the New York Yacht Club, the Royal Perth Yacht Club and the San Diego Yacht Club. The committee was known as the Trustees' Committee.
By each Protocol the committee was empowered as follows:
a. rcsolve disputes bctwccn the San Diego Yacht Club and the challenger of record (which may act on behalf of individual challengers) other than disputes concerning the radng rules or any applicable c1ass or rating mie;
5. Sec page 19 of the present book.
introduction
b. in the cvcnt of disagreement among the challengers, to designate the challenger of record; and
c. in the event of a disagreement between the San Diego Yacht Club and the challenger of record to determine the mu tuaI consent items which were identificd in the Protocol.
Both Protocols contained a statement that the San Diego Yacht Club believed:
That a mechanism for the rcsolution of disagreel11cnts between the defending yacht club and the challcnging yacht clubs without resort to litigation is highly dcsirable.
The San Diego Protocol gave notice of its position should it win the XXIX America '5 Cup. The Protocol provided:
soye
will maintain the current Interpretivc Resolutions concerning nationality forAmerica's Cup XXIX. However, should SDYC successfully defcnd in XXIX, SDye
intends to tighten up the nationality rules for XXX to better maintain the provision in the deed of gift for "friendly competition bctween foreign countries".
That reference to trustees' resolutions relates to a series of resolutions passed by the previous trustecs commencing with the 1958 resolution which was adopted on 27 Mareh 1958.
THE RNZYS PROTOCOLS
ln May 1995, the Royal New Zealand Yacht Squadron's "Black Magic" eompleted a five to nil series win of the America's Cup. And so a new trustee was found for the America's Cup. A new protocol was prepared and the New York Yacht Club accepted an invitation to become the challenger of record. 11 became responsible for the con- duct of the challenger elimination series. That new Protocol was a lengtby document.
It provided limits on the number of yachts per syndicates and strict limits on modifica-
tions. Tt introduced a requirement that competing yacht clubs had to show a five-year track history. Spying was outlawed.
THE PROTOCOL FOR THE AMERICA 's Cup XXXI
With its successful defence of the America's Cup XXX, the Royal New Zealand Yacht Squadron prepared a further Protocol to govern the America's Cup XXXI.6 Yacht Club Punta Ala became the challenger of record.
The Protocol for the America's Cup XXXI set out the rules which were to apply.
They were:
6. Sec page 47 orthe present book.
6
-
introduction
a. the Deed of Gift, the lnterpretive Resolutions and the Decisions of the Arbitration Panel;
b. the Protocol;
c. the Conditions;
d. the Racing Rules as agreed and adopted by CORO and administered by a jury appointed by CORD; and
e. the International America's Cup Class Rule version 3.
The Interpretive Resolutions were the resolutions adopted by the past trustees of the America's Cup.
The Conditions were in effect the notice of race and sailing instructions.
The Racing Rules adopted were an adaptation of the International Sailing Federa- tion (ISAF's) racing rules of sailing to cover match racing.
Finally, the International America's Cup Class Rule version 3 applied. In short those rules provided the specific dimensions and general parameters that a yacht must meet to qualify to be registercd as an America's Cup class yacht. The applicable rules were of course a specifie modification of the general provisions contained in the Deed of Gift as to the requirements of a yacht participating in the America's Cup.
The Protocol and Conditions made provision for three bodies which had separate and independent roles. Their respective jurisdictions were mutually exclusive.
Those bodies were the America's Cup Arbitration Panel, the International Jury and the Measurement Committee.
Since it appeared later that there could be a grey area regarding the respective jurisdiction of the Arbitration Panel and of the International Jury in respect of inter- preting and resolving disputes regarding certain matters, the signalories of the Pro- tocol executed a "Clarification # 1" on 30 October 20027 pursuant to which:
RNZYS and YCPY agree that, by executing the Protocol, they intended to, and hereby do, asslgn responsibilities for the interpretation of documents govcrning racing and the reso!u- tion of disputes as follows:
1. The Americas' Cup Arbitration Pancl ("ACAP") rcmains empowcrcd to interpret and resolve disputes in accordance with Article 22.3 of the Protacal in COIU1cction wÎth any matters rclating to the Dccd ofOift, Interpretive Resolutions, the decisions of the Arbitration Panel and the Protocol, and to mediate any dif'ferences in accordance with Article 5.3 of the Protoeo!.
