America's Cup PhD (Law)

28 May 2018
Grad Photo & Cup 5

Dr. Hamish Ross, a former commercial partner of Bell Gully for more than 10 years, left the firm at the end of 2001 to become a full time America’s Cup counsel. Since then, he has been with two Cup-winning teams, Counsel to Cup event and race management,  a consultant to two other winning teams. Over the past 6 years, Hamish completed a PhD (Law) at the Faculty of Law of the University of Auckland, on a part-time basis, under the supervision of Professor Michael Littlewood and Professor Peter Watts.

Hamish’s thesis investigated the America’s Cup Deeds of Gift. They are a succession of three documents, the first dating from 1857, governing the America’s Cup competition. The third Deed dating from 1887 continues to control the competition today and was the subject of intensive litigation in the New York courts between 1987-1990 and again from 2007 to 2010. The work involved research in the archives of the New York Yacht Club Library as well as researching New York law both as it was at various points in the nineteenth century and today.

In the course of Hamish’s work within the America’s Cup a number of troubling legal inconsistencies kept arising. These, in part, concerned the continued acceptance by the New York courts of the Deed as constituting a charitable trust in the face of factual inaccuracies and conflicting legal authorities. Upon coming across several claims made in the nineteenth century by former officeholders of the New York Yacht, that the 1887 Deed of Gift (which still governs the America’s Cup today) was unlawfully made, they became the catalyst for further research in depth to ascertain the real legal basis of the Deeds of Gift.

Past litigation in the New York courts has been disastrous for competition for the Cup, with the loss competitors, sponsors as well as sporting and commercial momentum, before it could be fully re-established. Even today the competition still suffers from the dispute that first arose in 2007. Hamish believed better way needed to be found to resolving future competitor disputes outside a courtroom and preferably by those more expert in the sport as befitting an international sporting contest.

There are also, a number of unresolved important interpretative uncertainties surrounding the Deed. For example, what is the scope of a clause of the Deed that allows competitors to agree the terms of their match? Are competitors permitted to agree match terms that conflict with the express terms of the Deed and if not, what are the boundaries of what the competitors can agree? For example, can competitors agree to build all or part of their competing yachts outside their country when the Deed states each competitor must build their yacht in their respective country? Can the competitors access components such as sail cloth, masts, rudders, or centreboards from abroad? The Deed provides, in strong mandatory language, that the use of centreboards cannot be restricted in anyway, but competitors have agreed class rules that place restrictions on them. Could these agreed class rule restrictions be declared invalid as violating the terms of the Deed, putting some competitors at a major disadvantage at the last minute, when it is too late for them to make changes to their competing yachts?

These issues matter because the competition has evolved from being funded exclusively by private wealth, to one that now makes increasing demands on public funds making governance and dispute resolution matters of public interest and scrutiny. NZD 130 million was spent by New Zealand local and central government for the 30th America’s Cup held in Auckland in 2000. USD 3.237 billion was invested in Valencia, Spain, to host the 32nd America’s Cup held in 2007. The City of San Francisco committed to a far more modest USD 22 million for infrastructure for the 34th America’s Cup in 2013. Bermuda, spent USD 77.08 million to host the last America’s Cup event. The  New Zealand Government and the City of Auckland have recently committed NZD 212.5m for hosting and defending the America’s Cup in 2021. This public expenditure has been justified based on positive economic impacts the event delivers to the hosting venue.

Hamish’s conclusions will form part of a book to be published, but it appears the original 1857 owners of the Cup , as mid-Victorian sporting gentlemen, did not have any legal intent when they first framed the terms of their gift of the Cup for perpetual international competition, rather, they intended a “gentlemen’s agreement” binding in honour rather than in law. The Deed could not establish a legally recognisable charitable trust at that time in New York State. If a valid trust had been formed, the later Deeds of 1882 and 1887 could not constitute valid amendments in the absence of court approval.

The Deed makes provision for dispute resolution within the sport rather than in a courtroom. This has been overlooked in past litigation. The Deed provides that where there is no agreement between the competitors, the rules and regulations of the yacht club holding the Cup govern. These are now universal rules promulgated by World Sailing, the international authority governing the sport of sailing.  They require the appointment by World Sailing of a five member  independent international sailing jury to resolve America’s Cup disputes. The New York courts are required to recognise and enforce the decisions of such juries as maritime arbitration awards and they can only set aside such awards on the limited grounds set out in the US Federal Arbitration Act.

Hamish said “ It was always pleasure working with Michael and Peter. They both encouraged me throughout the process, took a strong interest in my work, assisted my return to the academic world, thirty years after I left it and pushed me to explore new areas and issues. It was Michael who first suggested and encouraged me to turn my proposed LLM thesis into something far substantial. The Faculty of Law’s PhD programme gave me a unique opportunity to stand back from my Cup work over the past 20 years and review fundamental legal issues surrounding the Cup in a reflective environment rather than within a white-hot crucible of a competitor dispute.” He commented on the future of his work, “I hope my work will, in time, lead to a better understanding of the Cup and as an international sporting event and to an appropriate sport based dispute resolution process, away from the courtrooms of a competitor.

After his experience, would he do it again? “With the same people? In a heartbeat!” he said.

A short article describing some of Hamish’s work appeared in the New Zealand Law Journal (The America’s Cup and the courts NZLJ [2013] 359).