America’s Cup Panel Is Ordered to Dissolve

The arbitrator in the dispute over the makeup of the Defense Committee for the next America’s Cup ruled Friday that the seven-man panel appointed by the San Diego Yacht Club must be dissolved and he instructed the Sail America syndicate to submit a new list of nominees.

Sailors would call it a “throw-out”--a race that doesn’t count--but both sides seemed pleased with the decision by Charles W. Froehlich Jr., a retired Superior Court judge serving under the auspices of the American Arbitration Assn.

“I think this is the result we wanted to see,” said Ken Poovey, attorney for Sail America.

Dr. Fred Frye, commodore of the yacht club, said: “We see this as the beginning of a stronger and more fruitful relationship with Sail America.”

Sponsored Conner Campaign

The club sponsored Dennis Conner’s campaign to reclaim the America’s Cup under a September, 1985, agreement that stipulated, should his Sail America effort be successful, that the club would appoint the next Defense Committee from a list of nominees submitted by the syndicate.

The first important task of the committee would be to select the 1991 defense site.

However, Sail America has not committed itself to San Diego as the site, so the local club, fearful of losing the event, selected from that list six of its own members plus another San Diego yachtsman, ignoring several international sailing figures nominated by the syndicate.

Sail America found that unacceptable and took the issue to arbitration, as provided by the agreement.

Although Froehlich said the club acted “in accordance with the literal terms of the written agreement,” and that Sail America “made a mistake in its nominations,” he said he thought it best that they start the process of appointing a committee from scratch.

Froehlich did not address the matter of distrust between the two sides but Frye said: “I hope that will all be cleared up.”

That apparently would require a commitment from Sail America, whose key leaders--Conner, President Malin Burnham and trustee John Marshall--were in Sardinia Friday preparing for the 12-meter world championships that start next week.

The club will still have the votes to assure the event being held in San Diego. That’s because the agreement stipulates that a majority of the nominees and a majority of the committee be members of the club.

But Froehlich said: “I would anticipate that they would be able to work together. The division of responsibilities with respect to the next America’s Cup is a very delicate one, and both the yacht club and Sail America have important jobs to perform, each of which is dependent on the success of its partner. I would anticipate that they would cooperate in the future.”

Froehlich announced his decision in the Wells Fargo building law offices of Lillick, McHose and Charles, where five days of hearings and Friday’s closing arguments were conducted. But first he had to wait for a staff member to place an American Arbitration Assn. banner behind him for television cameras.

Then he said the dispute arose because “Sail America believed that some of its appointments had been pre-approved by the San Diego Yacht Club. Sail America did not anticipate that the final composition of the committee would be as heavily weighted in favor of yacht club members as it turned out to be.

“In other words, Sail America made a mistake in its nominations. The upshot of this, from the legal point of view, is that Sail America has a right to rescind its nominations, and that’s what the arbitrator has decided.

“My opinion is that both entities have dealt in the utmost good faith in this matter. The representative of Sail America thought he had a commitment when, in fact, the members of the yacht club did not view it that way.”

Poovey: “It really was a massive misunderstanding.”

Froehlich said that even Eugene Trepte, the chairman of the now-defunct committee, “suggested in his testimony that it might be a good idea to go back to square one. Those were his words.”

Patrick Goddard, rear commodore of the club, had been called to testify by Sail America.

The main thing he was asked, Goddard said, was how the nominees were screened.

“That was the general question on both sides: ‘Did you extract commitments?’ ” Goddard said.

“There was definitely a screening process. The screening of the committee members was more for them to know that we did feel very strongly about (San Diego as the site), but we were counting on their qualifications and their objectivity. There were no commitments extracted from potential nominees.”

Goddard also said it will be good to start over, “but with a great deal more clarity. It gives us a direction that will help to formulate the committee . . . filling in the holes of a contract that was formulated years ago without knowing what was going to happen in the future.”

The dispute put the site selection on hold for two months. Originally, the club had planned to announce the site at Sardinia during the 12-meter worlds, which conclude July 11.

“Obviously, we won’t be able to do that,” Frye said. “I’m very concerned, and so is Sail America, about holding up the decision. This isn’t good for the Cup.”

However, the process could restart when Burnham returns from Sardinia after July 4, Frye indicated. Aug. 15 is now being mentioned as a target date for picking a site.