2. The Jury is rcsponsible for interpreting and rcsolving the disputes on the LVC and Match Conditions, Sailing Instructions and Racing Rules of Sailing, cxcept where any provision of these rules Îs in conflict or is originated or connected with provisions of any of the documents listed under 1 above. In this case any questions regarding inter- pretation of such docwnents shall be referred by the Jury to the ACAP TI,e Jury shall be bound by the ACAP's interpretation.
7. See page 73 or the present book.
Introduction
Nothing in this clarification shaH alter or modify the procedures for amending the Protocol, LYC and Match Conditions or Sailing Instructions.
These Clarifications arc applicable to the Louis Vuitton Cup and the XXXI America 's Cup Match.
Despite this clarification, on one occasion both an application was filed with the Arbitration Panel and a protest lodged with the Jury. This was in November 2002 because the selection series was in process and a challenger felt that it had to challenge the right of its opponent, Seattle Yacht Club / One World Challenge, to take part in the regattas. The view taken by the Jury was that it had to stay its decision until the Arbitration Panel had issued its decision regarding the right of Seattle Yacht Club / One World Challenge to take part in the series. That right was affirmed in Arbitration Panel's decisions, ACAP 021118 and ACAP 02/129 subject to a certain penalty. The protest was therefore withdrawn.
THE INTERNATIONAL JURY
Matters pertaining to the yacht racing rules, that is rights of way on the race course and matters generally covered by the Racing Rules of Sailing, were placed within the exclu- sive jmisdiction of umpires who act as referees on the race course and who are members of the Intemational Jury. Umpires can require one of the competing yachts to undertake penalty turns, which are generally 270' tums, if they commit a breach of the Racing Rules of Sailing. The International Jury also dealt with certain matters collectively which involve the interpretation or resolution of disputes arising directly out of the Racing Rules of Sailing. In those cases, the International Jury held a hearing. Those familiar with yacht club protest hearings will be aware of the general nature of these hearings.
THE MEASUREMENT COMMl'fTEE
The Measurement Connnittee had exclusive jurisdiction to interpret the rules of the America 's Cup class of yacht. !ts decision was final. Where a measurement issue or a technical issue arose before the America's Cup Arbitration Panel, it was required to consult the Measurement Connnittee on that particular issue. The America's Cup Arbi- tration Panel was bound by the advice it received. The provision in the Protocol on this matter echoes Rule 64.3 of the Racing Rules of Sailing which requires a yacht club protest committee, when it is in doubt about a measurement rule, ta refer the issue ta the appropriate authority. Rule 64.3 binds the protest cOlll111ittee to any reply it receives from the par6cular measurement authority.
8. See page 221 of the present book.
9. See page 221 of the present book.
8
Introduction
THE AMERICA'S Cup ARBITRATlON PANEL
The Protocol established an America's Cup Arbitration Panel of five persans. Two were selected by the Royal New Zealand Yacht Squadron, as holder of the Cup. Two were selected by the initial challenger, called "Challenger of Record", that is, Yacht Club Punta Ala. The fifth member, who, pursuant ta Article 22.1 of the Protocol, was ta be the Chairman of the Arbitration Panel, was appointed by the four members ah'eady selected.
Article 22.2 of the Protocol sets out the criteria for selection. Panel members:
a. may be a resident or citizen of ally country participating in the XXXI America's Cup competition or trials whcthcr or not thcy have significant interest in the dispute or issue;
b. shaH posscss knowledge of America's Cup history, the Deed ofGift and the Interpreta- tive Resolutions;
c. shaH possess good gencral knowlcdge of yacht racing and yacht clubs; and d. shaH be known to be fair minded and possess good judgment.
The Royal New Zealand Yacht Squadron appointed Sir David Tompkins QC, a retired Judge of the High Court, and John Faire, a Master of the High Court.
Yacht Club Punta Ala appointed Ml' Donald Manasse, an American lawyer practis- ing at the French Bar in Nice and in the Principality of Monaco, and Professor Henry Peter, a lawyer and member of the Faculty of the University of Geneva, Switzerland.
