ICM v. ICANN

ICM v. ICANN was the first Independent Review Process proceeding, held between 2008-2011. It was focused on ICM Registry, LLC's application for the sponsored TLD .xxx. ICM prevailed.

Summary

On June 6, 2008, ICM Registry LLC, a company based in Florida which was established to apply and serve as the .xxx sponsored top level domain name (sTLD) manager filed a request for independent review of Board actions after the ICANN Board rejected its application in March, 2007. The company claimed that ICANN's decision to reject ICM's application were "arbitrary, lacking in transparency and discriminatory," a clear violation of the organization's Bylaws. The complaint was filed by ICM to the International Centre for Dispute Resolution (ICDR) whereby the company asked the IRP to invalidate ICANN's decision. In addition, ICM also requested the IRP to declare that the company fulfilled all the requirements set by the RFP, direct ICANN to immediately execute a Registry agreement between ICANN and ICM and require ICANN to pay all the expenses incurred by the company in conjunction with its .xxx application including legal fees.

On September 8, 2008, ICANN responded to the ICM complaint and pointed out that its decision was "consistent with the organization's Mission Statement, Articles of Incorporation and Bylaws and its negotiations with the company had been open, transparent and in good faith." In addition, ICANN reasoned that its Bylaws required the Board to consider the opinion of the Governmental Advisory Committee (GAC). In the case of .xxx TLD, ICM knew that the string was highly controversial and the GAC raised its concerns regarding the company's proposal. Those concerns were considered by ICANN in its decision. ICANN also explained that it never asserted any commitment or assured the company regarding the approval of its application. Furthermore, the internet governing body pointed out that it did not base its entire decision on the strong recommendation of the Independent Evaluation Panel to deny its application because it did not meet the sponsorship criteria for the application process.

On February 18, 2010, the IRP declared that ICM Registry met the required sponsorship criteria for the .xxx sTLD application process, and that ICANN did not carry out a fair and objective assessment. At the time, the ICANN Bylaws permitted the prevailing party to recoup its administrative fees and costs. The IRP Panel shifted all fees and costs to ICANN, including all the expenses and fees of the IRP ($473,744.91). ICANN was instructed to reimburse the ICM registry's expenses ($241,372.46). The IRP Panel expressly stated that "the holdings of the Independent Review Panel are advisory in nature; they do not constitute a binding arbitral award."

In response, the board created a series of decisional planning documents to determine how to move forward with ICM's application. In June 2010, the board determined that it would "accept and act in accordance with some of the Panel's findings" while continuing to deliberate on the full findings of the IRP Panel. The accepted findings were that that ICANN Board initially determined that ICM met the sponsorship criteria, and then reconsidered that decision in a manner inconsistent with neutral, fair and objective documented policy. The Board approved the following steps as a result:

1. staff to conduct expedited due diligence to ensure that: (1) the ICM Application is still current; and (2) there have been no changes in ICM's qualifications.
2. if the expedited due diligence results are successful, ICANN staff to proceed into draft contract negotiations with ICM, taking into account the GAC advice received to date.
3. upon staff's finalizing of a draft contract with ICM, the Board will determine whether the proposed contract is consistent with GAC advice, and if not, will enter into GAC consultation in accordance with the Bylaws.
4. after the GAC consultation is completed, the Board will decide whether to approve the contract, and will declare whether its action is in accordance with GAC advice or not.

In December 2010, the board initiated consultation with the GAC with the intention of entering into a registry agreement with ICM. In March 2011, the Registry Agreement with ICM was approved, with the board acknowledging good faith efforts to reach a consensus with the GAC, and noting that the GAC advice was not followed. It is unclear whether the Board accepted and approved the proposed reimbursement to ICM.