Roland Wilson, 32, from Stanley in Perthshire, was alleged to have been negligent after his boat was involved in the collision which took place on the first day of the Cowes Week racing regatta in 2011.
Footage of the incident, in which one crew member suffered head injuries and another abandoned ship, was posted on YouTube.
Mr Wilson, who was a serving Royal Navy officer at the time of the accident but who is now a navy reservist, denies three counts of contravening maritime regulations at the trial being held at Southampton Magistrates' Court.
Charles Row, prosecuting, said Mr Wilson owned and skippered the 33ft racing yacht Atalanta of Chester, which had a crew of eight.
It was claimed the yacht sailed into the path of the 138ft Hanne Knutsen tanker, despite it having been spotted five miles away.
He said: "The sea was calm, visibility was excellent, in excess of 10 miles, with 10 to 12 knots of wind. Unfortunately, despite these favourable conditions, the Atalanta was towards the back of the race."
Mr Row said Mr Wilson failed to comply with local shipping by-laws which required him to maintain a moving prohibited zone (MPZ) of 0.6 miles in front and 328ft either side of a vessel greater than 492ft.
He described how the situation became more complicated by a small motor vessel called Joy C which suffered engine failure just to the starboard of the Hanne Knutsen, which was heading to Fawley oil refinery.
The Hanne Knutsen had initially sounded its horn to indicate a starboard turn which it then abandoned when its pilots spotted the Joy C's plight.
The tanker then sounded its horn again to indicate it was actually going to make a port turn.
It was shortly after this that the accident happened.
Mr Row said that even though the Hanne Knutsen started to change its course, the Atalanta should not have been in such a close position to the tanker.
He said that Mr Wilson failed to turn on the Atalanta's engines to power away from the tanker in order to avoid the collision.
He said that such action was permitted under the race rules and would not have led to disqualification.
Mr Row said: "She was still attempting to manoeuvre under sail power alone. She too had stopped in the water with her sails flapping. They found themselves in the wind shadow of the Hanne Knutsen.
"One of the crew took the decision to abandon ship approximately five or six seconds before the collision. He passed down the starboard side of the Hanne Knutsen. Having abandoned ship he was picked up by a spectator vessel. The Atalanta mast struck the bow of the Hanne Knutsen and was pivoted round to the port.
"She was dismasted and one of her crew suffered head injuries which required hospital treatment. Mercifully there was no other injury as a result of what happened."
Mr Row said the Atalanta was passing "perilously close".
He added: "Even assuming that nothing went wrong, (it was) banking on the Hanne Knutsen turning at a certain rate at a certain point but something did go wrong.
"The Joy C found itself at great peril in front of the tanker. This caused the Hanne Knutsen to delay its turn.
"The Atalanta was in the MPZ having sailed hard. The Atalanta had not turned on its engine so didn't have the power to manoeuvre when it did lose its wind and it ended up stalling."
District Judge Anthony Calloway, who is hearing the trial, was shown the footage.
It shows the Atalanta, which had a bright pink sail, cross the path of Hanne Knutsen and crash into its side, knocking its mast off. Screams can be heard from spectators.
Mr Row stated that Mr Wilson said in an interview he had no formal sailing qualification but had been racing for eight years.
He said Mr Wilson knew and understood the sailing regulations and admitted he was "obliged to keep out of the way" of the tanker.
Mr Row said the tanker's horn blast indicating its starboard turn, which was then countermanded to a port turn, had led to the collision.He said: "This led them to believe it was going to turn to starboard. It seems they relied on that."
He said Mr Wilson claimed: "It was only that manoeuvre of heading to port that placed the Atalanta in the MPZ".
Mr Row saidMr Wilson blamed the pilots for the accident because of the "confusing" horn blasts. The trial continues.