The America’s Cup has moved to the protest room before the final series even begins with the two yachting syndicates disagreeing on the rules for racing the match which begins on Saturday.

Defender Team New Zealand and challenger Prada could not agree on two aspects of the sailing instructions, so the Italians have asked the America’s Cup Arbitration Panel to intervene. The differences are over immediate penalties and on board observers.

Team New Zealand want both provisions introduced, but Prada disagrees. Challengers did not race with the observers in the Louis Vuitton Cup series and, despite four days’ trialling in the last week, the Italians have come out against the idea, partly because none of the match umpires speak fluent Italian.

The on-board observers would act as liaisons between race umpires and crew on the boats, but would not be able to make any actual rulings. Their benefit is to advise crew when their boat might be breaching rules, such as right of way and overlap situations, risking incurring penalties.

Team New Zealand also want to use immediate penalties, as were used in the 1995 Cup, rather than delayed penalties which the challengers used. This means penalties would need to be taken as soon as umpires award them, rather than being carried around the race course and executed at the offender’s discretion.

Team New Zealand rules adviser Russell Green said last month they wanted the return to immediate penalties to prevent professional fouls in pre-start manoeuvres. A skipper could give away a penalty then to get control of the race start, and critical first leg position.

The arbitration panel has given Team New Zealand until 5pm tomorrow to respond to Prada’s position, with the panel to meet on Thursday or Friday. Prada has argued the challenger series continued for four months and more than 200 races with delayed penalties, and it is too late now for a change.

In its submission to the panel, the syndicate said there was already a provision for a foul that gives a boat an unfair advantage to be red-flagged, which means two penalties are imposed, one of which must be taken straight away. Prada have also complained there is no fluent Italian speaker within the umpire group who could act as an on-board observer, which is a disadvantage to their team.

They said Team New Zealand has been able to practise with the system for months, while Prada could not.