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America's Cup: Arb Panel dismisses American Magic request to be excused from Jeddah regatta

by Richard Gladwell/ 30 May 13:24 BST 30 May 2023
Patriot sails past the American Magic team base - AC75 - January 18, 2023 - Pensacola, Florida © Paul Todd/America's Cup

The three man Arbitration Panel has dismissed the Application by the New York Yacht Club's team American Magic to be excused from participation in the second Preliminary Event, part of the 37th America's Cup.

The regatta for AC40 One Design yachts is to be sailed in Jeddah, Saudi Arabia from November 30 to December 3, 2023, between the six teams entered in the 2024 America's Cup due to be sailed in Barcelona.

“The Arbitration Panel dismissed the Application (Case 004) saying it was a matter for the Challenger of Record and Defender (COR/D) Emirates Team New Zealand representing the Royal New Zealand Yacht Squadron and INEOS Britannia representing the Royal Yacht Squadron. COR/D, in their submissions opposed the Application being granted.

The US team made its Application to be excused as it believed that its team members' safety was at risk in Saudi Arabia.

In its decision, released on May 28, 2023 the Arbitration Panel effectively turned the matter over to COR/D to hear the matter.

"The Application is dismissed. When COR/D makes a decision on whether or not to excuse American Magic (AM) from participation in the Second AC37 Preliminary Regatta in Jeddah, if AM considers such decision to be not in accordance with the Protocol, AM may make a new application to the Panel. Such decision by COR/D must be "on reasonable grounds". Such (a) test is subjective," the Arbitration Panel noted in its Decision.

Should the Application to be excused from participation, fail at both the COR/D and Arbitration Panel level, and American Magic decides not to participate in the Jeddah regatta, then COR/D can make an application to the Arbitration Panel for penalties to be applied.

"Equally, Article 10.2(a)(i)(B) of the Protocol entitles COR/D to apply to the Panel "to impose such financial penalty it considers appropriate" should COR/D not excuse AM from attending the Second AC37 Preliminary Regatta in Jeddah. What is "appropriate" is within the Panel’s discretion," the Arbitration Panel noted.

The Arbitration Panel said: "If AM wishes to raise new matters of interpretation relating to the issues raised in Case 004 then AM may make a new application to the Panel. AM should note however, that if it makes an application to the Panel seeking to advance the matters raised in paragraphs 6 to 14 inclusive of its Reply dated 22nd May 2023, prior to COR/D making its decision, for the reasons set out above the Panel would need convincing to deviate from its current position."

The Arbitration Panel commented on the reporting of the Application, primarily in the New Zealand mainstream media, ahead of the Application, with one outlet claiming to have a 21 page document in its possession. Surprisingly, despite the team denials, one NZ mainstream media outlet repeated their claim, today, that they had the 21 page document on May 16, 2023.

"On 16th May 2023 it came to the attention of the Panel that there may have been a breach of the confidentiality obligation provided for in Article 67.12(b) of the Protocol in respect of disclosures to outside persons (in this case the media) concerning this Case 004," the Arbitration Panel wrote.

It then requested each team including the COR/D to investigate whether the leak to the media had come from within their team. Each replied individually to the Arbitration Panel denying that any of their team/members had communicated with the media. The denials to the Arbitration Panel, along with the media and other instances of individual document possession, call into question the integrity of the teams as a group and their respect for the Arbitration Panel, and judicial process. It is not possible that multiple copies of the 21 page document just appeared out of thin air.

"The breach of Article 67.12(b) of the Protocol is a significant concern. An entire copy of the Application has been disclosed to the media whilst these proceedings were continuing. It appears to be a blatant breach of the Protocol, likely intended to cause effect to COR/D. All Competitors have denied any such breach," the Arbitration Panel recorded in its Decision.

"If such a breach occurs in the future, the Panel gives notice that it intends to take more stringent steps including possible orders of discovery. The Panel notes that significant penalties can be imposed by the Panel under Article 67.4 of the Protocol for breaches of confidentiality," the Panel added.

American Magic was ordered to pay costs of €14,500.

The full decision can be read by clicking here

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