<html><head><meta http-equiv="content-type" content="text/html; charset=utf-8"></head><body dir="auto">Thank you George. These are very sobering facts that would seem to show that arbitration would work a substantial hardship on plaintiffs (UDRP respondents). <div><br></div><div>This makes the contrast even more severe when one considers the total lack of evidence supporting such a post UDRP arbitration process. <br><br><div id="AppleMailSignature">Sincerely,<div>Paul Keating, Esq.</div></div><div><br>On Nov 22, 2017, at 2:40 PM, George Kirikos <<a href="mailto:icann@leap.com">icann@leap.com</a>> wrote:<br><br></div><blockquote type="cite"><div><span>Hi folks,</span><br><span></span><br><span>I believe that the backers of Option #3 are incorrect to claim that</span><br><span>arbitration would be less expensive than the courts.</span><br><span></span><br><span>I provided some preliminary discussion of this imporant point at the</span><br><span>end of a prior email at:</span><br><span></span><br><span><a href="http://mm.icann.org/pipermail/gnso-igo-ingo-crp/2017-October/000884.html">http://mm.icann.org/pipermail/gnso-igo-ingo-crp/2017-October/000884.html</a></span><br><span></span><br><span>"Costs -- it's naive to believe that costs would be lower in</span><br><span>arbitration than in a judicial case, while trying to emulate the due</span><br><span>process protections of a court. One need only look at a recent IRP</span><br><span>that ICANN lost:</span><br><span></span><br><span><a href="http://domainincite.com/21481-icann-loses-another-irp-sport-gtld-fight-reopens-as-panel-finds-apparent-bias">http://domainincite.com/21481-icann-loses-another-irp-sport-gtld-fight-reopens-as-panel-finds-apparent-bias</a></span><br><span></span><br><span>where the costs of the IRP itself (*not* counting lawyers fees of each</span><br><span>party) amounted to $152,673. In real courts, the actual disbursement</span><br><span>costs and filing fees are relatively low (hundreds of dollars, maybe</span><br><span>thousands in a complex case), because the most substantial cost,</span><br><span>namely the labour cost for the judge (their salary) is paid for by</span><br><span>TAXPAYERS! Not so in an arbitration, where the parties themselves have</span><br><span>to pay for the costs of the panelists (3 panelists, multiplied by</span><br><span>hundreds of dollars per hour, multiplied by many hours adds up</span><br><span>quickly)."</span><br><span></span><br><span>but wanted to have a focused discussion just on this point.</span><br><span></span><br><span>Here are some additional references to consider (I saved the best for</span><br><span>last, since like the above it directly involved ICANN, so jump to the</span><br><span>bottom if you'd like):</span><br><span></span><br><span>(1) <a href="http://www.lawmemo.com/arb/res/cost.htm">http://www.lawmemo.com/arb/res/cost.htm</a></span><br><span></span><br><span>"Here, Public Citizen presents the first comprehensive collection of</span><br><span>information on arbitration costs. We find:</span><br><span></span><br><span>The cost to a plaintiff of initiating an arbitration is almost always</span><br><span>higher than the cost of instituting a lawsuit. Our comparison of court</span><br><span>fees to the fees charged by the three primary arbitration provider</span><br><span>organizations demonstrates that forum costs- the costs charged by the</span><br><span>tribunal that will decide the dispute- can be up to five thousand</span><br><span>percent higher in arbitration than in court litigation. These costs</span><br><span>have a deterrent effect, often preventing a claimant from even filing</span><br><span>a case.</span><br><span></span><br><span>Public Citizen's survey of costs finds that, for example, the forum</span><br><span>fee for a $60,000 employment discrimination claim in the Circuit Court</span><br><span>of Cook County, Illinois is $221. The forum fees for the same claim</span><br><span>before the National Arbitration Forum (NAF) would be $10,925, 4,943%</span><br><span>higher. An $80,000 consumer claim brought in Cook County would cost</span><br><span>$221, versus $11,625 at NAF, a 5,260% difference. These high costs are</span><br><span>not restricted to NAF; for the same $80,000 claim, the American</span><br><span>Arbitration Association (AAA) would charge the plaintiff up to $6,650,</span><br><span>and Judicial Arbitration and Mediation Services (JAMS) would charge up</span><br><span>to $7,950, amounting to a 3,009% and 3,597% difference in cost,</span><br><span>respectively."