ICANN’s dismal record of adverse Independent Review Process decisions continued last week, with a panel of arbitrators telling the Org to shape up its transparency and decision-making processes.
The panel has essentially ruled that ICANN did everything it could to be a secretive as possible when it decided to remove price controls from its .org and .info registry contracts in 2019.
This violated its bylaws commitments to transparency, the IRP panel found, at the end of a legal campaign by Namecheap commenced over three years ago.
Namecheap wanted the agreements with the two registries “annulled”, but the panel did not go that far, instead merely recommending that ICANN review its decision and possibly enter talks to put the price caps back.
But the decision contains some scathing criticisms of ICANN’s practice of operating without sufficient public scrutiny.
Namecheap had argued that ICANN broke its bylaws by not only not applying its policies in a non-discriminatory manner, but also by failing to adequately consult with the community and explain its decision-making.
The registrar failed on the first count, with the IRP panel ruling that ICANN had treated registry contract renegotiations consistently over the last 10 years — basically trying to push legacy gTLDs onto the 2012-round base Registry Agreement.
But Namecheap succeeded on the second count.
The panel ruled that ICANN overused attorney-client privilege to avoid scrutiny, failed to explain why it ignored thousands of negative public comments, and let the Org make the price cap decision to avoid the transparency obligations of a board vote.
Notably, the panel unanimously found that: “ICANN appears to be overusing the attorney-client privilege to shield its internal communications and deliberations.”
As one example, senior staffers would copy in the legal team on internal communications about the price cap decision in order to trigger privilege, meaning the messages could not be disclosed in future, the decision says.
ICANN created “numerous documents” about the thinking that went in to the price cap decision, but disclosed “almost none” of them to the IRP due to its “overly aggressive” assertion of privilege, the panel says.
As another example, staffers discussed cutting back ICANN’s explanation of price caps when it opened the subject to public comment, in order to not give too much attention to what they feared was a “hot” and “sensitive” topic.
ICANN’s failure to provide an open and transparent explanation of its reasons for rejecting public comments opposing the removal of price controls was exacerbated by ICANN’s assertion of attorney-client privilege with respect to most of the documents evidencing ICANN’s deliberations…
ICANN provided a fairly detailed summary of the key concerns about removing price caps, but then failed to explain why ICANN decided to remove price caps despite those concerns. Instead, ICANN essentially repeated the explanation it gave before receiving the public comments.
The panel, which found similar criticisms in the earlier IRP of Dot Registry v ICANN, nevertheless decided against instructing ICANN to check its privilege (to coin a phrase) in future, so the Org will presumably be free to carry on being as secretive as normal in future.
Namecheap also claimed that ICANN deliberately avoided scrutiny by allowing Org to remove the price caps without a formal board of directors resolution, and the panel agreed.
The Panel finds that of the removal of price controls for .ORG, .INFO, and .BIZ was not a routine matter of “day-to-day operations,” as ICANN has asserted. The Price Cap Decision was a policy matter that required Board action.
The panel notes that prior to the renewal of .org, .info and .biz in 2019, all other legacy gTLD contracts that had been renewed — including .pro, which also removed price caps — had been subject to a board vote.
“ICANN’s action transitioning a legacy gTLD, especially one of the three original gTLDs (.ORG), pursuant to staff action without a Board resolution was unprecedented,” the panel writes.
Quite why the board never made a formal resolution on the .org contract is a bit of a mystery, even to the IRP panel, which cites lots of evidence that ICANN Org was expecting the deal to go before the board as late as May 13, 2019, a month before the anticipated board vote.
The .org contract was ultimately signed June 30, without a formal board resolution.
(Probably just a coincidence, but Ethos Capital — which went on unsuccessfully to try to acquire .org registry Public Interest Registry from ISOC later that year — was formed May 14, 2019.)
The IRP panel notes that by avoiding a formal board vote, ICANN avoided the associated transparency requirements such as a published rationale and meeting minutes.
The panel in conclusion issued a series of “recommendations” to ICANN.
It says the ICANN board should “analyze and discuss what steps to take to remedy both the specific violations found by the Panel, and to improve its overall decisionmaking process to ensure that similar violations do not occur in the future”.
The board “should consider creating and implementing a process to conduct further analysis of whether including price caps in the Registry Agreements for .ORG and .INFO is in the global public interest”
Part of that process should involve an independent expert report into whether price caps are appropriate in .info and especially .org.
If it concludes that price controls are good, ICANN should try to amend the two registry agreements to restore the caps. If it does not conduct the study, it should ask the two registries if they want to voluntarily restore them.
Finally, the panel wrote:
the Panel recommends that the Board consider revisions to ICANN’s decision-making process to reduce the risk of similar procedural violations in the future. For example, the Board could adopt guidelines for determining what decisions involve policy matters for the Board to decide, or what are the issues on which public comments should be obtained.
ICANN is on the hook to pay the panel’s fees of $841,894.76.
ICANN said in a statement that it is “is in the process of reviewing and evaluating” the decision and that the board “will consider the final declaration as soon as feasible”.
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