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27 October 2009, 11:13 am
New 'Breach of Fiduciary Duty' Legal Challenge In America's Cup Battle
Alinghi 5 sailing
Alinghi 5 in action

33rd America's Cup

The court-battle surrounding the 33rd America's Cup Match took another twist on Monday when the Challenger, the Golden Gate Yacht Club filed a new court motion asking for the Defender, Société Nautique de Geneve, to be removed as Trustee of the Cup.
The latest court action comes ahead of a hearing scheduled to be held in the New York Supreme Court today, where the Golden Gate Yacht Club will argue the selection of Ras al-Khaimah in the UAE as the venue for the 33rd Match contravenes the provisions of the Deed of Gift.

The full release from the Golden Gate Yacht Club, and the response from Société Nautique de Genève are below.

Press release from the Golden Gate Yacht Club:

Reckless and repeated disregard in its stewardship of the America's Cup by the Société Nautique de Geneve (SNG) has prompted the Golden Gate Yacht Club (GGYC) to ask the New York Supreme Court to remove the Swiss yacht club from its position as Trustee in a Breach of Fiduciary Duty complaint filed today.

In its place, GGYC - the Challenger of Record the 33rd America's Cup - has requested the Court to appoint a faithful, fit and proper substitute to oversee the next Match to be sailed in 2010, starting 8 February.

A new Trustee would provide equitable terms for both competitors, something SNG has denied GGYC by its orchestration and manipulation of the rules and processes designed to ensure that the defending sailing team, Alinghi, can not lose.

GGYC, and its sailing team, BMW ORACLE Racing, remain committed to sailing the Match on the dates in February 2010 set by the Court. There is no desire by this action to change Alinghi's role as SNG's sailing team and defender.

Foremost among a catalogue of failures of SNG and listed in a Breach of Fiduciary Duty complaint are:

• Offering the America's Cup hosting rights in order to extract secret commercial deals

• Repeated attempts to seize control of the rules and officiating processes to ensure that Alinghi can not lose

• Moves to disqualify GGYC's yacht despite assurances to the New York Supreme Court that this would not happen

• Selecting Ras Al Khaimah for the 33rd Cup to further its own business interests whilst exposing GGYC to unnecessary danger

"Winning the Cup brings not just honor and pride, but responsibilities too. The honor may have gone, but the responsibilities remain," said Russell Coutts, Skipper and Chief Executive of GGYC's challenging team, BMW ORACLE Racing.

"The America's Cup is meant to be hard to win, not impossible to lose," added Coutts.

The complaint also states that the America's Cup was used as a powerful bargaining chip to extract enormous commercial benefits through secret and complex side deals in selecting Valencia and Ras Al Khaimah as host venues for the 32nd and 33rd Matches.

It is clear that entities associated with Ernesto Bertarelli leveraged the America's Cup for gain.

"SNG says it has the right to change the rules for the America's Cup races at any time and select all the umpires. It's like letting the Phillies change the rules for the World Series after it starts and select all the umpires," said David Boies, chairman of Boies, Schiller & Flexner.

"Basic fairness and sportsmanship require that a contest be played with set rules and judged by umpires free of interference. The Courts have already had to stop SNG from negotiating unfair rules with a sham competitor orchestrated by SNG. We hope that SNG will now abandon its efforts to win with rule manipulations and back-room deals. Let the best boat win on the water," added Boies.

GGYC is also contesting SNG's choice of Ras Al Khaimah in a separate case before the New York Supreme Court because it is in direct contravention of the Deed of Gift's clear stipulation that the Cup can only be sailed in the Northern Hemisphere between 1 May and 1 November.

Nevertheless as Trustee, and in breach of its duty, SNG did not consult GGYC at any stage in selecting Ras Al Khaimah, a location it knew did not meet the clear language of the Deed of Gift and one which exposes the American challenger to unnecessary danger.

SNG's actions since winning the America's Cup in 2003 and defending it 2007 has brought a clamor of complaint from the sailing community around the world.

"Ernesto Bertarelli has taken advantage of the Cup holder's inherent competitive balance in the Deed of Gift to absurd and obscene levels. By his actions on land he has tried to make sure that he can not be beaten on the water," commented Bill Koch, whose America3 team was the successful defender of the America's Cup in 1992.

Italy's Vincenzo Onorato, a three-time challenger, said of Alinghi's proposed rules for the next Cup: "This is the most unsporting document ever done."

The America's Cup has prospered for 158 years, despite the American Civil War, two World Wars and several economic depressions.

The oldest international trophy in sport is now in peril because of the selfish and self-serving acts of the Swiss yacht club, its representative sailing team Alinghi, America's Cup Management (both controlled by Ernesto Bertarelli) and other affiliates.

Statement from Société Nautique de Genève:

"By filing their eighth legal action against the Defender of the America's Cup in two years, Larry Ellison and his Golden Gate Yacht Club (GGYC) have demonstrated yet again that their true intention is to win sailing's most prestigious trophy in court instead of on the water. After failing in their attempts to circumvent the terms set in the governing Deed of Gift, Ellison is now seeking to snatch the Cup from Société Nautique de Genève (SNG) with a new round of baseless allegations," said Fred Meyer, Société Nautique de Genève Vice-Commodore. "As two-time winner of the America's Cup and organiser of what was widely considered the most successful America's Cup event ever in Valencia, Spain, in 2007, SNG and Alinghi will continue to fight for their legitimate rights in order to promote the sport of sailing around the world. We hope that GGYC will abandon this unsportsmanlike conduct and either join the competition on the waters off Ras Al Khaimah this February or let other teams who want to participate challenge for the Cup," he concluded.

Alinghi team skipper Brad Butterworth said: "BMW Oracle should clean up their unsportsmanlike behaviour with a dose of saltwater and sunshine and challenge for the Cup on the water. Otherwise they should stand aside and let other teams compete."

"The complaint is an affront to the America's Cup, to the UAE, to our country's relationship with an important ally, and to the judicial process. It is just a PR stunt. There is nothing in the complaint that hasn't been the subject of prior or pending legal proceedings. Basically, GGYC doesn't want to race SNG on the water after it disenfranchised 19 other clubs from competing in an elimination series and dislocated hundreds of sailors and participants in the sailing industry," concluded lead counsel for the Société Nautique de Genève, Barry Ostrager of Simpson Thacher & Bartlett.

Click here for all the news on the 33rd America's Cup

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