These four appointed MT Femando Pombo, a Spanish lawyer as chairman. On 17 Oecember 200 l Profcssor Pombo resigned. He took this step ta avoid a potential confiict of interest. On the same day, the four members of the Panel appointed the Honourable Michael Foster QC as chairman. He is a retired Federal Court Judge in Australia. He also currently sits as an acting Judge in the Supreme Court and Court of Appeal of New South Wales.
Al! members of the Panel are or have been active yacht racing sailors and have had substantial involvement with the sport.
The Panel appointed Martin Foster as its RegistraI'. Martin Foster is a former executive director of the New Zealand Yachting Federation, now renamed Yachting New Zealand. He also acted as a Transport Licensing AuthOlity in the greater Auck- land area for a number of years. His taslc was ta handle the considerable volume of administration for the Panel.
Panel members were not paid.
The Panel's jurisdiction is set out in Article 22.3 of the Protocol. Article 23 is an interpretation article.
RULES OF PROCEDURE
Pursuant to Article 22.6 of the Protocol, procedural rules had ta be drafted by the Panel and these rules had ta be approved by a committee representing the defender club and the challenger of record.
Introduction
The America's Cup Arbitration Panel prepared and had approved procedural rules.
They are known as the America's Cup Panel Rules 2001.'0 They are driven by bath the necessity ta issue a decision expeditiously and the desire ta guarantee ta ail parties involved that the rules of natural justice and due process are satisfied. They provide for the rnaking of written applications and written responses. Evidence was ta be given by affidavit. Provision was made for directions as ta service and confidentiality issues.
Confidentiality is a difficult problem in tItis arena. The event is very rnuch about having the fastest yacht. Protecting ail aspects of design and arrangements made between the competing clubs and the syndicates representing them and the sailors and their designers is crucial. lt was often difficult ta ensure that sufficient disclosure was made for other clubs ta comment on the material advanced, but, at the same time, ta protect the intellec- tuaI property rights or contr'actual arrangements of one of the parties.
The procedural rules also provided for the holding of conferences and general1y gave the Panel appropriate management tools ta ensure that applications could be dis- posed of prornptly. The Protocol authorised the America's Cup Arbitration Panel to hold its hearings and meetings by telephone or by audio visuallink up.
With the exception of one hearing, the Arbitration Panel decided ail applications on the papers. Panel members discussed applications by an exchange of emails and by using intemational telephone conference calls. The system worked weil and enabled decisions on most applications ta be issued promptly.
One application, however, illvolved a serious challenge of compliance by one syndicate. An oral hearing was required. The Panel was assembled in Auckland.
Deponents were cross-examined over a two day hearing. A decision was issued shortly after the hearing.' , That was followed shortly after by the reasons. The result was that the sailing programme was able ta proceed without amendment.
lt was fortunate that the parties and their legal advisers co-operated weIl. The result is now public knowledge. One club (syndicate) was penalised a point in respect of each part of the remaining sections of the Louis Vuitton Challenger Cup series and, if necessary, the America's Cup Match itself.
The Protocol provides that, in case a decision is not unanimous, it shall only be signed by the members supporting the decision. The possibility to issue dissenting decisions is expressly provided. Ali 22 decisions rendered by the Arbitration Panel were however unanimous.
As a matter of principle, it was foreseen that the decisions would be published and the Panel would deterrnine that, for reasons of confidentiality or for any other rea- son, the publication should be restricted in the rnanner that the Panel would determine.
The Arbitr'ation Panel has not found that any decision required such restrictions.
10. See page 75 of the present book.
11. SeeACAP 02/11 and ACAP 02/12.
JO
In traduction
THE PANEL'S (22) DECISIONS
The Arbitration Panel issued 22 decisions, the tirst on 17 December 2000 and the last on 9 December 2002. They are all published in this book in full.12
For the sake of convenience, the decisions are referred to by using the abbrevia- tion "ACAP", which stands for "America's Cup Arbitration Panel", followed by numbers the tirst two of which are the last numbers of the then eurrent year and the third one being the progressive number of the decisions rendered in such year. This takes into account decisions rendered by the Arbitration Panel of the XXXth Cup. ACAP 00/6 therefore is the sixth decision rendered during the year 2000 (tive having been rendered by the XXXth America 's Cup Arbitration Panel and this one being the tirst issued by the Americas' Cup XXXI Panel).
