MARINA DEL REY, Calif.—Dot-xxx, the controversial sponsored top-level domain (sTLD) rejected in March 2007 by the Internet Corporation for Assigned Names and Numbers (ICANN), has risen from the dead...again.
Late Friday, with a vote of 2-1, an independent review panel (IRP) convened by the International Centre for Dispute Resolution sided with dot-xxx registrar applicant ICM Registry, declaring the ICANN board violated its own charter when it rejected ICM's application to establish and manage the proposed adult-oriented web space.
ICM Chairman Stuart Lawley sought arbitration in March 2009 in a bid to keep the application alive after ICANN's 2007 decision reversed a June 2005 approval. At the time of the rejection, ICANN's then-Chairman Vinton Cerf declared, chuckling, that dot-xxx would be resurrected only "over my dead body."
While the IRP decision is not binding, ICANN's current board nonetheless has been directed to reconsider its predecessor's 2007 decision. The current board is significantly different in constitution and attitude. In addition, sTLDs have been abandoned in favor of ICANN's new plan to grant general TLDs to almost any group wanting to claim one.
As expected, Friday's decision reflected the real nub of the controversy (and disagreement) that has plagued ICM's application from the beginning; namely, the depth of support for the application that existed (and exists) within the "sponsored community"—i.e. the adult entertainment industry. That support was a required component of the sponsored TLD application process.
In its report, the IRP acknowledged the intense disagreement between ICANN and ICM regarding a vote taken by the board during a June 1, 2005, teleconference during which, in a 6-3 vote, the following resolution was passed:
Resolved…the board authorizes the president and general counsel to enter into negotiations relating to proposed commercial and technical terms for the [dot-xxx] sponsored top-level domain (sTLD) with the applicant.
Resolved…if after entering into negotiations with the [dot-xxx] sTLD applicant the president and general counsel are able to negotiate a set of proposed commercial and technical terms for a contractual arrangement, the president shall present such proposed terms to this board for approval and authorization to enter into an agreement relating to the delegation of the sTLD.
The report makes clear the pivotal role that June 1 vote would play in its ultimate decision.
The IRP report states, "The panel will initially consider the primary questions of whether by adopting the resolutions of June 1, 2005, the ICANN board determined that the application of ICM Registry met the sponsorship criteria, and, if so, whether that determination was definitive and irrevocable.
"ICM contends that [the June 2005] decision was definitive and irrevocable," the report continues. "ICANN contends that, while negotiating commercial and technical terms of the contract, its board continued to consider whether or not ICM’s application met sponsorship criteria, that it was entitled to do so, and that, in the course of that process, further questions about ICM’s application arose that were not limited to matters of sponsorship, which the board also ultimately determined adversely to ICM’s application."
In the end, two of the three arbitrators found that ICANN should have put the sponsorship question to rest after June 2005 and entered into final contract negotiations with ICM Registry.
The 79-page report is available here. Though it will take some time to analyze fully, upon first read there appears to be a small but significant inconsistency in the assessment by the IRP of the "integrity" and objectivity of the board with respect to its final vote in 2007 as well as its general handling of the ICM Registry application.
In its conclusion, the IRP says, on the one hand, "[t]he panel does not question the integrity of the ICANN board’s disposition of the ICM Registry application, still less that of any of the board’s members." Soon afterward, however, this follows: "ICM argues that its application was rejected in part because of its inability to comply with a contractual undertaking to which it never had agreed in the first place.... To the extent that this is so—and the facts and the conclusions drawn from the facts by the ICANN board in its resolution of March 30, 2007, in this regard are not fully coherent—the Panel finds ground for questioning the neutral and objective performance of the board, and the consistency of its so doing with its obligation not to single out ICM Registry for disparate treatment." [Emphasis added.]
That sounds as if the panel found itself between a rock and a hard place and decided the wiser course consisted of punting on the questions of integrity and independence and instead deciding the ultimate question on fairly narrow and technical grounds. The panel took pains, however, to acknowledge its discomfort with the requirement that it reach a conclusion on the matter even though the "record is inconclusive" on the all-important question of sponsorship for the domain.
"While the panel has concluded that by adopting its resolutions of June 1, 2005, the board found that ICM’s application met financial, technical and sponsorship criteria," the report notes. "Less clear is whether that determination was subject to reconsideration. The record is inconclusive [for conflicting reasons favoring both ICANN and ICM]. The panel nevertheless is charged with arriving at a conclusion on the question.
"In appraising whether ICANN on this issue 'applied documented policies, neutrally and objectively, with integrity and fairness' (Bylaws, Section 2(8)), the panel finds instructive the documented policy stated in the board’s Carthage resolution of October 31, 2003, on 'Finalization of New sTLD [request for proposals],' namely, that an agreement 'reflecting the commercial and technical terms shall be negotiated upon the successful completion of the sTLD selection process.'"
The IRP report concludes, "In the panel’s view, the sTLD process was 'successfully completed,' as that term is used in the Carthage RFP resolution, in the case of ICM Registry with the adoption of the June 1, 2005, resolutions. ICANN should, pursuant to the Carthage documented policy, then have proceeded to conclude an agreement with ICM on commercial and technical terms, without reopening whether ICM’s application met sponsorship criteria."
No matter how one feels about the IRP decision, an inescapable irony remains that the one voice missing throughout the resolution process is the one that belongs to the very community being dissected and discussed—the adult entertainment industry. In essence, the IRP concluded that the industry's voice was appropriately silenced as of June 1, 2005, and that its attempts to be heard after that date should have no bearing on the board's final decision regarding a dot-xxx sTLD.
The conclusion of the panel is, as follows:
First, the holdings of the independent review panel are advisory in nature; they do not constitute a binding arbitral award.
Second, the actions and decisions of the ICANN board are not entitled to deference whether by application of the “business judgment” rule or otherwise; they are to be appraised not deferentially but objectively.
Third, the provision of Article 4 of ICANN’s Articles of Incorporation prescribing that ICANN “shall operate for the benefit of the internet community as a whole, carrying out its activities in conformity with relevant principles of international law and applicable international conventions and local law,” requires ICANN to operate in conformity with relevant general principles of law (such as good faith) as well as relevant principles of international law, applicable international conventions and the law of the State of California.
Fourth, the board of ICANN in adopting its resolutions of June 1, 2005, found that the application of ICM Registry for the [dot-xxx] sTLD met the required sponsorship criteria.
Fifth, the board’s reconsideration of that finding was not consistent with the application of neutral, objective and fair documented policy.
Sixth, in respect of the first foregoing holding, ICANN prevails; in respect of the second foregoing holding, ICM Registry prevails; in respect of the third foregoing holding, ICM Registry prevails; in respect of the fourth foregoing holding, ICM Registry prevails; and in respect of the fifth foregoing holding, ICM Registry prevails. Accordingly, the prevailing party is ICM Registry. It follows that, in pursuance of Article IV, Section 3(12) of the bylaws, ICANN shall be responsible for bearing all costs of the IRP provider. Each party shall bear its own attorneys’ fees. Therefore, the administrative fees and expenses of the International Centre for Dispute Resolution, totaling $4,500.00, shall be borne entirely by ICANN, and the compensation and expenses of the independent review panel, totaling $473,744.91, shall be borne entirely by ICANN. ICANN shall accordingly reimburse ICM Registry with the sum of $241,372.46, representing that portion of said fees and expenses in excess of the apportioned costs previously incurred by ICM Registry.
