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Article The America's Cup arbitration panel PETER, Henry Reference PETER, Henry. The America's Cup arbitration panel. ASA Bulletin, 2003, vol. 21, no. 2, p. 249-271 Available at: http://archive-ouverte.unige.ch/unige:30126 Disclaimer: layout of this document may differ from the published version. 1 / 1 The America' s Cup Arbitration Panel HENRY PETER' Introduction Ever since the schooner America sailed against 14 English yachts around the Isle of Wight on 22 August 1851 for what was then officially known as the Royal Yacht Squadron 'One Hundred Guineas Cup', later the America's Cup, contests for the Cup have been embroiled in controversy. Indeed, even after thal first race there was a protes!. The purpose of this paper is to pro vide an outline of the background and the task of the body known as the America's Cup Arbitration Panel which has been installed and issuing decisions throughout the America's Cup XXXI edition, i.e. between 2000 and 2003. A Background 1. The origin The America's Cup began when a small group of New York Yacht Club members decided thal an appropriate part of the festivities which were being organised for the first of the Great World Expositions, to be held in En gland in 1851, would be an important yacht race. Their objective, of course, was to 1 show the superiority of American yachting • The then New York Yacht Club commodore, John C. Steveus, wrote to the commodore of the Royal Yacht Squadron, the Earl of Wallon. He suggested thal a race be convened between the best yachts of bath nations. His Lordship thought !hat was an appropriate plan. The Americans held trials. They selected America, a yacht which proved to be remarkably fast. It was decided thal the race would be conducted in Dr. iur., Professorat the University of Geneva, Member of the 31st America's Cup Arbitration Panel See paper delivered by Master John Faire to LCIA and Arbitrators and Mediators Institute of New Zea!and Inc., Arbitration Seminary, February 20,2003. 21 ASA BULLETIN 2/2003 (JUIN) 249 ARTICLES conjunction with the Royal Yacht Squadron's regatta which was to be sailed on 22 August 1851. There were seventeen British yachts of ali sizes and, of course, the America. America won the race by 8 minutes. The race attracted considerable interest. Queen Victoria followed its progress. She is said to have asked her bowman ' who was second' . There followed that famous reply 'Ma'am, there is no second'. This has been true ever since. 2. The first dispute Shortly after the finish of the race the first protest was lodged by the English against America. And so began the dispute resolution segment of the history of the America's Cup yachting. It was disputed that the American yacht had won because America had passed on the wrong side of the Nab Lighthouse. In short, the British argued that America had eut the corner. 2 The protest, however, was dismissed • The grounds given for dismissal were that the sailing instructions given to the crew of America had not specified the side on wbich she was to pass the Nab. Thus, the very first race was ultimately settled not on the water but by an argument over the Rules. 3. The present Deed of Gift The Cup known as the America's Cup was donated in 1857 by the six owners of the yacht America to the New York Yacht Club. It was thereafter twice returned to George Schuyler, the sole surviving donor, when questions arose as to the terms of the trust in which the Cup was to be held. The present Deed of Gift was executed by George Schuyler in 1887. That deed donated the Cup to the New York Yacht Club to be held in trust upon the condition th at any organised 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 always be entitled to the right of sailing a match for this Cup, with a yacht or vesse! propelled by sails only and constructed in 'The America's Cup Arbitration Panel, a dispute resolution procedure for a major sporting event', paper prescnted to the ANZSA Conference on October Il, 2002 by the Honourable Sir David Tompkins, QC. 250 21 AS A BULLETIN 2/2003 (JUIN) PETER, THE AMERICA'S CUP ARBITRA l'ION PANEL the country to which the Challenging Club belongs, against any one yacht or vesse] constructed in the country of the Club holding the Cup and that it shall be preserved as a perpetuai Challenge Cup for friendly competition between foreign countries. Thus, under the Deed of Gift only yacht clubs can race for the Cu p. The winner of the Match becomes the holder o"f the Cup and its sole trustee. Provision is made in the Deed for the Defender (the then current holder) and the Challenger of Record (the first challenging yacht club of any America's Cup edition) 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 competed. None of the deeds of gift by which the original owners of the America gifted the Cup to the New York Yacht Club contained a method of dispute resolution. Since the Deed of Gift had been executed in the state of New York, it was accepted that the Supreme Court of that state had j urisdiction over matters relating to the Cup. 4. The Mercury Bay Boating Club Challenge The most famous controversy, which started in 1988, is probably the long legal wrangle in the Courts of New York surrounding what became known as 3 'the Big Boat Challenge' • The San Diego Yacht Club bad planned to defend the Cup in 1990 or 1991 with the international 12 metre class yachts. Before arrangements were frnalised, 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, whereby if it was successful in defending the Cup it would hold the next race at a certain time and at a certain place, specifying the class of yachts. See ' The Mercury Bay Boating Club !ne. v. San Diego Yacht Club ', 26°' April 1990; 76 N.Y. 2d 256; 557N.E. 2d 87; 557 N.Y.S. 2d 851. 2 1 ASA BULLETIN 2/2003 (JUIN) 251 ARTICLES The San Diego Yacht Club did not follow the same course. By failin~ to take that step it opened the way for a challenge by the Mercury Bay Boatmg Club which demanded to sail in a new type of boat, a 90 footer known as the 'Big 'Boat'. To justify this unorthodox ~hallenge , Mercury B.ay Boating Club advised the San Diego Yacht Club that 1t sought to compete ma vesse! larger than those of recent matches because such a yacht, by 'utilising technology outside any class ofrating rule would be most likely to offer real opportunity 4 of innovative design to the benefit ofyachting at large' • There followed a series of Court applications. The Mercury Bay Boating Club comrnenced an action in the New York Supreme Court seeking a declaratory judgement that 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 commenced an action seeking an interpretation of the Deed of Gift authorising the continuation 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 terms. Nothing came of those negotiations. The result was that in late January 1988, the San Diego Yacht C lub announced its decision to race a catamaran whose dimensions were considerably smaller - but notoriously faster - than the mono-hull yacht which had been notified in the Mercury Bay Boating Club challenge. The parties then went back to Court. The Mercury Bay Boating Club asserted that the San Ùiego Yacht Club was in contempt of Court and argued that the use of a catamaran rendered meaningless the Match to which it was entitled under the Deed of Gift. The Supreme Court denied the application and directed the parties to reserve any protests until after the completion of the America's Cup races. Those races were held on 7 and 9 September 1988 and Ibidem, Section 1. 252 21 ASA BULLETIN 2/2003 (JUIN) PETER, THE AM ERICA 'S CUP ARBJTRATION PANEL resulted in the San Diego Yacht Club's catamaran defeating by two races to nil the Mercury Bay Boating Club' s mono-hull New Zealand. The parties then went back to Court. The Mercury Bay Boating Club moved to have the results of the race set as ide and itself declared the winner. To that effect, it contended that the San Diego Yacht Club's behaviour was unsportsmanlike, antithetical to the concept of ' friendly competition between foreign countries' and a 'gross mismatch' in violation of the America's Cup Deed of Gift and San Diego's obligations as trustee.