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