</span><br><span></span><br><span>(2) <a href="https://m.mayerbrown.com/Files/News/04165fd5-5165-41ea-bb6f-19d9235c171d/Presentation/NewsAttachment/7e531e5e-4040-4251-b1a8-1d4b6168c99b/Practice%20Note_Duncan_Pros-Cons-Arbitration_oct12.pdf">https://m.mayerbrown.com/Files/News/04165fd5-5165-41ea-bb6f-19d9235c171d/Presentation/NewsAttachment/7e531e5e-4040-4251-b1a8-1d4b6168c99b/Practice%20Note_Duncan_Pros-Cons-Arbitration_oct12.pdf</a></span><br><span></span><br><span>"It is often said that arbitration is quicker and cheaper than</span><br><span>litigation. However, arbitrations may in certain cases actually be</span><br><span>more protracted and more expensive than litigation. There are numerous</span><br><span>reasons for this, including: - the additional costs payable in</span><br><span>arbitration which are not applicable in court proceedings. For</span><br><span>example, the requirement to pay the arbitrators’ fees, any</span><br><span>institutional administrative fees and to pay to hire the hearing venue</span><br><span>- poorly drafted contracts with arbitration agreements which fail to</span><br><span>provide an adequate and practical framework for the conduct of the</span><br><span>arbitration proceedings - tribunals being unwilling to control the</span><br><span>timetable and the parties’ conduct for fear of challenges to the</span><br><span>subsequent award on the grounds of unfairness Disputed enforcement</span><br><span>proceedings (although this is an area which various arbitral</span><br><span>institutions are working hard to address, for example with the new ICC</span><br><span>Rules)"</span><br><span></span><br><span>(3) <a href="https://www.attorneygeneral.jus.gov.on.ca/english/family/arbitration/cost.php">https://www.attorneygeneral.jus.gov.on.ca/english/family/arbitration/cost.php</a></span><br><span></span><br><span>"It is often thought that arbitrations are cheaper than court-based</span><br><span>litigation, because people may agree on a streamlined procedure and</span><br><span>avoid delays that may occur in the formal court process.</span><br><span></span><br><span>However, an arbitration that is contested may turn out to be longer</span><br><span>and more expensive than going directly to court. The parties may end</span><br><span>up in court fighting about the arbitration as well as their original</span><br><span>dispute."</span><br><span></span><br><span>[George's note: Note, it's clear that for the case of an IGO dispute involving a</span><br><span>domain name owner, where it already went to UDRP, already fought a</span><br><span>battle re: "immunity", that it is a heavily contested case, so would</span><br><span>very likely end up being more costly than court due to the payment of</span><br><span>the arbitrators' fees (which are going to be triple in total due to</span><br><span>the 3 person panel).]</span><br><span></span><br><span>(4) <a href="http://thefirmdubai.com/new/publicationdetails/114">http://thefirmdubai.com/new/publicationdetails/114</a></span><br><span></span><br><span>"It is submitted that one of the first things to consider should be the</span><br><span>value of the contract and, more precisely, the amount that would be</span><br><span>the subject of a claim if a potential dispute arises. This is</span><br><span>important because arbitration costs and attorney fees for the same are</span><br><span>usually much higher than court fees and attorney fees for litigating</span><br><span>the case. Dubai courts (mainland courts) have a cap on their fees</span><br><span>equivalent to AED 40,000 regardless of the value of the claim, while</span><br><span>there is no cap for arbitration cases. By way of example, a claim with</span><br><span>a value of AED 3 million before Dubai courts (mainland courts) would</span><br><span>not involve more than AED 40,000 of court fees. However, the</span><br><span>same-value arbitration would cost AED 130,000 before a single</span><br><span>arbitrator, and three times this amount (roughly AED 350,000) if the</span><br><span>contract provided for a three-arbitrator panel. Moreover, if you</span><br><span>successfully obtained the award, you would have to pay an additional</span><br><span>AED 40,000 by way of court fees to enforce the award.</span><br><span></span><br><span>Furthermore, the number of panel arbitrators should be carefully</span><br><span>considered because the fees of an arbitration panel of three</span><br><span>arbitrators will be three times that of a sole arbitrator. Recently, a</span><br><span>client, an international supplier of building materials instructed our</span><br><span>firm to commence proceedings against a main contractor to claim an</span><br><span>outstanding balance. Upon review of the supply contract, we discovered</span><br><span>the presence of a UNCITRAL arbitration clause whereby any dispute was</span><br><span>to be resolved through a panel of three arbitrators. When informed of</span><br><span>the estimate of arbitration and attorney fees, the client’s</span><br><span>representative refused vehemently to proceed down that route for</span><br><span>economic reasons. In the words of the client’s representative, the</span><br><span>fees were “exorbitant”. However, luckily, after the client submitted</span><br><span>to us additional documents, we detected a loophole in the contract,</span><br><span>which we used to avoid the arbitration agreement. Hence, the decision</span><br><span>was taken to bring proceedings before the Dubai mainland court."