The World Intellectual Property Organization (“WIPO”) recently announced that it has registered its 50,000th “cybersquatting” case, a major milestone capping two decades of pro-consumer activity ensuring Internet users can easily find genuine sites for the brands they love and trust.
Given the pandemic and the realities of working from home, businesses and consumers are relying heavily on the Internet – whether to perform their jobs, to shop online, or to inform themselves about the current news and on staying safe in the current pandemic.
The Uniform Domain Name Dispute Resolution Policy (“UDRP” or the “Policy”), with its set of transnational rules entrenched in the Policy itself is of great importance to fight cybersquatting, and its relevance will no doubt continue to grow.
Nevertheless, there are instances where certain domain name disputes cannot be solved under the UDRP, rather under arbitration rules; I will discuss below the applicable law in such cases.
Context for UDRP
To put things into context, given the multijurisdictional character of the Internet on one side and the territoriality of trademark rights, and the speed of registering domain names, on the other side, solving conflicts between trademark owners and domain name registrants before national courts is not always a feasible option.
It was for these reasons that in 1999 WIPO established the UDRP for resolution of disputes arising from registration of abusive Internet domain names. As explained in a previous post, the procedure is limited in scope at preventing abusive registration of domain names (cybersquatting) and not solving complex litigation between parties, such as those deriving from prior commercial relationship.
Main Features of the UDRP
The UDRP is incorporated by reference into the registration agreement entered between each domain name holder and the entity with which such domain name is registered (i.e. the registrar). Therefore, from the outset, from the date of the registration of a domain name, the registrant accepts that in case a third party, whose trademark right was breached by the registration of the domain name, initiates a UDRP proceeding, the registrant will accept to be a party in the proceedings and will be bound to the decision, without the access to courts being denied.
As with all extrajudicial alternative dispute resolution procedures, the authority for the UDRP resides in a contract.
The difference is that it is not a contract between the parties to the dispute.
Rather, in the case of UDRP, there is a set of contractual relations that binds together the participants in the DNS.
A first contract in the set of contractual relations is the contract between ICANN – which accredits registrars to accept registrations of domain names – and the registrars. The terms of such contractual accreditation require the registrars to respect the decisions of panels under the UDRP and to require persons who apply to them for domain name registrations to also comply with the UDRP.
The later obligation is, in turn, implemented in the contracts between the registrars and applicants for domain name registrations.
Although sometimes referred to as domain name arbitration, the UDRP procedure is not an arbitration procedure. Rather, it is a sui-generis alternative dispute resolution procedure, or as often called, an administrative procedure, because, unlike an arbitration, UDRP proceedings expressly allow recourse to national courts.
Also, (i) there is no arbitration agreement between the parties to the dispute; rather, the procedure is based on the domain name registrant’s consent given in the registration agreement of the domain name; (ii) the decision issued by an administrative panel does not need to be enforced in a court of law; rather, the registrar of the domain name must enforce the decision based on its contractual obligation to ICANN, as the accrediting body; (iii) courts of law are not bound by UDRP decisions, as in case of arbitral awards; a court proceeding can be initiated any time with the case being heard once again.
Moreover, in the UDRP process there are no hearings, no discovery, and no witness’s examination.
Today, all generic top-level domains (“gTLDs”), including new gTLDs, use the UDRP to resolve disputes. However, while many country-code top-level domains (“ccTLDs”) also utilize the UDRP, other ccTLDs have chosen to adopt a modified version of the UDRP.
Other Means to solve DN Disputes
In certain jurisdictions domain name disputes can only be solved before courts of law, such as Russia and Germany (in this last case unless parties explicitly agree upon an ADR procedure).
There are also jurisdictions where domain name disputes are solved by arbitration resulting in a final and binding award or decision. For example, in case of .pl domain names, for disputes in which both parties are registered or reside outside Poland, the applicable policy is a slightly adapted version of the WIPO Expedited Arbitration Rules.
The applicable law in arbitrations conducted under the mentioned rules will be discussed briefly below.
Applicable Law in International Arbitration
Generally, in international arbitration, unless the parties had agreed on the applicable law to the merits, the arbitral tribunal has power to select, interpret and apply conflict of law rules and chose the substantive law applicable to the merits.
