Truth and power
August 30, 2007, 4:25 pm
Filed under: America's Cup, Diary

The truth is a very powerful weapon in an armoury of deception (one of my little sayings) and everyone may need to be well protected over the coming couple of months as the lawyers square up to each other in the case of Golden Gate Yacht Club versus Société Nautique de Geneve. Michel Hodara, the chief operating officer of America’s Cup Management, who is increasingly fronting for an organisation in which CEO Michel Bonnefous said he would be taking a less high profile role, has been vindicated when he said that the timeline as being propounded is in fact later and longer than at first thought.

But it may not be too much longer, if opinions about Justice Herman Cahn, from those who claim to know, are correct. He apparently has a reputation for being a no-nonsense, cut to the chase kind of guy. If there is any flannel or irrelevant thinking from either side, expect him not just to be impatient but ruthless.

So some paperwork will be delivered by 5 September and there will be a hearing on 10 September. This is not expected to be a careful examination of the arguments, just depositions to help Justice Cahn decide if there is a case to be heard at all and if it is in the jurisdiction of his court. Best estimates say that any angry confrontation would not be until October.

By the way, there has already been an angry confrontation in the not so wonderful city of Copenhagen. It has been cold and miserable for the Farr 40 worlds, but some heat was injected from outside when Ernesto Bertarelli’s Alinghi asked that the chairman of the jury, Tom Ehman, should step down. As Ehman is at the centre of the litigation by GGYC, at the behest of BMW Oracle’s Larry Ellison, Alinghi, as a competitor, felt there could be some conflict of interest.

Ehman did not step down, doubtless because he thought that his four co-jurors would never allow themselves to be manipulated in what could be seen as vindictive behavour. But Bertarelli’s skipper, Brad Butterworth, is incensed and has written to the International Sailing Federation (ISAF) with a formal complaint.

The stage is being set for a bitter battle. Expect SNG (Alinghi) to have a formidable team of lawyers which will assert that the event already has a mechanism for resolving disputes. It is called the Arbitration Panel, appinted by ACM, and may well deliver an opinion prior to any court hearing. SNG may also say that any quarrels over mutual consent have been covered by the Club Nautico Espanol de Vela, the chosen Challenger of Record, having signed up to the new protocol – as,  by implication, have challengers from South Africa, United Kingdom, New Zealand and Germany.

Which leaves the case of the validity, under the terms of the Deed of Gift, of the CNEV challenge. That will doubtless give rise to long arguments over previous challenging clubs, not least the Mercury Bay and the SNG. But they went ahead, and so have the power of precedent. What everyone could do with is a tutorial on trust law in the New York Supreme Court. That is something which Justice Cahn is expected to give the highest priority.

Roll on the Rugby World Cup.  


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If you want to predict how the court case might go, read the decision from the 1988 AC case, available at:

Key point: to the extent the language of the Deed of Gift is unambiguous, the court will not look “beyond the four corners of the deed”. So if they decide that the deed unambiguously requires the challenger to have held an annual regatta at the time of its challenge, then it seems to me that CNEV would not be a valid challenger. It won’t matter whether Mercury Bay in 1987, SNG in 2003 or Desafio in 2007 were valid challengers. That is all “extrinsic evidence”. And a further question on which the court can rule: did SNG breach its fiduciary responsibility to the beneficiaries of the trust (yacht clubs that meet the requirements of the deed) by self-dealing with a sham challenger? Over to you, Judge Cahn.

Comment by Nick Carraway

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