The New York State Supreme Court on Monday agreed to hear arguments on October 22 in the America's Cup yacht-racing row if champions Alinghi and US challenger Oracle can't resolve their rules dispute.

At Monday's hearing, the court also urged the warring parties to continue to try to settle their differences out of court.

"We are very pleased with this decision, as we are keen to see this issue properly resolved with a minimum of further delay," said Tom Ehman, head of external affairs for the Golden Gate Yacht Club's team BMW Oracle.

Ehman said Oracle continued to support efforts to solve the dispute through mediation.

"Our strong preference remains to negotiate a solution. If this is not possible, today's decision provides for swift resolution through the courts," he said.

The GGYC of San Francisco launched its legal challenge arguing the new race protocol outlined by Swiss syndicate Alinghi for 2009 violates the historical "Deed of Gift" governing the race.

That's because Spain's Spanish Nautical Yacht Club (CNEV) has been tabbed to house its challenger of record Desafio Espanol.

The Americans say the Deed of Gift stipulates such a challenger has to involve a traditional yacht club which holds annual regattas.

CNEV was formed just days before before it issued the challenge and has never held a major regatta.

Ehman has called it a "sham club" that has given Alinghi unwarranted control over an event in which the challenger is traditionally involved in setting the competition terms.

Oracle and GGYC took their case to the New York Supreme Court, which has jurisdiction because the Cup was given to the New York Yacht Club in 1887 under the terms of the Deed of Gift.

The legal squabble has raised shades of the America's Cup court battle of the 1980s between New Zealand banker Michael Fay and US yachtsman Dennis Conner.

In 1987, Fay sued defending champion Conner after Conner refused to consider his challenge to race in a 90-foot monohull.

The court ordered Conner to take the challenge or surrender the Cup, and Conner responded by beating Fay in a 60-foot catamaran.

Fay later won a court ruling that Conner's catamaran defense was illegal, but that ruling was overturned on appeal.