KEY POINTS:
America's Cup holders Alinghi have lashed out at Team New Zealand, calling their attempted legal action "without merit", and vowing to defend claims it had broken a contractual agreement to hold the next event in 2009.
Team New Zealand is seeking tens of millions of dollars over the delays in the America's Cup, and filed court documents in United States courts today.
Alinghi lawyer Lucien Masmejan said this morning it was disappointed in Team New Zealand's actions "given their previous public acceptance and commitment to the competition".
"These actions are totally without merit," said lawyer Lucien Masmejan.
"We share the sailing community's frustration in the delays affecting the America's Cup but Alinghi, as trustee, is duty bound to defend its position in the current legal action and to preserve the integrity of the America's Cup."
Team New Zealand has filed two law suits, the first in the New York Supreme Court seeking up to $50 million in compensation for the delays -plus damages.
It has also filed papers in the Federal Court, claiming Bertarelli's Alinghi team and Cup organisers AC Management have acted in an anti-competitive manner.
A wealthy "friend" is backing Team New Zealand's legal cases launched today against Ernesto Bertarelli and his Alinghi syndicate.
Team New Zealand is represented by New York lawyer David Boies, a leading US trial lawyer who successfully represented the US Government in its competition law action against Microsoft.
Managing director Grant Dalton told the Herald he felt he was forced to take legal action, but was adamant he would only do it if it could be paid for out of sources other than sponsors' funds or the taxpayer money the team receives.
"That was an important consideration that before we could embark on this we needed to fund it from external sources - not reserves, or sponsors or taxpayer's money," said Dalton.
He would not name who the financial backer was but said: "Emirates Team New Zealand has many friends and it has basically come from a friend."
The 33rd America's Cup was to be staged in Valencia in 2009, but is now unlikely to be held until 2011. Since Alinghi beat Emirates Team New Zealand 5-2 in the Cup match last July, the event has been mired in controversy and legal jousting. United States challenger BMW Oracle has accused Alinghi of rigging the event in its favour.
Dalton said the continued delays were impacting on the team, and the integrity of the America's Cup itself.
"We're taking a hit in the pocket, the brand of Emirates Team New Zealand is taking a hit and the event is taking a hit," said Dalton.
"The America's Cup has been damaged. The Cup has been around for 157 years now and one of is fascinations is that it goes through stages. But in the short term, sure it has been damaged, when it was on a roll.
"In the end this is about going sailing. We're sailors not litigators. We've considered this very, very carefully, but there's so much investment in Emirates Team New Zealand, there's so much goodwill, IT support and we're basically a leadership brand.
"We need to stand up and be counted."
At the centre of the compensation claim is an agreement signed between Dalton and Bertarelli before Team New Zealand confirmed its entry for the next Cup.
"There were two quite key points in that [contract] - the first was that it would be in '09 and the second that it would be in Valencia and they happily contracted those things on which basis we commenced work," Dalton said.
Late last year, Team NZ wrote to Bertarelli seeking compensation on the basis that the contract was not being honoured.
"Frankly, they didn't have the courtesy of even replying," said Dalton.
Now they have taken it to court to claim compensation for the direct costs, but also the damage incurred to the team's brand.
The second case, taken under US "anti-trust" laws, alleges that the Swiss have abused the power conferred to the defender under the Deed of Gift, the document which has governed the Cup through its 157-year history.
Dalton says that by accepting a challenge from a "sham" club, Spanish CNEV, Alinghi were able to impose rules for the next event which were one-sided and designed to give it a competitive advantage.
"The protocol has increased the cost for all teams andgiven them a larger piece of the pie in an anti-competitive environment."
Oracle launched a case last year, also alleging Alinghi's "challenger of record", CNEV, was illegitimate and that the Swiss defender had set rules for the next Cup which were unfairly weighted in its favour.
It wanted the court to impose it as the challenger of record and to endorse more traditional rules of the race regatta.
A proposed out-of-court settlement, agreed to by Oracle and other challengers, would have seen the event go ahead in 2009, but it was rejected by Bertarelli.
AC Management announced on November 22 that the Cup was to be postponed, saying Oracle was "holding the event to ransom" through its court action.
On November 27, Judge Herman Cahn made a preliminary ruling in Oracle's favour, but he has subsequently heard further arguments from both sides before issuing his final decision, which is expected soon.
- with NZPA