The importance, complexity and length of the decisions vary considerably. The authors of this book have decided not to make a selection and to publish them ail. For the sake of eonvenience, a bullet point summary has been placed at the beginning of each decision. Also, a key word index is to be found at the end of this book which may help to find which of the key arguments are dealt with in which decision. \3
By and large, the applicant's applications tended to fall into three general categOiies.
They were:
a. where the Panel was asked to rule whether or not a particular course of action might breach the Protocol. These applications were permitted by the Panel where they were seen to involve real situations and not simply hypothetical ones. The advantage in giving a ruling before a breach occurred is that the club (syndicate) involved can take appropriate action to ensure that the Protocol is not breached.
The Panel took the view that a purely hypothetical ruling was not appropria te.
ln one case which came before the America's Cup Arbitration Panel assembled for the (year 2000) America 's Cup, a decision in a hypothetical case had the effect of causing one of the contestants sufficient eoncern so that it made an application to the Panel. Unfortunately, for that club, the result was the imposition of a penalty;
b. in respect of questions of eligibility. Questions under this head were whether a particular designer or sailor could be employed by the club (syndicate) without the club (syndicate) breaching the Protocol. Again, the answer that the Panel gives on such an application enables the club (syndicate) to avoid a breach of the rules;
c. in case of disputes between clubs (syndicates) when one alleges a breacb of the relevant rules by the other.
12. With exception of ACAP 02/11 and 02/12 in which, on legal grounds, porlions of the decision have been omincd as Ihey may relate to currcnt pcnding litigation.
13. Sec page 261 of the present book.
Introduction
The Protocol provided in Article 22.8:
Where no penalty is specifically provided for a breach of ally of the provisions of this Protocol, the Conditions, the Deed of Gift, the Interpretative Resolutions or decisions of the Arbitration Panel, the Panel shaH determine and impose sueh penalty as it eonsiders appropriate having regard ta the nature and manner of the particular breach.
ln many situations which came before the Panel there was no specifie penalty provided. The Panel was given discretion but no direct guidance from the Protocol itself. That is an over-simplification of the position. The Panel members were, of course, selected because oftheir knowledge of yacht racing. The Racing Rules ofSailing have a section dealing with penalties which requires the disqualification of the infringing yacht unless sorne other specifie penalty applies. The yachts involved in the Louis Vuitton series were involved in a series of races thus giving a range of penalty options to the Pane!. At the highest level was the power of the Panel to declare that the club should not be eligible to challenge the defender for the America's Cup. There was also, by implication, the power of the Panel to declare, in an appropriate case, that the defender should be disqualified for serious breach resulting in the loss of the right to hold the America's Cup.
Those Iwo situations are the worst case scenarios from the competitors' point of view. ln addition, the Panel, in sorne instances, can impose fines. This was often appropriate in situations where the breach was seen to have no, or virtually no, effect on the outcome which was anticipated to occur on the race course itself.
PROHIBITION FROM ACCESS TO COURTS
The Protocol provided that, as a condition of entry as a challenger in the America's Cup XXXI, ail challengers agree that they would be bound by ail the provisions of the Protoco!. Article 10.3 of the Protocol provided that each challenger and defender was deemed to have undeltaken that they would not
... in relation ta any matter govemed by this Protocol or in relation to any other matter con- cerning the XXXI America's Cup, issue proeeedings or suit in any court or other tribunal against ail or any of the foHowing: ...
The Iist included any challenger, the defender, any race official, the Measurement Committee and the Arbitt·ation Pane!. The Article did permit proceedings in court in respect of any claim for property damage or personal in jury.
It follows that the decision of the Arbitration Panel on any matter properly referred to it was fina!. There was no right of appea!. Tbere was no right to resort to the court to challenge the Panel's fuldings. Although it has not yet been tested, it would appear that the provision of Article 10.3 would also prevent any party from seeking judieial review of a Panel's decision on the grounds of lack of jurisdiction, breacll of
the rules or natural justice, etc.
12
Introduction
Article 6.4 provided that no challenger should be accepted as a challenger under the Deed of Gifi unless it had declared that it had and would comply with the Protocol.
