domains Verisign statement on .web IRP decision

[Lox]

Recent Developments

As previously disclosed, a subsidiary of Afilias plc (“Afilias”), a competitor and losing bidder in the .web auction, raised objections to the .web auction by filing a form of arbitration proceeding against ICANN, called an Independent Review Process (“IRP”) under ICANN's bylaws, on November 14, 2018. Such an IRP is for the purpose of evaluating whether an action or omission by ICANN constituted a violation of ICANN’s bylaws. Despite the IRP’s limited jurisdiction, Afilias’ claims sought to have the IRP panel invalidate the .web auction and to award the .web TLD to Afilias. On May 21, 2021, the Company received the panel's Final Decision dated May 20, 2021.
Consistent with Verisign’s position, the panel dismissed Afilias' claims for relief seeking to invalidate the .web auction and to award the .web TLD to Afilias, concluding that such issues were beyond its jurisdiction. Furthermore, as we expected, consistent with Verisign’s position, the panel's ruling recommends that ICANN's Board of Directors consider the objections made about the .web auction and then make a decision on the delegation of .web.
With respect to ICANN, the ruling finds that certain actions and/or inaction by ICANN in response to Afilias’ objections violated aspects of ICANN's bylaws related to transparency and fairness. These findings are particular to ICANN’s actions and not conduct by Verisign. Verisign anticipates that ICANN's Board will review the panel's ruling and proceed consistent with the panel’s recommendation to consider the objections and make a decision on the delegation of .web.
Although Verisign intends to continue to vigorously pursue the delegation of .web, we can provide no assurance as to the ultimate resolution of this matter, including the decision of ICANN’s Board regarding the delegation of .web.

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[Lox]

ICANN .WEB Independent Review Process Update

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Altanovo (Afilias) prevails in .WEB arbitration

Panel rules that ICANN Staff and Board breached ICANN’s Bylaws by treating Afilias unfairly and by failing to disclose secret Verisign deal

An Independent Review Process (IRP) Panel in Afilias Domains No. 3 Limited (Afilias) v. Internet Corporation for Assigned Names and Numbers (ICANN), ICDR Case No. 01-18-0004-2702, has unanimously determined that ICANN violated its Articles of Incorporation and Bylaws by not acting fairly and transparently in addressing Afilias’ multiple complaints about VeriSign, Inc.’s (Verisign) attempt to circumvent ICANN’s rules for applying for the rights to operate the registry for .WEB—often considered the Internet generic top-level domain (gTLD) most likely to challenge Verisign’s .COM/.NET monopoly. The Panel’s key ruling states:

In the opinion of the Panel, [Afilias] is entitled to a declaration that [ICANN] violated its Articles and Bylaws . . . and to being designated the prevailing party in respect to the liability portion of its core claims.

ICANN’s Articles and Bylaws require the organization to “carry[…] out its activities in conformity with relevant principles of international law and international conventions and applicable local law and through open and transparent processes that enable competition and open entry in Internet-related markets.” The Bylaws also require ICANN to “[m]ake decisions by applying documented policies consistently, neutrally, objectively, and fairly, without singling out any particular party for discriminatory treatment (i.e., making an unjustified prejudicial distinction between or among different parties).” The documented policies include ICANN’s specific rules for the delegation of new gTLDs (New gTLD Program Rules), including application procedures, auction rules for deciding competing applications, and disclosure requirements.

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[Lox]

Verisign

IRP PANEL DISMISSES AFILIAS’ CLAIMS TO REVERSE .WEB AUCTION AND AWARD .WEB TO AFILIAS


On Thursday, May 20, a final decision was issued in the Independent Review Process (IRP) brought by Afilias against the Internet Corporation for Assigned Names and Numbers (ICANN), rejecting Afilias’ petition to nullify the results of the July 27, 2016 public auction for the .WEB new generic top level domain (gTLD) and to award .WEB to Afilias at a substantially lower, non-competitive price. Nu Dotco, LLC (NDC) submitted the highest bid at the auction and was declared the winner, over Afilias’ lower, losing bid. Despite Afilias’ repeated objections to participation by NDC or Verisign in the IRP, the Panel ordered that NDC and Verisign could participate in the IRP in a limited way each as amicus curiae.

Consistent with NDC, Verisign and ICANN’s position in the IRP, the Order dismisses “the Claimant’s [Afilias’] request that Respondent [ICANN] be ordered by the Panel to disqualify NDC’s bid for .WEB, proceed with contracting the Registry Agreement for .WEB with the Claimant in accordance with the New gTLD Program Rules, and specify the bid price to be paid by the Claimant.” Contrary to Afilias’ position, all objections to the auction are referred to ICANN for determination. This includes Afilias’ objections as well as objections by NDC that Afilias violated the auction rules by engaging in secret discussions during the Blackout Period under the Program Rules.

THE ORDER DISMISSES ALL OF AFILIAS’ CLAIMS OF VIOLATIONS BY NDC OR VERISIGN

Afilias’ claims for relief were based on its allegation that NDC violated the New gTLD Program Rules by entering into an agreement with Verisign, under which Verisign provided funds for NDC’s participation in the .WEB auction in exchange for NDC’s commitment, if it prevailed at the auction and entered into a registry agreement with ICANN, to assign its .WEB registry agreement to Verisign upon ICANN’s consent to the assignment. As the Panel determined, the relief requested by Afilias far exceeded the scope of proper IRP relief provided for in ICANN’s Bylaws, which limit an IRP to a determination whether or not ICANN has exceeded its mission or otherwise failed to comply with its Articles of Incorporation and Bylaws.

Issued two and a half years after Afilias initiated its IRP, the Panel’s decision unequivocally rejects Afilias’ attempt to misuse the IRP to rule on claims of NDC or Verisign misconduct or obtain the .WEB gTLD for itself despite its losing bid. The Panel held that it is for ICANN, which has the requisite knowledge, expertise, and experience, to determine whether NDC’s contract with Verisign violated ICANN’s Program Rules. The Panel further determined that it would be improper for the Panel to dictate what should be the consequences of an alleged violation of the rules contained in the gTLD Applicant Guidebook, if any took place. The Panel therefore denied Afilias’ requests for a binding declaration that ICANN must disqualify NDC’s bid for violating the Guidebook rules and award .WEB to Afilias.

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