Dennis Conner's Stars & Stripes continued its improbable string of success in America's Cup racing today, but was hammered with a potentially devastating decision on land.

While Stars & Stripes was handily defeating Nippon by 10 seconds in light winds on the Hauraki Gulf, an arbitration panel on shore was listening to testimony about the legality of a rudder used in one race to start the challenger semifinal series a week ago.

The panel ruled Stars & Stripes violated Cup rules when it used a new rudder built in Australia for the first race of the series, in which the U.S. team also beat Nippon. The panel said rules require boats to use appendages built either in the home country or, for convenience after racing begins, in New Zealand along lines drawn by designers from the home country.

The panel sent the ruling on to an international jury to determine the appropriate penalty. Speculation is that Conner's team, tied for second place halfway through this elimination round, could be docked the point they won from Nippon or worse.

"If they take our race away, which is their prerogative," helmsman Ken Read said, "it will be a real shame for our program. But we are not going to crumble. We will come back."

Two boats will advance from the 10-race semifinals to challenger finals Jan. 25.

Today's win improved Stars & Stripes' record to 4-1, just behind fleet leader AmericaOne, which easily beat Le Defi Francais by 1 minute 16 seconds today to go to 5-1. Also winning was Prada, tied with Stars & Stripes at four wins after beating America True.

Before the racers headed to sea, all six challenger syndicates as well as Cup defender Team New Zealand sent representatives to the arbitration panel's hearing. None supported Stars & Stripes' claim that the Australian-made rudder was legal.

Helmsman Read said Saturday that the team had the rudder built in Sydney because it was cheaper and more convenient than anyplace else.

Stars & Stripes tactician Tom Whidden reportedly told the arbitration panel this morning, "If you rule against us, we're dead."