On April 26, 1990 the New York Court of Appeals gave its decision in the case of Mercury Bay Boating Club v San Diego Yacht Club. Giving that decision, Judge Fritz Alexander said:
“Long settled rules of construction preclude an attempt to divine a settlor's intention by looking first to extrinsic evidence. Rather, the trust instrument is to be construed as written and the settlor's intention determined solely from the unambiguous language of the instrument itself. It is only where the court determines the words of the trust instrument to be ambiguous that it may properly resort to extrinsic evidence.”

In ruling that the rudder should not be included for measurement purposes, Judge Shirley Kornreich appears to have ignored Judge Alexander’s words. The Deed of Gift is quite clear on measurement, for single mast vessels it specifies permitted Length on Load Waterline and goes on to say: “Centre-board or sliding keel vessels shall always be allowed to compete in any race for the Cup, and no restriction nor limitation whatever shall be placed upon the use of such centre-board or sliding keel, nor shall the centre-board or sliding keel be considered a part of the vessel for any purposes of measurement.”

Clearly, the Deed specifies that vessels, not just hulls, are to be measured and, equally clearly, it does not exclude rudders from measurement, the only exclusions are centreboards and sliding keels. Judge Kornreich appears to have decided the rudder issue solely on extrinsic evidence, indeed she states that her findings were “based on the evidence presented and arguments of counsel” and Judge Alexander also stated:

[When] the plain language of the Deed of Gift is unambiguous, such resort to extrinsic evidence to impute a different meaning to the terms expressed is improper.

In deciding that rudders should not be included for measurement purposes, Judge Kornreich appears to have depended on the extrinsic evidence of what was common practice at the time the Deed of Gift was written. In doing so, although she asked question about trimarans racing in the America’s Cup, she seems to have ignored the fact that, when the Deed was written, trimarans were working vessels used by indigenous Polynesians that nobody had considered using for racing. In doing so Judge Kornreich appears to have failed to grasp another fundamental point made by Judge Alexander in the Mercury Bay v San Diego case:

As sporting activities evolve in light of changing preferences and technologies, it would be most inappropriate and counterproductive for the courts to attempt to fix the rules and standards of competition of any particular sport. To do so would likely result in many sporting contests being decided, not in the arena of the sport, but in the courts.

The result of Judge Kornreich’s judgement on the rudder issue has left any future America’s Cup contest open to a ridiculous situation. As Dirk Kramer said before this ruling “This is something that needs to be settled, because not including rudders could lead to all sorts of future abuse. Someone could build a multihull with additional long pivoting hull sections, which would provide a steering effect, and say those were the rudders; that way you could end up with a boat far longer than the Deed of Gift envisaged.”

Judge Kornreich is still trying to resolve several other issues that, according to the Court of Appeals, are outside her province, saying:

The Court requires additional expert guidance in order to decide the following issues:

1. How “load water-line” is measured in an America’s Cup race, including but not limited to whether SNG can exclude movable ballast from the measurement and whether the same procedures are used when dealing with a catamaran and/or trimaran;

2. The safety of holding the race off the coast of Valencia in February, 2010;

3. When the Notice of Race and other rules of the race are customarily issued in an America’s Cup challenge, including whether they are changed after the Notice of Challenge;

4. When the panel of jurors is customarily appointed in an America’s Cup challenge;

5. Whether the contract between the ISAF and SNG provides for an independent and objective panel of jurors and by which rules such a panel is bound in an America’s Cup challenge.

Such issues all hinge around GGYC’s argument that SNG’s rules are unfair and, here again, Judge Kornreich has chosen to ignore the Mercury Bay ruling, in which Judge Alexander said:

The question of whether particular conduct is "sporting" or "fair" in the context of a particular sporting event, however, is wholly distinct from the question of whether it is legal. Questions of sportsmanship and "fairness" with respect to sporting contests depend largely upon the rules of the particular sport and the expertise of those knowledgeable in that sport; they are not questions suitable for judicial resolution.

