There is a good argument to be made that very few cases in recent legal history have featured the exquisite litigation skills of such a high-priced, high-caliber cadre of lawyers as those who have toiled, at little or no benefit to society, on the America's Cup dispute between billionaire sailors Larry Ellison and Ernesto Bertarelli. (Here's our most recent previous coverage of the litigation, which includes links to older posts.)
But after attending a Tuesday morning Manhattan state court hearing in the latest round of the apparently interminable case, we have to say that lawyers for the dueling yacht clubs sure are entertaining. Arguments over who gets to decide the location of the sailing race at times sounded like a debate at the U.N. General Assembly. When the debate ended, Manhattan Supreme Court Justice Shirley Kornreich ruled that Ras al-Khaimah, one of the emirates of the United Arab Emirates, cannot host the next America's Cup, which is scheduled to start in February 2010.
The ruling was a win for Ellison's Golden Gate Yacht Club, the official challenger for the cup, and its lawyer, David Boies of Boies, Schiller & Flexner. On the losing end were Barry Ostrager of Simpson Thacher & Bartlett, who represents the current cup holder, Bertarelli's Societe Nautique de Geneve; and Jeffrey Rosenthal of Cleary Gottlieb Steen & Hamilton, who spoke for the emirate.
Boies' primary argument was that SNG's choice of the emirate as the race location was prohibited under a provision in a 19th-century document that governs the America's Cup competition. The document, called the Deed of Gift, requires a Northern Hemisphere site for a race to be sailed in February. But Boies also introduced security concerns. He showed Kornreich a map of the UAE and explained that the proposed course would abut Iranian waters, raising the specter of a terrorist attack by an Iranian group. There couldn't be "a more provocative target," he told the judge, than a huge yacht flying an American flag.
Ostrager called GGCY's objections to the emirate locale "a completely confected proposition" designed to delay the race. He also argued that an earlier ruling by Manhattan Supreme Court Justice Herman Cahn, which was affirmed by the New York Court of Appeals, gave SNG the sole right to pick a venue, trumping the Deed of Gift. As for the supposed terrorism threat, Ostrager cited an affidavit from Noah Feldman, the well-known Harvard Law School comparative constitutional law expert, who said that a terrorist attack was more likely in Spain, where the cup was originally to be held, than in the UAE.
"It's an affront to the UAE ... and it's an affront to the sport, frankly," Ostrager said about GGYC's objections to holding the cup in the emirate.
As counsel to the Ras al-Khaimah emirate, Cleary's Rosenthal was even more sensitive to the security concerns Boies raised. He touted the UAE's importance as an ally to the United States and noted that Dubai, another emirate of the UAE, hosts world-class sporting events all the time. He took Boies to task for an interview he gave to CNBC in which Boies said, "This is not like sailing off Dubai." Dubai, Rosenthal noted, is actually closer to Iran than Ras al-Khaimah.
Justice Kornreich, who admitted to being overwhelmed by the subject matter at issue, found that Justice Cahn's order and the Deed of Gift had to be read in conjunction. After she ruled from the bench, Ostrager immediately stood up and pleaded with her to reconsider, warning that her decision could have a disastrous effect on the race. Kornreich invited Ostrager to file an appeal.
Even if an appeals court quickly resolves the question of the race location, the litigation still won't be over. GGYC recently filed a New York state court complaint against SNG, alleging that the Swiss club has breached its duties as trustee of the America's Cup by rigging the rules to ensure it wins.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
