On 25 September 2013, Oracle Team USA completed a comeback against Emirates Team New Zealand, from an 8-1 deficit, to clinch the 34th America’s Cup in San Francisco.
Oracle won 11 races on the water in all, overcoming a two-point penalty imposed by the International Jury on 3 September 2013. In the end, the penalty didn’t decide the winner; but it easily could have.When Oracle became the first to win nine races it was speculated that had Team NZ won at that point, Oracle would appeal the Jury decision and the Cup would once more become embroiled in the courtroom battles it is now famous for.
It would not have been the first time New Zealand was involved in a legal stoush over the Cup. In 1987, Michael Fay’s challenge on behalf of the Mercury Bay Boating Club ended up in the New York Supreme Court. Mercury Bay won the right to challenge but unfortunately did not win the race. The San Diego Yacht Club (represented by Dennis Conner) was ordered by the Court to meet the challenge on the water. However, as the parties had not agreed to any rules, Dennis Conner entered a catamaran and easily won. Mercury Bay brought the case back to the Court to disqualify the catamaran.
Initially, this proved successful and it was awarded the Cup. However, on appeal, the decision was overturned.
In reaching its decision the NY Court of Appeals strictly interpreted and applied the terms of the Deed of Gift, the founding document that established the competition after the race around the Isle of Wight in England in 1851.
The Deed sets out default rules for future races if the parties cannot agree. In the Mercury Bay case, however, the Court found that the Deed did not specify the type of yacht and on this basis decided the catamaran was legal. On the back of this decision in 2010, when Alinghi and Oracle could not agree on the rules for the 33rd America’s Cup, they also adopted multihulls.
In every other America’s Cup, the parties have been able to agree on the rules, which are known as the Protocol. In San Francisco, the Protocol extended to establishing the International Jury, as an arbitral body, to determine any disputes that may arise. These rules provide that any decision of the Jury is final and binding and that if a party refers a dispute to a court rather than the Jury, it would be ineligible to compete.
These provisions effectively removed Oracle’s ability to appeal the penalties that had been imposed.
However, Oracle’s concern was that members of the Jury that had investigated the cheating allegations had also decided the case. This was arguably a breach of due process and although the Jury was entitled to decide its own procedure, as an arbitral body, the procedure could have been challenged if it breached the applicable US law. While it was unlikely, if that had occurred, for the Court to substitute its own decision for that of the Jury, it is possible the Court could have referred the case back to the Jury to adopt a conforming procedure and decide the matter again. If that had happened, it would have left the Jury ultimately responsible for deciding the winner of the Cup.