All those questions that Judge Kornreich intends to rule on are issues that should be left to experts to decide. Instead she has stated that “the Court will hold a hearing at 10.00 A.M. on Wednesday November 4, 2009, at which the parties shall each produce an independent expert who is not affiliated with either party and who has sat on an America’s Cup jury in the past. The parties’ appointed experts shall confer prior to the hearing and choose a third, independent expert who is not affiliated with either party and who has also sat on an America’s Cup jury in the past.”

In the Mercury Bay v San Diego ruling, Judge Alexander stated:

Moreover, the Deed of Gift governing the conduct of the America's Cup competitions contemplates that such issues of fairness and sportsmanship be resolved by members of the yachting community rather than by the courts.

In calling for experts, Judge Kornreich may have created an illusion that she is letting members of the yachting community decide these issues, in reality she is not; she is merely asking for opinions so that she can decide on these issues. What Judge Kornreich should have done was to follow the Appeal Court’s ruling in the Mercury Bay case and told GGYC:

Having thus chosen to seek relief in a judicial forum, Golden Gate Yacht Club is limited to a resolution of only the legal issues presented.

It was Judge Hermann Cahn who set off a sequence of events that ended with the Defender being stripped of its Deed of Gift right to choose where the location of the races will take place. On May 13, 2008, Judge Cahn ordered that “the location of the match shall be in Valencia, Spain or any other location selected by SNG, provided SNG notify GGYC in writing not less than six months in advance of the date set for the first challenge match race of the location it has selected for the challenge match races.”

The venue issue was just one of several orders in that May 13 document; in the case of other orders, Judge Cahn added (where applicable) “pursuant to the Deed of Gift”, or “in accordance with the Deed of Gift”, he did not add those words to the order on the venue. Any reasonable person would have understood that Judge Cahn’s failure to add “pursuant to the Deed of Gift” to the venue order meant that the deed did not come into it; the simple fact is that Cahn intended that SNG should be allowed to choose any venue it wished regardless of hemisphere and there is absolutely no doubt that BMW Oracle knew that. At a July 16, 2008 press conference, BMW Oracle CEO Russell Coutts said “But the courts also allowed, you know, gave the defender the flexibility to choose, in fact, any venue in the world, North or Southern Hemisphere, the way the order's worded, so it's interesting.” At another press conference, Tom Ehman, BMW/Oracle Racing Head of External Affairs said “In this case, the judge has said that the defender may choose any venue in the world in either hemisphere irrespective of the dates.”

Yet, despite the clear language of Judge Cahn’s order, despite the fact that he did not add “pursuant to the Deed of Gift”, Judge Kornreich decided that his phrase “must be read in conjunction with the Deed of Trust, and the Deed of Trust specifically requires that the race, if it takes place between November 1 and May 1, must take place in the Southern Hemisphere. Therefore, since RAK is in the Northern Hemisphere, it cannot under the Deed of Trust take place in RAK.”

Judge Kornreich has stripped the Defender of its Deed of Gift right to choose the venue, she has – with the measurement ruling – stripped the Defender of its Deed of Gift right to hold the races under its rules, she seems set on making other decisions that could further strip the Defender of rights and, with the rudder measurement ruling, she has opened up a situation where a vessel well outside the length parameters of the Deed of Gift could contest the matches. In plain terms, if Judge Kornreich’s rulings are allowed to standit is likely that we are witnessing the end of an era and an America’s Cupevent, as we know it, will be never take place again.

Furthermore, with everything connected with the Deed in turmoil, it can surely only be a matter of time before the matter of the dubious validity of the George Schuyler Trust (see Ownership & George Schuyler Trust) comes before the courts. If that happens, the America’s Cup could languish in a Swiss bank vault for many years, whilst the matter of who really owns the America’s Cup is decided; the Société Nautique de Genève could well be the last America’s Cup Trustee and Ernesto Bertarelli’s Alinghi the last team to win it.
Marian Martin - November 2, 2009
In addition to stories in this 33rd America's Cup section, you can read stories from the 32nd America's Cup . You will also find some older stories and interviews, from the last event, HERE.
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