United States: ICANN Domain Name Dispute Resolution Not an Arbitration Under Federal Arbitration

A domain name dispute decided pursuant to the ICANN Uniform Domain Name Dispute Resolution Policy (UDRP) is not an arbitration under the U.S. Federal Arbitration Act (FAA) and, thus, is not entitled to the deferential standard of judicial review afforded by the FAA. Dluhos v. Strasberg, Case No. 01-3713, 2003 U.S. App. LEXIS 3014 (3rd Cir. February 20, 2003).

The plaintiff, Dluhos, registered the domain name leestrasberg.com, invoking the name of well-known acting coach Lee Strasberg. Mr. Strasberg’s widow and estate brought a complaint against Dluhos pursuant to the ICANN UDRP, and the UDRP panel ordered that the domain name be transferred to the Strasbergs. Dluhos in turn filed a complaint in federal court seeking, among other things, restoration of his right in the domain name. The district court reviewed the UDRP decision under the FAA’s extremely deferential standard of review, under which a district court may only vacate an arbitration award: when the arbitrators were guilty of misconduct, or when the evidence demonstrates a "manifest disregard of the law." Applying these highly deferential standards, the district court granted the Strasberg motion to dismiss Dluhos’ complaint.

The U.S. Court of Appeals for the Third Circuit reversed and remanded, holding that a non-binding ICANN UDRP decision is not an "arbitration under the FAA, which only applies to ‘contracts… to settle disputes by arbitration.’" Unlike dispute resolution mechanisms covered by the FAA, the UDRP was not intended to replace formal litigation; the unique contractual arrangement under the UDRP contemplates the possibility of judicial intervention by either party at any time, including before, during or after the UDRP process. Moreover, the Third Circuit reasoned that since the trademark holder is not required to participate in a UDRP such proceeding before moving ahead in court, the UDRP proceedings do not qualify as the type that would entail a court’s compelling parties’ participation prior to independent judicial review—a power that is granted to federal courts under the FAA. Accordingly, the Third Circuit held that judicial review of UDRP decisions is not restricted to a motion to vacate an arbitration award under the FAA, which applies only to binding proceedings likely to realistically settle the dispute.

Finally, the Third Circuit held that although a private contractual covenant such as the UDRP cannot confer federal jurisdiction where none independently exists, in enacting the U.S. Anticybersquatting Consumer Protection Act (ACPA), Congress explicitly created a cause of action by which UDRP decisions may be challenged. Noting that its decision did not intimate a belief that the UDRP panelist erred in its judgment, but merely that the decision was not entitled to deference under the FAA, the Third Circuit remanded the matter to the district court with the direction that it review the UDRP decision de novo under the ACPA.