There was a rare truce in the America's Cup on Christmas Day.

Warring factions took a few days off, pohutakawa trees were bearing soft red flowers and a summer breeze from the tropical north wafts across the South Pacific island.

No one expects the peace to last. Soon enough daggers will be unsheathed once more in this most litigious and contentious Cup. The combatants are not shy.

Billionaires Larry Ellison of San Francisco and Ernesto Bertarelli of Switzerland are the two challengers left battling for the right to race the Cup match Feb. 15. A best-of-nine final between Ellison's Oracle/BMW and Bertarelli's Alinghi open Jan. 11.

On the flip side of the fence, Team New Zealand is gearing up for its second Cup defense, having been stripped of huge chunks of talent and ideas by wealthy challenging teams after its 2000 victory.

Attacks await on both sides.

The challengers are poised to dispute the legality of Team New Zealand's breakthrough design innovation, a clever appendage the Kiwis attached to the bottom of their race boats to increase the working length and thus potential top speed.

Challengers also fired the first shots in what could be an airing of questions about how the Kiwis disbursed profits that may have accrued from the successful 2000 defense, and how those profits should be spent in the future.

In retaliation, Team New Zealand is expected to contest the right of Alinghi and Oracle to copy the so-called "Kiwi clip-on" appendages, as both are trying to do. And an unauthorized group of disaffected Kiwis called Blackheart continues to harass Alinghi's skipper, Russell Coutts, and tactician Brad Butterworth, who led New Zealand to two Cup wins before defecting to the Swiss.

How crude does the harassment get? Some Kiwis are reported to be mooning the Alinghi camp on Viaduct Harbor from boats. Happy Holidays!

Of all the issues, the battle over the Kiwi clip-on promises to be the most caustic. To understand it, it helps to understand what makes sailboats go.

Big sailboats like the Cup contenders create a wave as they move through the water on the strength of the wind and their top speed is defined by that wave. The longer the wave is, the faster their theoretical top speed.

The Cup class rule gives designers the ability to make their boats slightly longer and thus potentially faster by extending the wave they make. But to do so they pay a penalty in the square footage of sail area they can carry.

So they must give up power for length.

TNZ's clever solution is to build a slightly smaller boat with more sail area, then extend the working length of the hull by clapping on a horizontal second skin to the bottom from the rudder back to the transom.

This second skin, which may not touch the hull except at attachment points down the middle of the boat, is rated as an "appendage," which is permitted under class rules. It makes the boat behave as if it's longer in the water.

No one has ever applied an appendage this way in the Cup. In the past, appendages were vertical, usually second rudders in a few unique designs.

Challengers think the clip-on contravenes the intent of the class design rule. They will press their case to international measurers who certified the Kiwi boats as legal. Chief measurer Ken McAlpine says the measurers are not meant to divine a rule's intent, only interpret the actual words.

McAlpine also says measurers' rulings are not subject to appeal, but sources in the challenging camps say they will present new evidence that should be considered.

If in the end New Zealand's appendages are ruled illegal, it would put the Kiwis in a vulnerable position, as they apparently have the attachments on both of their race boats and thus have no fall-back.

In the event that they are not ruled out, as seems more likely, both Alinghi and Oracle have been testing copycat appendages of their own.

Alinghi's boat shed rang with shrieks of cutting tools over the Christmas break.

Team New Zealand has disputed the legality of copying the design and questioned the right of challengers to switch over to boats with the clip-on appendages between the end of semifinal trials and the Cup match.

Alinghi skipper Coutts and owner Bertarelli have publicly decried Kiwi efforts to stop them from developing or switching boats. Bertarelli said with the "built-in advantages the defender already has" in competing for the Cup, Team New Zealand ought to focus on winning on the water and not in legal briefs.

Challengers also are believed to be behind a 15-page anonymous letter that landed in the hands of the New York State Atty. Gen. Elliott Spitzer, calling into question the way leftover funds were disbursed by Team New Zealand after the 2000 Cup. New York State courts oversee the Cup as trustee of the 1887 Deed of Gift under which the regatta is run, and are expected to study whether the trust requires that information about profits should be public and shared by all competitors.

The issue never came up before because the Cup was generally a money-losing proposition for organizers. But with the advent of global TV coverage and corporate sponsorship of teams, profits are now considered likely.

All of which is to say that litigation in the Cup, which reached new heights with a year-long battle here against OneWorld, the Seattle team that was eliminated Monday by Oracle, is not over. OneWorld was docked a point in every competition round and fined for design improprieties. The penalties were unprecedented in the Cup.

What next?

Good racing, for sure, as Alinghi and Oracle square off in the bright sunshine of Southern Hemisphere summer next month, and the winner goes on to battle for yachting's grand prize against TNZ in February.

But this America's Cup will not be settled entirely on the water.

It never is.

All was quiet at America's Cup viaduct in Auckland, New Zealand, on Christmas, but controversy reigns as competition reaches pinnacle.