</span><br><span></span><br><span>[George's note: Of note, UNCITRAL rules have been brought up several</span><br><span>times in this PDP as potential rules to follow, and the above is a</span><br><span>clear example of parties to a dispute wanting to avoid their use</span><br><span>because the costs would be "exorbitant".]</span><br><span></span><br><span>(5)(a) <a href="http://domainincite.com/4580-icann-tries-to-dodge-jobs-legal-fees">http://domainincite.com/4580-icann-tries-to-dodge-jobs-legal-fees</a></span><br><span></span><br><span>"ICANN is still smarting from the last time it headed to arbitration,</span><br><span>for its Independent Review Panel over ICM Registry’s .xxx top-level</span><br><span>domain.</span><br><span></span><br><span>ICANN lost that case in February 2010, and had to cover the panel’s</span><br><span>almost $500,000 in costs, as well as its own legal fees. The overall</span><br><span>price tag is believed to have comfortably made it into seven figures."</span><br><span></span><br><span>(5)(b) <a href="https://www.thedomains.com/2010/02/20/report-finds-against-icann-in-denying-the-xxx-extension-charges-them-the-475k-cost/">https://www.thedomains.com/2010/02/20/report-finds-against-icann-in-denying-the-xxx-extension-charges-them-the-475k-cost/</a></span><br><span></span><br><span>"Yesterday an independent panel, the International Centre For Dispute</span><br><span>Resolution (pdf) found in a 80 page decision, in favor of the ICM</span><br><span>Registry against ICANN for its decision to eventually reject the .xxx</span><br><span>extension and ruled that ICANN had to pick up all the costs of the</span><br><span>independent panel to the tune of $475K and reimburse ICM the fees it</span><br><span>paid for the application to the tune of another $241K. (ICM is stuck</span><br><span>for its own attorney fees)."</span><br><span></span><br><span>(5)(c) <a href="https://www.icann.org/en/system/files/files/-panel-declaration-19feb10-en.pdf">https://www.icann.org/en/system/files/files/-panel-declaration-19feb10-en.pdf</a></span><br><span></span><br><span>"Therefore, the administrative fees and expenses of the International</span><br><span>Centre for Dispute Resolution, totaling</span><br><span>$4,500.00, shall be borne entirely by ICANN, and the compensation and</span><br><span>expenses of the Independent Review Panel, totaling $473,744.91, shall be</span><br><span>borne entirely by ICANN. ICANN shall accordingly reimburse ICM Registry</span><br><span>with the sum of $241,372.46, representing that portion of said fees and</span><br><span>expenses in excess of the apportioned costs previously incurred by ICM</span><br><span>Registry."</span><br><span></span><br><span>(from the full ICDR decision, costs on page 70)</span><br><span></span><br><span>[George's note:] ICANN paid nearly $500,000 just to cover the IRP</span><br><span>panel fees in the .xxx arbitration (not counting its own legal fees)!</span><br><span>There's no court in the world where the court fees would ever amount</span><br><span>to such a high level for such a case (because, as I've noted earlier,</span><br><span>it's the taxpayers who pay the salaries of judges in court, whereas in</span><br><span>arbitration it's the parties who pay those steep costs).</span><br><span></span><br><span>Thus, while arbitration is presented as a solution to improve access</span><br><span>to justice, it'd actually have the exact opposite effect, *increasing*</span><br><span>the barriers to justice due to the prohibitive costs involved.</span><br><span>Contested intellectual property disputes are by their very nature</span><br><span>complex compared to other litigation, and the costs would accordingly</span><br><span>be high for an arbitration where the parties have to pay the hourly</span><br><span>fees of panelists.</span><br><span></span><br><span>Sincerely,</span><br><span></span><br><span>George Kirikos</span><br><span>416-588-0269</span><br><span><a href="http://www.leap.com/">http://www.leap.com/</a></span><br><span>_______________________________________________</span><br><span>Gnso-igo-ingo-crp mailing list</span><br><span><a href="mailto:Gnso-igo-ingo-crp@icann.org">Gnso-igo-ingo-crp@icann.org</a></span><br><span><a href="https://mm.icann.org/mailman/listinfo/gnso-igo-ingo-crp">https://mm.icann.org/mailman/listinfo/gnso-igo-ingo-crp</a></span></div></blockquote></div></body></html>