Article 10.2 provided that any challenger who resorted ta any court or tribunal other than the Arbitration Panel would be in breach of the Protocol and would accordillgly be ineligible ta make the declaration required by Article 6 and ta be the challenger for the match. Sa the combined effects of ail these provisions amount ta a powerful deterrent against any participant resorting to the courts. These provisions became the subject matter of an application to the Panel. The decision is contained in this book.'4 These provisions against resorting to the courts must be contrasted with the short pro- vision contained in the San Diego Protocol which simply contained a statement of intent. That statement of intent was that a trustees' committee was formed because of a belief that a mechanism for resolving disputes without resort to litigation was highly desirable.
Prohibiting access to courts is not unique to the Protocol. The Racing Rules of Sailing, which are enacted by the International Sailing Federation, contains, in Part 1 under tbe heading FUlldamental rules, such a requirement. The operalive part provides:
By participating in a race cooducted uoder these racing rules, cach competitor and boat owncr agrces ... with respect to sncb detenninatioll, Ilot to resort to any court or other tri- bunal not provided by the rules.
The sanctions which are provided in the Racing Rules of Sailing for such a breach of the rule include the taking of action before the appropriate body, incJuding the appropriate national authority, under the gross misconduct section in the Racing Rules of Sailing. As part of the rules, there is power to suspend the party concerned from eligibility ta compete in future events. Il can lead ta a reference ta the International Sailing Federation for it to take what action it considers appropriate.
At the time of publication of this book, the object of providing for a dispute resolu- tion process which was exclusive of any other type of proceeding appears ta have been achieved.
DEEDS OF WArVER AND INDEMNITY FOR PANEL MEMBERS
Saon afier their appointment to the Panel, the members sought fi·om the participants, contractual arrangements, that would give the Panel members immunity from suit.
The Panel members were carrying out their function voluntarily. Since they receive no remuneration, they did not consider the obligation was on them to obtain the necessary protection. The Panel sought, from the participants, a comprehensive in surance policy and a waiver and indemnity by or against any cJaims which might not be adequately covered by any insurance poJicy. This issue proved ta be bath diflicult and protracted.
14. See ACAP 02/6 page 195 of the present book.
introduction
The participants were in agreement that the Panel members should not be exposed to any risk of personal liability, but were not, at least initially, in agreement on how this result could be achieved.
The problem was that the participants were, in practical terms, the syndicates who were the agents of the clubs, who under the Deed of Gift make up the challengers and the defender. Whilst a policy of insurance could be, and indeed has been, obtained, the insurer was not prepared to cxtend that insurance for the period of possible liability, that is six years after the final race in the Match for the Cup. Once the Match was over, the syndicates are likely to be wound up, or even ifthey were not, to have little in the way of assets. The clubs wcre not prepared to enter into a personal liability placing the assets of the clubs at risk.
This matter was resolved. In summaty the nature of the deeds that the challengers, the defender and ail the syndicates entered into provide that ail parties agreed to:
a. expressly waive any Iight to c1aim against Panel rnernbers;
b. provide a comprehensive policy of illsurance;
c. covenant that whichever club wins the Cup and therefore becomes the defender for the next Match will use its best endeavours to renew the insurance cover on similar terrns and obtain waivers and indemnities fl-Olll future challengers and give thern itself.
The Panel was satislied that, whilst not providing the equivalent of judicial immu- nity against suit, these arrangements do provide an acceptable level of protection.
DISPUTE RESOLUTION DURING THE AMERICA'S CUP XXXII
On 2 March 2003, Société Nautique de Genève, as Defender, and the Golden Gate Yacht Cub, as Challenger of Record, executed the Protocol goveming the America's Cup XXXII. 15 Article 21 of such new Protocol, under the title "Dispute resolution and jury", provides for the America's Cup XXXU dispute resolution system. It is not the intcntion of the members of the America's Cup XXXI Arbitration Panel to comment on these provisions, nor would this be appropriate.
lt has just been considered useful ta include the new Protocol in this book since, in a way, il closes a cycle and establishes the basis for the new cvent.
