ICANN Ombudsman Blog Creating Dialogue Affirming Fairness

May 28, 2015

New Ombudsman Report on Dot Amazon

Filed under: Uncategorized — Chris LaHatte @ 4:41 pm

Office of the Ombudsman
Case 14-00333
In a matter of a Complaint by Amazon EU S.a.r.l.
Report dated 28th May 2015

Introduction

This investigation is about an application for a new generic top level domain string for .amazon, by Amazon EU Sa.r.l, a subsidiary of the well known Amazon company known for on line sales of a wide range of products, throughout the world. They sought the use of this string as a natural flow on from the use of the corporate name and trademark in the word Amazon. The application for this string attracted considerable opposition from several South American countries, who channeled this though the Government Advisory Committee (GAC), an advisory committee to ICANN. The GAC then provided advice to the New gTLD Program Committee (NGPC), a committee of the ICANN Board, objecting to the delegation. This advice and objection procedure was enabled by the Applicant Guidebook, created by ICANN and the ICANN Community for the purpose of stating the necessary procedure for applicants for the new strings.
The NGPC accepted the GAC advice and as a result the application for the string came to a halt. Amazon then sought a reconsideration request, as provided in the ICANN Bylaws for such decisions, numbered 14 – 27 in the ICANN system. The resulting decision from the ICANN Board Governance Committee (BGC) who have the delegated power to decide reconsideration requests, declined to do so. As is the current practice, the BGC suggested that if Amazon was unhappy with the result, then they could ask the Ombudsman to review the decision, and Amazon have chosen to do so.

Facts

The essence of the complaint is that Amazon have complained that they have been treated unfairly because there is a conflict of interest by the members of the two ICANN committees who have considered the issues and made a number of decisions. Both the NGPC and BGC committees are made up of ICANN Board members, and have some but not all members in common.
The first decision was made by the NGPC to accept GAC advice that the string for .amazon should not proceed. Amazon then used the reconsideration process to ask the ICANN Board to review that decision. The BGC then made a recommendation which was referred back to the NGPC for final action. The effect is that the application for the string was not able to proceed. Amazon however assert that there is a conflict of interest created by the fact that the NGPC and BGC committees of the board have the same ICANN board members. They say that this made the process fundamentally and inherently unfair, and submit that the process precluded any meaningful and objective review of the reconsideration request.

Investigation

To undertake this investigation I have read the application for reconsideration request and related papers sent to ICANN by Amazon, the minutes of the two ICANN committees and the final reconsideration decision. I have discussed the matter with ICANN and with representatives of Amazon. I have sought comment on specific aspects including a specific request from me, to comment on the knowledge of the Applicant Guidebook. I was concerned that community, and specifically Amazon, as part of the community would have been aware of the terms of the AGB and the procedure. The AGB was issued in a number of iterations, and developed in a policy development process by the community, and the version relevant to the Amazon application, was January 2012. Subsequent to the guidebook being developed and published, the ICANN board specifically created a new committee to deal with the new generic names, which was the NGPC committee. This was created by a resolution on 10 April 2012. This committee then proceeded to deal with various aspects of the program, and in due course the decision from the GAC, which effectively halted the Amazon application.
Amazon note in their submissions to me, that by the time this committee had been created they had already filed their application for the .Amazon string.

Issues

The issue which I am required to investigate is whether there is a conflict of interest of such a nature which made the decisions unfair. The issue which flows from this is whether the members of the ICANN committees can reach their decisions having regard to their dual capacity as members of both committees. In other words does membership of the NGPC taint any decisions made subsequently as a member of the BGC? Do the openly disclosed declarations of conflict made by the members of the committees make the decision acceptable?
Jurisdiction
This is a matter where I clearly have jurisdiction. If there is a conflict of interest in a decision made by the board or committees of the board, then I have jurisdiction to make a recommendation about the procedure and the result. I do not have the power to set aside the result but only to suggest that the matter be reviewed, if the process was tainted by a conflict of interest, if one existed.

