America's Cup holder could face $200m damages pay-out

A Federal case and New York Supreme Court case that could cost Swiss America's Cup holder Ernesto Bertarelli US$200m are to be launched today by challenger and former holder Team New Zealand. Bertarelli, his syndicate Alinghi and sponsoring Geneva yacht club are already embroiled in another case which could force Bertarelli to race against Larry Ellison's San Francisco-based BMW Oracle, in multihulls, later this year.

The battering which Bertarelli has endured ever since trying to jimmy a protocol through a chorus of dismayed complaint after retaining the cup by 5-2 against New Zealand in Valencia last year has taken what could be a lethal turn when his contribution to the history of the oldest trophy in sport is written.

Team New Zealand will ask the NY Supreme Court for damages because a contract signed with them by Bertarelli for the next edition of the cup to be staged in Valencia next year will not be fulfilled. The claim for work undertaken, contacts signed with every department of what was a 100-person team, plus damage to their brand and team reputation will amount to over US$50m.

Their action is supported by the New Zealand Government, which had underwritten both some of the finance for the last campaign and enough to launch the new one, plus TNZ's sponsors, but they will not be paying for the legal offensive.

This doubtless hefty bill is being met by private supporters who are doing a lot more than sabre rattling. They have retained the firm of Boies, Schiller and Flexman with David Boise leading. He was the man retained by the US Government for its anti-trust case against Microsoft. He won.

The second case is in the Federal Court and accuses Alinghi and the yacht club of a breach of fiduciary trust, of abusing the power they had as organisers of the next event, resulting in a failure of TNZ and many other teams to compete while incurring considerable cost.

Boies will ask that both cases should heard in front of a jury and that, in the trust case, that the Geneva yacht club should be stripped of its role as a trustee of the America's Cup. Others are the founder of the event, the New York Yacht Club, and the subsequent other winners, Royal Perth, San Diego, Royal New Zealand and, now, Societe Nautique de Geneve.

Under US legal convention, if TNZ`wins that case then SNG would be liable, automatically, to pay three times the damages awarded by the Supreme Court.

So far no other challenging team has said that it will follow the New Zealand lead, Britain's Origin saying that it had no plans at present to do so and Team Germany merely studying the implications. The Alinghi team seemed rather surprised at the action, their Swiss lawyer, Lucien Masmejan, saying only that "we haven't received anything official yet and should we do so we have been advised not to make any comment until our legal team has fully reviewed the issues."

TNZ boss Grant Dalton, who is New York, said he had written to Bertarelli in November saying he was in breach of contract "and they didn't even have the courtesy to reply."

He knows that the cases could take years to resolve but said: "We are fighting for the historical honour of the cup. There are 157 years of tradition here. This not a short-term, frivolous commercial fix. We are all being disadvantaged here, we are not the Lone Ranger. We are sailors, not litigators and we are doing this reluctantly. We would rather be sailing."