Brick wall

GGYC outline the events leading up to Ernesto Bertarelli's lawyer yesterday informing them they are "to stop all settlement discussions"

Wednesday November 14th 2007, Author: Jane Eagleson, Location: United Kingdom
Following the abrupt halt to negotiations between the Societe Nautique de Geneve and the Golden Gate YC, so the latter, represented by BMW Oracle Racing, have issued the following summary providing their take on proceedings to date between the two clubs:

Over the last four months the Golden Gate Yacht Club and others have been very intensively involved in efforts to address serious issues posed by the proposed protocol for the 33rd America’s Cup.

Concerns about the protocol turn on the unprecedented advantage and level of control it gives to the defender. GGYC has always said that it would have welcomed a protocol like the one used so successfully in Valencia for the last Cup. We believe nearly all other America’s Cup competitors would agree. We have never understood why the defender felt the need to radically rewrite the rules of the America’s Cup. But in the interests of finding a speedy resolution we have agreed to significant compromises.

To this end GGYC has been involved in detailed talks with challengers over several weeks to clearly identify the areas where useful changes can be made.

Indeed, on October 17 the challengers wrote to Alinghi, confirming that the talks and a resulting proposal by GGYC meant they believed we were “incredibly close” to a successful resolution. Unfortunately, that resolution never came about.

The following summary and related correspondence confirms widespread opposition among syndicates to the protocol from the outset; and records the defender’s repeated refusals, essentially without explanation, to enter mediation. It also outlines the disappointing fact that up until the last moment GGYC and the challengers genuinely believed a workable settlement was within reach.

In the correspondence included with this backgrounder we quote a letter from seven syndicates from the last event (of whom only two have re-entered) saying that the protocol is a threat to the survival of the modern America’s Cup. We agree. We are disappointed Alinghi have abruptly ended attempts to find a resolution, but we remain committed to returning the Cup to a genuinely competitive event. The Cup’s Deed of Gift is clear that it is a “Challenge Cup,” under terms agreed by mutual consent, and is not intended to be dictated by the defender. We want to see all entrants get a fair chance, and the Cup given the respect it deserves at the pinnacle of our sport.

Time line

July- August: First efforts to address protocol

July 5: Accepting a challenge from CNEV, Alinghi introduces a new protocol. This causes immediate concern among syndicates because of the defender’s unprecedented control over the event.

July 11: GGYC files a formal challenge for the Cup, on the basis that CNEV is not an “organized yacht club” as required by the Deed, and that CNEV’s challenge amounts to self-dealing by Alinghi with a paper entity.

July 13: Louis Vuitton, a major partner in the Cup for 25 years, withdraws from the event. A key figure in the Louis Vuitton Cup and America’s Cup Hall of Fame member, Bruno Troublé, will later publicly confirm his opposition to the new protocol and support for the GGYC court action.

July 16: Six syndicates from the previous event (Luna Rossa, Mascalzone Latino, Areva Challenge, United Internet Team Germany, Emirates Team New Zealand and BMW ORACLE Racing) write to CNEV insisting that they stand down as the Challenger of Record, and stating that the protocol puts the very survival of the America’s Cup at risk. They describe it as the “worst text in the history of the America’s Cup.” (See letter here)

July 19: SNG accepts a challenge by Royal Cape Yacht Club (Shosholoza), ignoring GGYC’s July 11 challenge.

July 20: GGYC initiates a legal challenge in the New York State Supreme Court where the Cup’s Deed of Gift is registered.

July 23: SNG rejects GGYC’s challenge, stating that CNEV’s challenge is valid.

July 25: A seventh syndicate, Victory Challenge, signs the July 16 protest letter against the protocol. Of the seven signatories to this letter only two will re-enter for the next event.

August 3: Vincenzo Onorato, of Mascalzone Latino, puts up a compromise proposal for a revised protocol to get the event back on track. GGYC supports this. Alinghi rejects it without discussion.

Late August: By now the international yachting media are widely condemning the protocol. Seahorse, in its September editorial; describes the protocol as, “so provocatively one-sided as to have potential as a spoof.”

September: Attempts to negotiate with Alinghi

September 10: Following a request by GGYC, the New York State Supreme Court grants an early hearing date – 22 October.

September 15: GGYC writes to Alinghi offering the names of ten respected international sports leaders as potential mediators. Alternatively it invites Alinghi to name a mediator of its choice. Alinghi do not respond.

September 18: Emirates Team New Zealand offers to provide a mediator. GGYC accepts this offer. Alinghi do not respond.

September 20: Alinghi announces a protocol amendment. This addresses some concerns about the Arbitration Panel, but in all other respects leaves Alinghi in control of the event. Weeks later it is discovered that amendments to the protocol as posted in the official text on the ACM website were substantially different from the “final draft” that was given to the teams and media by Alinghi when announcing the protocol amendments.

