America's Cup: Breach of Fiduciary Suit Filed Against America's Cup Trustee

by Jane Eagleson

Reckless and repeated disregard in its stewardship of the America's Cup by the Société Nautique de Genève (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 Monday, 26th October.

In its place, GGYC - the Challenger of Record of 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, cannot lose.

GGYC, and its sailing team, BMW ORACLE Racing, remain committed to sailing the Match on the date 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 cannot 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 bringd not just honour and pride, but responsibilities too. The honour may have gone, but the responsibilities remains," 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 slaos 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 levraged 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 for 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 in 2007 have brought a clamour 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 cannot be beaten on the water," commented Bill Koch, whose America^3 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.

Golden Gate Yacht Club
Breach of Fiduciary Duty complaint