The 2009 America's Cup could be scrapped after Alinghi rejected a new "last proposal" from BMW Oracle to settle their legal battle before a deadline expires later on Friday.

Alinghi's yacht club SNG (Société Nautique de Genève) had given BMW Oracle until 2200 GMT on Friday to drop the lawsuit, which argues the Swiss defender chose an illegitimate yacht club to be the lead challenger in two years' time.

SNG did not say what would happen if the deadline passed without a settlement but the ACM (America's Cup Management) organising body has said it may review the feasibility of holding the regatta in Valencia in 2009 if the legal uncertainty drags on.

On Thursday, U.S. syndicate BMW Oracle and its club GGYC (Golden Gate Yacht Club) sent Alinghi a settlement proposal including changes to the umpiring of the regatta.

The proposal was prepared by Oracle and was endorsed by Emirates Team New Zealand, Team Origin of Britain and Team Shosholoza of South African. Three of the five challengers of the 33rd America's Cup which is set to take place in 2009 in Valencia.

It was presented Thursday night to Alinghi who rejected it by letter "within a short time" and "without any reference to the specific points it made or the new concessions offered", Oracle said in a statement.

"Together with a majority of the challengers we have delivered a fair, genuine and honourable best last shot," said BMW Oracle chief executive Russell Coutts in a statement. "Alinghi's rejection is a disgrace and ... can only mean they have decided to delay the event".

"What should have been a great chapter in America's Cup history has instead degenerated into a shambles", he added. "The protocol Alinghi introduced is the most one-sided in the history of the Cup."

Questioned by AFP, an Alinghi spokesman confirmed the Swiss syndict had replied to Oracle and it repeated its request that the US team abandon their court case by Friday to lift the "uncertainty" surrounding the event. ACM said it would stand by the 2200 GMT deadline.

"We have responded to their (BMW Oracle's) letter," said ACM. "The 11pm CET deadline still stands. "The only way to guarantee certainty is for them to drop their lawsuit. We continue to hope for this."