Reasoning

It must be assumed that the applicants for all of the new generic top level domains would have spent some time familiarising themselves with the AGB and the process. The procedure for reviewing board decisions by the reconsideration procedure is also well established, although perhaps not as well known at the start of the programme, as the present, after so many new gTLD applicants have used the procedure. The point is that when the applicants made their applications for the new names, they should have also considered the process and the procedure which would be needed, particularly when dealing with adverse decisions.
It would be well known to applicants that any decisions made by the ICANN board were subject to the accountability functions of the ombudsman, reconsideration request and independent review panel. So in terms of fairness, all of the applicants would be aware that the process for dealing with issues of procedural fairness would need to be undertaken using those accountability functions. They have signed up to the process in other words.
Amazon has however been concerned that the NGPC committee was only formed after the applications had been filed. They raise the issue that they did not know that such a committee would be formed, and therefore could not have waived any right to object to this committee and the BGC making decisions on the reconsideration process. The NGPC committee was of course set up to deal specifically with the process, but it is important to note that it is a committee of the ICANN board, which has the power to delegate decision-making in this fashion. The alternative way of dealing with the issues arising out of the new gTLD program would have been to place these before the board as a whole, but obviously this would be cumbersome. So the creation of this subcommittee is not of itself unfair or using an unfair process. So in my view there is nothing problematic in the creation of this committee after the various applications for the new names were made. It was a predictable and appropriate use of the board’s resources.
Amazon state that they could not have consented to any process that did not even exist when they filed the application and therefore could not waive any potential conflict of interest. They submit that there was never any consent, and that they specifically objected to the conflict of interest in the Request for Reconsideration with a specific reference in a letter of 3 June 2014 to the BGC, raising the issues of conflict. They sought specific comment from the BGC, but assert they do not ever receive a response from ICANN. This appears to be one of their principal concerns.
The real difficulty arises because the board is relatively small, and the committees required a minimum number to be able to properly consider the issues. If the decisions had been made by the entire board that would not have resolved any potential conflict of course. But it is also important to note the procedure for identifying potential conflicts and the requirement by board members to complete forms relating to any potential conflict. In addition, they are expected to identify any new conflicts which arise during any discussion and decision making.
It is also important to note that there is a different issue with conflict which arises during a judicial process and decisions made by a corporate board. A difficulty does arise when the board is acting in a quasi-judicial capacity, as with the reconsideration. Then the issue is whether a higher standard of conflict of interest should apply?
The key issue with any conflict of interest is disclosure of the conflict. Some conflicts will require recusal from decision making but others will just require disclosure, but the board member can still vote on the issue. As long as the parties are aware of the decision makers, and their role, and importantly, do not object at the appropriate time to the decisions being made by the board committees. The membership of the committees is an open matter, and available on the ICANN website. So by opting to use the reconsideration process, Amazon were on notice that the membership was common to both. But although they did raise this when making the application for reconsideration, nothing was done by ICANN. If they had asked for a BGC committee to be constituted of non NGPC members to reconsider, then this would have resolved any conflict. In terms of the standard test has this created a perception of bias on the part of the BGC?
I have been troubled by this issue. On one hand the members of the ICANN board are both required to be, and have been transparent in disclosing any potential conflicts of interest. But because Amazon raised the issue of the perception of conflict, without this being addressed, should this affect the fairness of the process? My jurisdiction is to examine the fairness of the process. This is not an abstract exercise, and for me to make a recommendation about the reconsideration decision, I must be able to identify something about the process which is caused a disadvantage to Amazon.
It is important to note that the scope for the BGC to reopen the decision is in very narrow focus in any event. The jurisdiction to set aside a reconsideration decision can only focus on quite specific issues which are set out in the bylaw as follows:-
Section 2. Any person or entity may submit a request for reconsideration or review of an ICANN action or inaction (“Reconsideration Request”) to the extent that he, she, or it have been adversely affected by:
a. one or more staff actions or inactions that contradict established ICANN policy(ies); or
b. one or more actions or inactions of the ICANN Board that have been taken or refused to be taken without consideration of material information, except where the party submitting the request could have submitted, but did not submit, the information for the Board’s consideration at the time of action or refusal to act; or
c. one or more actions or inactions of the ICANN Board that are taken as a result of the Board’s reliance on false or inaccurate material information.
Of course, in the course of a review of fairness, I cannot address the reasons for the decision. But it is important to note in practical terms, that the BGC simply does not have much room to move on setting aside the NGPC decision. This includes the power to reject the application. Provided the BGC adheres to the limits of its jurisdiction, and makes a decision consistent with the specific power, then issues of unfairness will be limited in scope.
It is also important to note that these are decisions of a corporate entity rather than a formally constituted tribunal or court. The ICANN board is made up of volunteers, and relies upon advice from counsel within ICANN, and with some exceptions, they are not qualified or practising lawyers. The necessary standard of conflict of interest and disclosure appears to be of a high standard compared to many other corporate entities. From considering the decisions made from time to time, and reading the minutes of the board it is apparent that the possibility of conflict of interest is frequently examined, and board members do recuse themselves on a regular basis when making decisions.
In this situation, what should the ICANN BGC committee have done when Amazon raised the issue of the perception of bias? The best way to resolve an issue of perception of bias, is to answer this with a robust response, with transparency and openness. In this case, the issue has not been addressed by ICANN. My discussions with ICANN staff have certainly made it clear that they do not regard this as an issue which affects the result. The appropriate way to resolve such a perception of bias would be to recommend a rehearing. I have considered this matter at some length because of the importance of the issue. There are two factors which need to be considered, the first being the issue of proportionality. I have already discussed the different standard for a corporate board of directors from a judicial tribunal. When this is placed in proportion, it seems to me the standard, in proportion, may not require a rehearing. The second factor in combination with proportionality, is that if there was a rehearing, could the BGC, with the constraints on its ability to examine the decision, reach a different result? I am not sure that they would be able to do so, because there is no change in the factual matrix and other issues.
As I have been considering this report, there has been a contemporaneous debate about the accountability functions within ICANN, including considerable criticism of the reconsideration process. It appears to be accepted that there are limitations with reconsideration because of the very specific jurisdiction, which only provides a narrow scope for setting aside a decision. It may be useful to consider some protections to avoid assertions of conflict of interest, if the reconsideration model is to be re-examined and modified.

Result

As a result of this investigation, I consider that the existing structure has some issues, but that this is a matter for perhaps the current examination of accountability structures and the review of the New GTLD programme in the future. Although this comes close to the need for a recommendation for a rehearing, on the balance I cannot therefore recommend this.

Chris LaHatte
Ombudsman

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