The application of the choice-of-law rules often results in the application of a set of rules, generally the national law of a particular State. However, in certain situations, where the international nature of an agreement would compel leaving aside a specific national legislation, tribunals have applied the so-called non-national systems or rules of law, such as lex mercatoria, general principles of law, or the UNIDROIT Principles of International Commercial Contracts or the Principles of European Contract Law.[1]
Applying such classic rules would lead to the application of a domestic law in case of domain name arbitrations. However, this might not be appropriate given inter alia the international character of domain name protection and difficulty of choosing between various possible applicable national laws. This is why in domain name arbitrations the efficient solution is for the substantive law of UDRP to be applied, as a transnational set of rules developed in the domain name dispute resolution area.
Albeit in commercial arbitration it is argued that reliance on non-national legal systems fails to provide predictable result, this appears to be the best option in the specific area of dispute resolution of domain name arbitrations, since it also ensures a predictable result.
Applicable Law in DN Arbitrations
In terms of substantive law applicable to .pl arbitrations, according to Article 46(a) of the WIPO Expedited Arbitration Rules for Domain Name Dispute Resolution under .PL, (“.PL Expedited Rules”):
“the Tribunal shall decide the substance of the dispute in accordance with the law or rules of law that it determines to be appropriate, taking into account any observations which the parties may have made. In all cases, the Tribunal shall decide having due regard to the terms of any relevant contract and taking into account applicable trade usages. The Tribunal may decide as amiable compositeur or ex aequo et bono only if the parties have expressly authorised it to do so”.
In terms of the choice-of-law rules, the best suited approach is the closest connection to the parties’ underlying dispute test that would converge to the applicable law being the UDRP set of rules.
This approach draws support from the related approaches of the Rome Convention and Regulation (“closest connection”) and is regulated in various arbitration legislation.[2]
Cross-border internet disputes, like domain name disputes, have the closest connection with the UDRP set of rules and principles. UDRP operates in an international sphere and a set of transnational general principles has been developed to address these disputes, with “a core of generally recognised mandatory rules of law that might be termed as transnational public policy”.[3] The dominant normative source from the viewpoint of the procedural and substantive applicable law is the UDRP itself for domain name disputes.[4]
Arbitral tribunals dealing with .PL expedited arbitrations usually apply the UDRP as:
“an authoritative, well-established and widely known set of transnational rules, designed for disputes [..] relating to domain name registration alleged to infringe established trademarks or service marks. It provides the set of rules with which this dispute has the closest connection” (Case No.: WIPO 2010PL2).
The same argument was used in a similar WIPO .PL expedited arbitration, Case No. WIPO2007PL1: “since the UDRP was specifically created to address situations like the one presented here the Sole Arbitrator will base his decision upon the substantive rules of the UDRP.”
As explained in a previous post, in domain name disputes heard under the UDRP, there is a consistent application of the Rules and a strong body of case law that is largely followed. National laws are relevant only in certain situations.
For example, when determining the existence of a trademark recognized by the Policy, whether the complainant can show unregistered or common law rights in a trademark, or in the so called “gripe site” cases where the owner of a certain domain deliberately uses a protected trademark in order to criticize the trademark holder.
The same conclusion applies to domain name arbitrations, where applying the closest connection to the parties’ underlying dispute test would converge to the applicable law being the UDRP set of rules.
This post is part of a larger study, “Applicable Law in Domain Name Arbitrations”, published in the Romanian Arbitration Journal, no. 1/2021.
[1] Gary B. Born, “Chapter 19: Choice of Substantive Law in International Arbitration” in International Commercial Arbitration (Second Edition), 2nd edition, Kluwer Law International, 2014, pp. 2661-2662.
[2] Such as the Swiss Law on Private International Law, article 187(1)) and it was applied in international arbitration disputes including ICC arbitration as detailed in Gary B. Born, “Chapter 19: Choice of Substantive Law in International Arbitration”, in International Commercial Arbitration (Second Edition), 2nd edition, Kluwer Law International 2014, pp. 2654-2655.
[3] Moritz Renner, “Towards a Hierarchy of Norms in Transnational Law?”, in Journal of International Arbitration, Kluwer Law International, 2009, Volume 26, Issue 4, p. 552.
[4] Thomas Schultz, ‘Chapter 7: The Roles of Dispute Settlement and ODR’, in Arnold Ingen-Housz (ed), ADR in Business: Practice and Issues across Countries and Cultures II, Kluwer Law International, 2010, p. 153.