September 20: Alinghi issues a press release saying it has “again appealed” to GGYC to settle. Two hours later it writes to GGYC rejecting mediation. GGYC replies to Alinghi requesting a face to face meeting. Alinghi does not respond to this request. In the discussions that will follow its management team will continue to refuse to sit down with the GGYC team face to face.

October: Progress to court and discussions with challengers

October 3: ACM issues a press statement saying they may have to postpone the event. Individual challengers complain privately they were given no forewarning of this release.

October 10: Alinghi agrees to vary the displacement of the new boat to, at least in principle, negate Alinghi’s lead-time advantage in design development, but declines to enable this to be accurately checked, saying the design rule can only be seen by teams after they commit to the terms of the protocol.

October 17: GGYC writes to challengers offering further compromises around nine key points. The following day the challengers respond, writing to Alinghi they are “incredibly close” to achieving a resolution.

October 19: GGYC confirms that if potential challengers can ensure that Alinghi has not retained an unfair advantage in developing a boat then other outstanding points are close to resolution. Alinghi do not respond.

October 22: The case comes before Justice Herman Cahn, who says he will deliver a decision quickly.

October 23: Representatives of Alinghi and GGYC meet privately at the New York Yacht Club to explore possible settlement options, and all agree the nine-point compromise offered by GGYC, with further suggestions from the challengers, make settlement possible. GGYC promises to forward a formalized proposal to the challengers and Alinghi by Friday, 26 October.

October 25: GGYC emails a letter to the challengers and Alinghi detailing the nine-point compromise, further modified in accordance with suggestions by the challengers. An original of this letter is hand-delivered Friday morning to the Alinghi team base.

October 26: GGYC issues a press release saying that if Alinghi reveal the class rule and allow the American team to confirm that it is fair the other issues look to be readily resolvable.

October 28: Shortly after midnight on Sunday morning, Lucien Masmejan, Ernesto Bertarelli’s lawyer, sends an email saying “since [Tuesday] I did not hear from you” and “the offer we made to you in New York to settle…is no longer valid.”

October 31: Alinghi reveal the design rule and at the last minute agree to make it public. GGYC enters into due diligence to ensure this new rule does not give the defender a retained unfair advantage.

November 1: GGYC checks the rule. Two challengers provide the American club with some information and assurance that the changes to the original design by Alinghi have been significant. On this basis GGYC representatives meet by phone with Alinghi and a challenger who as a group agree that seven out of the nine points now appear to be resolved, and that the two outstanding points should be easy to resolve quickly. Alinghi undertakes to come back with a response on November 5.

November 4: President and vice-president of the Spanish Sailing Federation, and the two top officers of CNEV, Gerardo Pombo and Manuel Chirivella, tell Spanish reporters at a press conference on the opening day of the Barcelona Boat Show that CNEV was not a yacht club but a “legal adjustment”, created because they were told to do so by Valencia's authorities, and told by ACM to do so in secret.

November 5: Alinghi does not reply to GGYC as had been promised on November 1, despite several attempts to reach Lucien Masmejan.

November 7: Russell Coutts phones Lucien Masmejan to ask whether Alinghi are serious about settling. Masmejan says they are, but says that while they agree to most of the nine points they will not agree to any Protocol amendments, only to a letter of agreement. Without amendments to the Protocol any such agreement would not be binding on Alinghi. Nor could it be enforced in court because that would violate section 35 of the Protocol, “Resort to Courts Prohibited”, and subject a team to being expelled from the Cup. GGYC suggests meeting in Geneva to work through this issue and finalize the agreement.

November 8: GGYC continues to pursue an out of court agreement with the cooperation and support of several other challengers. GGYC asks why the Competition Regulations are going to be issued in the middle of these negotiations on the afternoon of the 8th, and are told by Lucien Masmejan that ‘they can be amended if necessary”. GGYC sends draft protocol amendment language as per SNG’s earlier request.
November 9: GGYC representative speaks with Lucien Masmejan regarding the remaining points and he states that the proposed protocol amendment language looks good, and that he will discuss the issues with his team on the weekend, and call on Monday, November 12. He says GGYC should send him any comments or concerns regarding the Competition Regulations. Lucien Masmejan suggests meeting in Geneva the following Tuesday.

November 12: In response to efforts to contact him during the day, Lucien Masmejan calls at 6:30pm, and in response to a GGYC request says he will set up a meeting with Alinghi designers and sailors to discuss the sporting issues the following evening. Meeting to include: Russell Coutts, Brad Butterworth, Grant Simmer and Tom Schnackenberg. This meeting is intended to also review the Competition Regulations so that any questions can be resolved quickly by drawing on the sporting knowledge of the participants.

November 13: In an early morning telephone call, Lucien Masmejan confirms that progress is promising, and agrees to talk again at 2:00pm to set up an evening conference call. However he does not call as agreed. GGYC leaves messages, and finally Lucien Masmejan calls at 3:45pm and says he is “sorry”, and that “SNG has sent a letter to GGYC and the decision has been made to stop all settlement discussions”. In the meantime GGYC receives a letter from SNG calling off negotiations.

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