Yachting rivals due back in N.Y. court next week

NEW YORK (Reuters) - A legal dispute between the two teams scheduled to meet in the next America's Cup yachting competition is sailing back into a New York state court next week after talks between the rivals hit the rocks.

The defending champions from Switzerland are arguing with their U.S. challengers over the rules for the next competition for the most prestigious prize in yachting.

New York State Supreme Court Justice Shirley Kornreich on Tuesday ordered lawyers for the California-based challengers, Golden Gate Yacht Club (GGYC), and Switzerland-based Societe Nautique de Geneve (SNG) to appear in her Manhattan courtroom on July 21.

Software executive Larry Ellison's BMW-Oracle team, sponsored by GGYC, and the defending champions Alinghi, backed by biotechnology billionaire Ernesto Bertarelli, have been locked in a legal dispute for more than two years over the terms of the 33rd running of the race.

Ellison is the chief executive of software giant Oracle.

BMW-Oracle has accused Alinghi, which sails under the colours of SNG, of unfairly changing the rules of the race. They have asked the court to hold Alinghi in contempt of court.

Under America's Cup rules, a challenger proposes to race the defending champion, and together they plan the terms of the next race.

"What they've told us is they're going to make up the rules as they go along -- which they can't do," said GGYC spokesman Tom Ehman.

Ehman also said GGYC believes SNG has installed an engine on their racing boat that is not permitted by sailing rules.

The next America's Cup competition had been scheduled for this year and is now slated to take place in 2010. Alinghi initially agreed to race Club Nautico Espanol de Vela (CNEV), a Spanish team that formed as a club just days before submitting its challenge for the America's Cup.

But BMW-Oracle contested CNEV's challenge in a lawsuit filed in 2007. New York state's highest court earlier this year rejected the Spanish team as the challenger and picked BMW-Oracle as the official challenger.

"It's again a disappointment that GGYC has pursued its litigious strategy instead of looking to go sailing and fight for the America's Cup on the water," SNG said in a statement.

(Reporting by Edith Honan; Editing by Ellen Wulfhorst and Will Dunham)