15. Sec page 233 of the present book.
14
John Faire Michael Foster Donald Manasse Henry Peter David Tomp/ans 15 April 2003
2 . Deed of Gift of 24 October 1887
This Deed of Gift, made the twenty-fourth day of October, one thousand eight hun- dred and eighty-seven, between George L. Schuyler as the sole surviving owner of the Cup won by the yacht AMERICA at Cowes, England, on the twenty-second day of August. one thousand eight hundred and fifty-one, of the first part, and the New York Yacht Club, of the second part, as amended by an arder of the Supreme Comt of the State of New York dated 17 December 1956, and 5 April 1985.
WITNESSETH
That the said party of the first part, for and in consideration of the premises and of the perfonllance of the conditions and agreements hereinafter set forth by the party of the second part, has granted, bargained, sold, assigned, transferred and set over, and by these present does grant, bat'gain, seU, assign, transfer, and set over, unto said party of the second part, its successors and assigns, the Cup won by the schooner yacht AMERICA, at Cowes, England, upon the twenty-second day of August, 1851. To have and ta hold the same ta the said party of the second part, its successors and assigns, IN TRUST, NEVERTHELESS, for the following uses and purposes:
This Cup is donated upon the conditions that it shaU be preserved as a perpetuai Challenge Cup for friendly competition between foreign countries.
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 on ocean water course on the sea, or on an arm of the sea, or one which combines bath, shall always be entitled ta the right of sailing a match for this Cup, with a yacht or vessel propeUed by sails only and constructed in the country ta which the Challenging Club belongs, against any one yacht or vessel constructed in the cmlll- try of the Club holding the Cup.
The competing yachts or vessels, if of one mast, shaU be not less than forty-four feet nor more than ninety feet on the load water-line; if of more than one mast they shaU be not less than eighty feet nor more than one hundred and fifteen feet on the load water-line.
The Challenging Club shaU give ten months' notice, in writing, naming the days for the proposed races; but no race shall be sailed in the days intervening between
Deed o/Gifi 0/24 Oc/aber 1887
November Ist and May Ist if the races are ta be conducted in the Northern Hemi- sphere; and no race shall be sailed in the days intervening between May 1 st and November Ist if the races are ta be conducted in the Southem Hemisphere.
Accompanying the ten months' notice of challenge there must be sent the name of the owner and a certificate of the name, rig, and following dimensions of the chal- lenging vessel, namely, length on load water-line; beam at load water-line and extreme beam; and draught of water; which dimensions shall not be exceeded; and a custom-house registry of the vessel must also be sent as saon as possible. Centre-board or sliding keel vessels shall always be allowed ta compete in any race for this Cup, and no restriction nor limitation whatever shall be placed upon tbe use of such centre-board or sliding keel, nor shall the centre-board or sliding keel be considered a part of the vessel for any put-poses of the measurement.
The Club challenging for the Cup and the Club holding the same may, by mutual consent, make any arrangement satisfactory ta bath as ta the dates, courses, number of trials, rules and sailing regulations, and any and all other conditions of the match, in which case also the ten 1110nths' notice 111ay be waived.
ln case the parties cannat mutually agree upon the tenns of a match, then three races shall be sailed, and the winner of Iwo of such races shall be entitled ta the Cup. All such races shall be on ocean courses, fTee from headlands, as follows: The first race, twenty nautical miles ta windward and return; the second race an equilateral tri- angular race of thirty-nine nautical miles, the first side of wbich shall be a beat ta windward; the third race (if necessary) twenty nautical miles ta windward and retum;
and one week day shall intervene belween the conclusion of one race and the stalting of the next race. These ocean courses shall be praclicable in a11 parts for vessels of Iwenty-two feet draught of water, and shall be selected by the Club holding the Cup;
and these races shall be sailed subject ta its rules and sailing regulations sa far as the same do not contiict with the provisions of this deed of gift, but without any times allowances whatever. The challenged Club shall not be required ta name its reprcsent- ative vessel until at a time agreed upon for the start, but tbe vessel when named must compete in all the races, and each of such races must be completed within seven hours.
Should the Club holding the Cup be for any cause dissolved, the Cup shall be transferred ta some Club of the same nationality, eligible the challenge under this deed of gift, in trust and subject ta its provisions. In the event of the failure of such transfer within three months after such dissolution, said Cup shall revert ta the preceding Club holding the same, and under the terrns of this deed of gift. It is distinctly understood that the Cup is ta be the property of the Club subject ta the provisions ofthis deed, and not the property of the owner or owners of any vessel winning a match.
