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Accountability and Redress

David Maher

In ICANN circles these days, accountability is the buzz word. Nearly everybody is talking about it. Generally everybody is in favor of it, but that's where the agreement ends. This paper urges action by ICANN to provide a means for redress of grievances as an essential element of accountability.

I would like to review the ICM case (the delegation of the .xxx domain), and the role of ICANN's Independent Review Panel (the IRP). As you will recall, the ICANN Board had originally awarded .xxx to ICM, but in a subsequent reconsideration had reversed the award. The Review Panel, in a split decision, found that the ICANN Board's reconsideration "was not consistent with the application of neutral, objective and fair documented policy." Following the Panel's declaration, the ICANN Board again reversed itself and made the award to ICM.

Accountability and redress worked in the ICM case, but ICANN did not see it that way. ICM sought and received redress for what it considered a raw deal from ICANN. ICANN, however, decided that a change in the ground rules was needed in order to avoid further and similar embarrassments.

ICANN offers three avenues for redress of perceived failures to abide by its established policies. Article IV of the ICANN Bylaws provides a process for Request for Reconsideration (Section 2), and a separate process for "independent third-party review of Board actions...." (Section 3). Article V of the Bylaws establishes the office of an Ombudsman.

Independent third party review was the procedure invoked by ICM. At the time ICM requested review, in June 2008, the standard of review was simple and straightforward:

"Requests for such independent review shall be referred to an Independent Review Panel ("IRP"), which shall be charged with comparing contested actions of the Board to the Articles of Incorporation and Bylaws, and with declaring whether the Board has acted consistently with the provisions of those Articles of Incorporation and Bylaws."

Effective in April 2013, the ICANN Board made a number of significant changes in the standard of review. First, requests for review are now referred to an Independent Review Process Panel (emphasis added). In other words, only the process is subject to review, not the real question whether the Board acted consistently with the ICANN articles and bylaws.

To nail this down, the Board specified three areas for allowable review:
"The IRP Panel must apply a defined standard of review to the IRP request, focusing on:

  1. did the Board act without conflict of interest in taking its decision?;
  2. did the Board exercise due diligence and care in having a reasonable amount of facts in front of them?; and
  3. did the Board members exercise independent judgment in taking the decision, believed to be in the best interests of the company?"

Why would ICANN make these changes? One clear reason is that ICANN wanted to reverse the findings of the Independent Review Panel in the ICM case. In the proceedings leading up to the Panel's declaration, ICANN had argued that the Panel should apply a California legal concept known as the "business judgment" rule; this rule would require the Panel to give deference to the Board's decision. In essence, ICANN argued that only a showing of bad faith on the part of the Directors could be a basis for reversing the Board's decision. The Panel rejected ICANN's argument and made a full and independent review of the Board's actions.

ICANN's desire to escape from the conclusions of the Panel declaration has been stated explicitly. In the debate over the recommendations of the second Accountability and Transparency Review Team (ATRT2), ICANN legal staff posted a comment taking direct issue with the Panel declaration. ICANN asserted:

"… it is important to note that the grounds for bringing an IRP *have not been changed in any way, and have not been restricted.* As a California corporation, the business judgment rule does apply to the acts of the Board. That's a reality that ICANN cannot change, just as ICANN cannot cede its decision making to a third party."

This is disingenuous. While the grounds for bringing an IRP have not changed, the power of a Panel to determine whether or not ICANN has violated its policies has been severely limited. As to the business judgment rule, the ICANN view of reality is at odds with the decision of the arbitrators in the ICM case. The business judgment rule is intended to protect directors from personal liability when they have acted in good faith, not to prevent a review of corporate decisions, as occurred in the ICM case. The assertion that ICANN cannot cede its decision making to a third party merely obfuscates the question of how to compel ICANN to live up to its legal obligations.

Another reason for ICANN's alterations to its bylaws was its concern with the money involved. ICANN also stated, in the same ATRT2 comments:

"… there is a place for the business judgment rule considerations to be brought into the IRP proceedings, as opposed to wasting millions of dollars in attorney time and panelist time (and the requester's and ICANN's money) fighting about what an appropriate standard of review could be in an IRP proceeding."

The wasting of time and money was, of course, entirely due to ICANN's intransigence in the first place. It is a sore loser's complaint.

Beyond the arguments about ICANN's manipulation of its bylaws, there remains a real issue that should be at the heart of the debate on accountability — how can a party aggrieved by an ICANN decision have a meaningful opportunity for redress?

As a first principle, ICANN should not be judge and jury in review proceedings. Even the pre-2013 version of the bylaws establishing the Independent Review Panel is less than ideal. The findings of a panel are not binding in the traditional sense of arbitration decisions. The declaration of a panel is in the form of recommendations to the ICANN Board, and it is up to the Board to act on those recommendations. In order to be truly independent the Independent Review Panel should be outside the control of ICANN, and its decisions should be binding on ICANN.

There is a long way to go in the debate over ICANN's accountability and the availability of redress for legitimate grievances. At the very least, ICANN should start by reversing the 2013 bylaw amendments. The community should come together to plan an independent review system. Ideally, review should be available not only for failure to adhere to the articles of incorporation and bylaws, but also for departures from ICANN's contractual obligations.

The unanimous statement by the constituencies and stakeholder groups making up the GNSO put it clearly:

"The entire GNSO join together today calling for the Board to support community creation of an independent accountability mechanism that provides meaningful review and adequate redress for those harmed by ICANN action or inaction in contravention of an agreed upon compact with the community."

By David Maher, Attorney
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