Panel determines that ICANN violated its bylaws by failing to make a decision about Verisign’s deal for .web.
“…[ICANN] has violated its commitment to make decisions by applying documented policies objectively and fairly.”
This is the big takeaway from an Independent Review Panel (IRP) decision regarding a long-running dispute over the .web top level domain name. ICANN consistently avoids making decisions to the detriment of its contracted parties and the internet community, and the battle over .web is a prime example.
Now, it’s being asked to show up and make a decision.
The dispute stems from the auction for the rights to the .web top level domain name.
Nu Dot Co, a business founded by .Co Internet’s founders, applied for the .web top level domain. After the application period closed, Verisign (NASDAQ: VRSN) decided it wanted to own .web and worked out a deal with Nu Dot Co in which Nu Dot Co would bid in the auction and Verisign would then buy the top level domain from it.
Nu Dot Co (NDC) won the auction for $135 million, which was the amount of the second-highest bid, placed by applicant Afilias.
Other applicants were upset. Not only did their rival Verisign win the auction, but Nu Dot Co decided to use an ICANN auction of last resort rather than a private auction in which the losing applicants stood to earn tens of millions of dollars each.
Donuts, another applicant, subsequently sued, but the judge dismissed the case.
After Donuts exhausted its options, Afilias picked up the baton and filed for cooperative engagement with ICANN. Then it escalated to the Independent Review Process.
Yesterday, ICANN published the IRP decision. The IRP determined that ICANN:
has violated its Amended and Restated Articles of Incorporation of Internet Corporation for Assigned Names and Numbers, as
approved by the ICANN Board on 9 August 2016, and filed on 3 October 2016 (Articles), and its Bylaws for Internet Corporation for Assigned Names and Numbers, as amended on 18 June 2018 (Bylaws)…
…by failing to make a decision.
The panel wrote:
It may be fair to say, as averred in the [ICANN’s] Response, that “ICANN has been caught in the middle of this dispute between powerful and well-funded businesses”. However, in the Panel’s view, it is not open to [ICANN] to add, as it does in the same sentence of its Response, “[and ICANN] has not taken sides”, as if [ICANN] had no responsibility in bringing about a resolution of the dispute by itself taking a position as to the propriety of NDC’s arrangements with Verisign.
In the opinion of the Panel, there is an inherent contradiction between proceeding with the delegation of .WEB to NDC, as [ICANN] was prepared to do in June 2018, and recognizing that issues raised in connection with NDC’s arrangements with Verisign are serious, deserving of [ICANN] consideration, and remain to be addressed by [ICANN] and its Board, as was determined by the Board in November 2016. A necessary implication of [ICANN’s] decision to proceed with the delegation of .WEB to NDC in June 2018 was some implicit finding that NDC was not in breach of the New gTLD Program Rules and, by way of consequence, the implicit rejection of the [Afilias’] allegations of non-compliance with the Guidebook and Auction Rules. This is difficult to reconcile with the submission that “ICANN has taken no position on whether NDC violated the Guidebook”.
Essentially, ICANN should have made a decision on whether the deal between Nu Dot Co and Verisign complied with the New gTLD Program Rules or not. Instead, it seems to have hoped that either the competing bidders would drop the matter or some outside group would make this decision for it.
The IRP determined that it did not have authority to decide that Afilias, the runner-up in the auction, should get the domain. It merely decided that ICANN has to do its duty: make a decision! At the same time, the IRP ordered ICANN to pay the majority of Afilias’ expenses and fees for the IRP.
So what does ICANN have to say about this? It still hopes to avoid making a decision. In a post on its website, it states:
The ICANN Board will consider the Final Declaration as soon as feasible, within the timeframe prescribed in the Bylaws, and remains hopeful that the relevant .WEB applicants will continue to seek alternatives to resolve the dispute between them raised during the IRP. (emphasis added)
Verisign issued a statement today urging ICANN’s board to proceed with contracting the domain.