Emirates Team NZ takes Alinghi to court

Kiwis to seek financial compensation for the delay in holding the next America’s Cup.

Emirates Team New Zealand has confirmed it is to seek financial compensation for the delay in holding the next America’s Cup.

Managing Director Grant Dalton said today: “We have a duty to protect the investment in the team over many years by a wide range of loyal supporters. We also have an obligation to honour the trust shown by the hundreds of thousands of New Zealanders who have supported the team through the years.

“We have to ensure that when the next America’s Cup is held, Emirates Team New Zealand is still in very good shape and ready for the battle on the water.”

Dalton said today the 33rd America’s Cup was to have been held at Valencia in 2009. “It’s now probable we might not see a normal regatta until 2011. The delay in staging the next America’s Cup is harming every challenging syndicate as they have to stretch budgets for a two-year campaign over three or perhaps four years.”

He said the team had been working towards a challenge in 2009 when AC Management announced in November that the 33rd America’s Cup was to be delayed to a date to be decided.

“By then we had already done an enormous amount of work on the design of the new 90ft AC class boat. Design work is continuing, although with less urgency.”
He said the sailing team planned to stay sharp this year and had put together a comprehensive programme for 2008, with team members competing in a number of European regattas.

“ETNZ is fortunate in having the full support of sponsors, the New Zealand Government and team members. However the delay does come at a price and it seems prudent for the team to seek financial compensation. We are seeking compensation through American Courts from Alinghi, AC Management which is controlled by Ernesto Bertarelli and the defending yacht club, Société Nautique de Genève.

“We are doing this reluctantly but have no option,” Dalton said. “We would rather be racing.”

The first action, filed in the Supreme Court of the State of New York, claims damages for breach of contract arising from an agreement made as a pre-condition of ETNZ’s entry to the 33rd America’s Cup.

The agreement involved an understanding entered into by Ernesto Bertarelli that the America’s Cup would go ahead in 2009.

“That assurance was a pre-condition of our entry on July 25,” Dalton said. “Then on November 22 last year, before the Supreme Court of New York had even issued judgment on Golden Gate Yacht Club’s challenge to the validity of the Spanish challenge, AC Management, announced that the Cup would be delayed.

“Bertarelli had the chance to accept a reasonable proposal from Oracle, which was also signed by the majority of the challengers, and which would have allowed the America’s Cup to be held in 2009. He would not do so.”

The action also claims that SNG, as trustee of the Cup, through the actions of the other defendants has committed breaches of its fiduciary duties that trustees owe to maintain the standing and integrity of the Cup.

The second action has been filed in the Federal Court under United States anti-trust legislation, which is conceptually similar to New Zealand competition law.

ETNZ contends that Alinghi and the other defendants, abusing the power conferred to the defender under the Deed of Gift, has acted to stifle competition for the Cup and for the right that goes with it of conducting future events by accepting the Spanish CNEV (a paper yacht club of no substance) as the challenger of record, thereby enabling it to impose rules for the next event that were completely one-sided and which were designed to give Alinghi an unfair competitive advantage.

ETNZ also contends that Alinghi’s subsequent conduct in refusing to agree to a reasonable settlement of the BMW Oracle case, the unilateral and indefinite delaying of the Event from 2009 was all designed to and had the effect of increasing other teams’ costs, including those of ETNZ.

“It seems prudent to seek compensation to cover additional campaign costs and damage to our brand name and reputation and to the event in which we compete, the standing of which affects our ability to raise funds,” Dalton said.

He said the actions were being funded by sources other than sponsors and the New Zealand Government.