Cup racers in turmoil as lawsuit row festers

By HELEN TUNNAH

The October 1 start of the America's Cup regatta is threatened by a potentially ruinous legal standoff.

With eight weeks to go before the challenger series starts, a panel which rules on cup disputes is still refusing to take any actions because it fears exposure to crippling lawsuits.

Concern is mounting that unless the legal conflict is resolved quickly, some of the five America's Cup arbitration panel members will decide the risk of lawsuits is too great and resign.

That would create immediate headaches for the event, because cup rules say each regatta must have an arbitration panel to hear disputes.

As well, the fate of cases in which the panel has already heard evidence would be unclear.

The long-running struggle to get an indemnity against legal action for the panel is upsetting the organisers of the challengers series, the Louis Vuitton Cup, which starts on the Hauraki Gulf on October 1.

Louis Vuitton spokesman Bruno Trouble said the organisers of the challengers' series were worried.

"Every week I think it will be over by the end of the week, but it's not.

"We are starting to be a little worried. It must be resolved within two weeks or it will be very bad for the event."

Several high-profile disputes are before the panel, including claims that OneWorld may have obtained and used Team New Zealand design secrets.

The panel has heard a mountain of evidence on that issue, and is understood to have made a decision.

But it will not release any rulings on any dispute until it is given a guarantee it will not be sued.

It also wants insurance cover for any other legal action filed against it.

The panel has significant powers, including the ability to impose hefty fines or even expel a syndicate from the event.

Previous panels have operated without insurance, but with syndicates now spending up to $US100 million ($216 million) on campaigns the stakes have become much higher, and existing cup rules are not thought to provide enough legal protection.

If any panel members do resign, replacements must be found by October 1, and that would be difficult if indemnity agreements were not settled.

It would also raise questions about whether existing disputes would need to be reheard by any new panel.

New Zealand panel member Sir David Tompkins, a retired judge, confirmed yesterday the issue was unresolved.

"The panel is still not prepared to issue any decisions because we understand that some syndicates have not signed the deed," he said.

All the challengers and Team New Zealand at one stage agreed to a deed of indemnity and to provide insurance cover, but that proposal was not acceptable to the panel.

Now there are concerns about future indemnities, and who should pay.

A second deed has been drawn up, but the syndicates remain divided.

Some, including Oracle Racing, Team Dennis Conner and Team New Zealand, are understood to accept the new provisions.

But Russell Coutts' new syndicate, Team Alinghi, and OneWorld Challenge said there were still outstanding issues concerning the cost of insurance, and who should pay.

A meeting of challengers in the United States this week did not settle the row.

Disputes outstanding include:

* An application by OneWorld Challenge to the panel to rule on whether it broke any rules by having Team New Zealand data.

* A dispute between Oracle Racing and Prada, and Team Alinghi and OneWorld, about where boats must be assembled.

* A claim from Oracle Racing that Prada is ineligible to race because it broke the protocol by lodging a civil lawsuit against Oracle.

Team Alinghi rules adviser Hamish Ross said everyone was still in negotiation.

He said Team Alinghi would waive action against the panel, and indemnify it. The problem was over who should pay.

OneWorld spokesman Bob Ratliffe said he understood options to meet the panel's requirements were still being considered.

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