No vessel which has been defeated in a match for this Cup can be again selected by any Club as its representative until after a contest for it by some other vessel has intervened, or until after the expiration of two years from the lime of such defeat. And wh en a challenge fi·om a Club fulfilling all the conditions required by this instrument has been received, no other challenge can be considered until the pending event has been decided.
16
Protocol XXXlJ America S Clip
from using the benefit oftheir experience, knowledge and ski Ils gained in the design and construction of ACC yachts built prior to the last race of the XXXI Match in 2003. Any information developed prior to the last race of the XXXI Match in 2003 lawfully available to ally persan may be used in the design, construction and assembly of an ACC yacht.
13.8 Acquiring Old ACC Yachts: A Competitor may acquire at any time an Old ACC yacht, or any of its components constructed priar to the last race of the XXXI America's Cup Match in 2003, including its plans and specifications and the design and performance information, relating to that Yacht, in exist- ence prior to the last race of the XXXl America's Cup Match in 2003.
13.9 Trading old design and performance information: A Competitor may acquire, until 1 October 2004, any design or performance information regarding any ACC Yacht from a lawful owner of such design or performance information provided that design or pelformance information existed prior to the end of the last race of the XXXI Match for the America 's Cup whether or not the ACC Yacht to which it relates has been acquired.
13.10 Size limitation for models: Any scale model or scaled down version of an ACC yacht (or other yacht, other than an ACC yacht, which could be meas- ured as an ACC yacht without significant modification) which is greater than one-third of the size of an actual ACC yacht (or such other yacht) is deemed to be a New ACC yacht for the purposes of this Article and shall be deemed to have been allocated a sail number under the ACC Rules.
13.11 Anti-avoidance: Any agreement, arrangement or understanding, whether legally enforceable or not, by one person or entity (in this paragraph "the first person"), whether then a Competitor or not, with any other person or entity (in this paragraph "the second person") that the second person will directly or indirectly build, acquire or otherwise obtain one or more yachts of whatever type (in this paragraph "other yachts") so that the first person can directly or indirectly obtain, in any manner whatever, design or performance information regarding the other yacht or yachts for use in the program of design, develop- ment or challenge of the first person, is prohibited.
13.12 Crew restricted to work for oruy one Competitor: A Competitor shall not engage a person in any capacity who has sailed on another Competitor's yacht as a race or training crewmember within a period commencing eighteen months prior to the fust race of the Match, except with the consent of ail Competitors still competing in the Regatta. A seventeenth person referred to in the ACC Rules shall not constitute a crew member for the pUl-poses of titis Article 13.12.
14. MODIFJCATfONS TO YACHTS
14.1 Purpose and inten!: The purpose of this Article 14 is ta maximize the use of ail ACC yachts, and to enable yachts to be reshaped in a cost effective manner.
Deed of Gif! of 24 October 1887
AND, the said party of the second part hereby aceepts the said Cup subject to the said trust, terms, and conditions, and hereby covenants and agrees ta and with said palty of the first part that it will faithfully and will fully see that the foregoing conditions are fully observed and complied with by any contestant for the said Cup during the holding thereof by it; and that it will assign, transfer, and deliver the said Cup ta the foreign Yacht Club whose representative yacht shall have won the sa me in accordance with the foregoing tenns and conditions, provided the said foreign Club shall, by instrument in writing lawfully executed, enter with sa id party of the second part into the like covenants as arc herein entered into by it, such instrument to contain a like provision for the successive assignees ta enter inta the same CQvenants with their respective assignors, and to be executed in duplicate, one to be retained by each Club, and a copy thereof to be forwarded to the sa id party of the second part.
WITNESS WHEREOF
The said party of the first part has hereunto set his hand and seal, and the said party of the second part has caused its corporate seal to be affixed to these presents and the same to be signed by its Commodore and attested by its Secretary, the day and year first above written.
George L. Schuylel; (L.S.) The New York Yach t Club by Elbridge T Geny, Commodore John H. Bird, Secretmy ln the presence of H. D. Hamilton (Seat of the New York Yacht Club)
17
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1
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