DotConnectAfrica Trust v. Internet Corp. for Assigned Names & Nos.

Citation: Not availableDocket: B302739

Court: California Court of Appeal; September 20, 2021; California; State Appellate Court

Original Court Document: View Document

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The Court of Appeal of California affirmed a judgment from the Los Angeles Superior Court in the case involving DotConnectAfrica Trust (DotConnect) and the Internet Corporation for Assigned Names and Numbers (ICANN), alongside ZA Central Registry, NPC (ZA). The case centers on the allocation of the new internet suffix .africa. DotConnect and ZA both applied for the rights to the suffix, but ICANN, influenced by advice from international representatives, awarded the rights to ZA. 

DotConnect engaged in a two-year arbitration with ICANN, during which it argued that it had waived its right to sue ICANN in court, thereby seeking certain procedural advantages in the arbitration. The arbitrators granted DotConnect these advantages but ultimately did not award it the .africa rights, instead directing ICANN to reconsider DotConnect's application. Despite this, ICANN re-evaluated but ultimately rejected DotConnect's application again, favoring ZA, which had the backing of the African Union.

DotConnect did not pursue arbitral review of ICANN's new decision and instead filed a lawsuit in the Los Angeles Superior Court. The trial court ruled against DotConnect based on judicial estoppel, reasoning that DotConnect had effectively precluded itself from suing by previously convincing arbitrators of its waiver. The appellate court upheld this decision, confirming that DotConnect was estopped from pursuing its court claims. The parties involved include DotConnect, a nonprofit based in Mauritius with operations in Kenya, and its CEO Sophia Bekele, who has strong ties to both California and Africa.

Sophia Bekele, originally from Ethiopia, relocated to the U.S. at 16 and has resided in Northern California for approximately 20 years. She is characterized as a highly accomplished individual. ZA, a South African nonprofit company and proxy applicant for the African Union Commission, is a party in this case. ZA, established in 1988 as UniForum SA, promotes open standards in technology and is the largest domain name registry in Africa. It has successfully launched several domain names, including .africa, .capetown, .joburg, and .durban, and claims a reputation for independence and technical expertise. The African Union Commission, which represents African heads of state, serves as the secretariat for the African Union, an organization comprising numerous African nations. ICANN, the entity governing the internet's domain name system, was formed in response to the internet's growth, establishing regulations for top-level domain names. The evolution of the domain name system dates back to ARPANET's inception in 1969, leading to the need for a structured approach to internet naming, which culminated in ICANN's creation in 1998 through a contract with the U.S. Department of Commerce.

ICANN is a California-based nonprofit corporation headquartered in Los Angeles, with a global presence. In 2016, it ended governmental oversight in collaboration with the Department of Commerce. ICANN operates as a nongovernmental organization aimed at uniting international stakeholders to develop internet policies, emphasizing its mission to coordinate the global system of unique identifiers, including top-level domain names. It functions as a self-governing entity with a multi-stakeholder policy-making model involving business, government, public policy, and academic representatives.

The organization consists of three primary components: the ICANN board, staff, and community. The board, which includes 20 members from over a dozen countries, oversees ICANN's operations and has a Governance Committee of seven members. The ICANN staff comprises 140 employees led by a Chief Executive Officer. The community includes various organizations outlined in ICANN's bylaws, notably the Governmental Advisory Committee (GAC), which has over 150 members, including representatives from countries and intergovernmental organizations. The GAC's role is to advise on how ICANN's activities intersect with governmental concerns and public policy issues. Its members are not appointed by ICANN but apply independently, ensuring a separation from ICANN's governance.

DotConnect expresses a critical stance towards the GAC, arguing that its open membership invites excessive political influence due to its inclusion of national governments and economies recognized in international contexts, particularly as the GAC advised against DotConnect in this case.

DotConnect criticized the Committee for its lack of distinct rules, limited public records, ambiguous definitions of membership and quorums, and unfair procedures. Although there has been no judicial or arbitral validation of DotConnect's claims, arbitrators noted the Committee's opaque decision-making, which contradicted ICANN’s commitment to transparency. The rivalry for the .africa domain between DotConnect and ZA is outlined in five phases: the initial dispute in Africa, events at ICANN, arbitration, ICANN’s response, and subsequent court cases.

The conflict began when Bekele conceived the idea for the .africa domain in 2006 and founded DotConnect in 2008 to pursue it. Initially, the African Union Commission supported DotConnect’s initiative, but after other parties recognized the potential of .africa, competition ensued. In April 2010, the Commission withdrew its support for DotConnect and opted for an open selection process to identify a new applicant, which Bekele interpreted as a move to replace DotConnect. Bekele labeled this reversal as shocking and unfair, claiming the Commission's original endorsement was still valid and alleging a conspiracy against her.

Despite the Commission's 2010 reversal, DotConnect continued to assert the validity of the initial endorsement. The Commission’s new selection process invited proposals, which DotConnect boycotted, alleging a predetermined outcome, a claim unsupported by independent verification. In contrast, ZA participated in the proposal process and argued that it was legitimate and fair. Ultimately, ZA won the Commission's support for its ICANN application, while DotConnect lost this backing, setting the stage for both parties to prepare their applications.

ICANN initiated the New gTLD Program to expand internet names, resulting in the creation of approximately 1,200 new generic top-level domain names, including .shop and .africa. A committee was established to manage this process, with decision-making authority delegated to it by ICANN's board in 2012. A comprehensive guidebook for applicants was published in June 2012. Applicants for geographic names like .africa needed backing from 60% of relevant governments. DotConnect and ZA applied for the registry operator designation, with ZA having current support from the African Union Commission, while DotConnect's support was revoked in 2010. Despite this, DotConnect claimed continued backing from the Commission and the United Nations Economic Commission for Africa, which denied it was qualified to support their application.

Bekele raised concerns regarding conflicts of interest among ICANN board members, but the Ombudsman rejected this complaint. In April 2013, the Governmental Advisory Committee met in Beijing and advised ICANN not to proceed with DotConnect’s application, although this advice lacked detailed rationale. DotConnect contested the decision, alleging irregularities, but on June 4, 2013, ICANN's New gTLD Program Committee accepted the advice and halted processing their application.

In June 2013, ICANN's board adopted recommendations from the Governmental Advisory Committee, leading ICANN staff to halt the processing of DotConnect's application for the .africa domain. On July 2, 2013, the African Union and African Union Commission, representing 54 African governments, supported ZA's predecessor entity and objected to DotConnect’s application. Sixteen African nations similarly protested against DotConnect, indicating unanimous support among the 55 African nations for ZA's application. Following a denial of DotConnect's request for reconsideration by the ICANN Board Governance Committee on August 1, 2013, Bekele criticized the rejection as unfair, alleging conflicts of interest and unethical conduct by several individuals involved in the decision-making process.

DotConnect sought arbitral review through ICANN's Independent Review Process, which involved a two-year arbitration initiated in October 2013, managed by the International Centre for Dispute Resolution. The arbitration panel comprised three arbitrators: DotConnect selected Dr. Catherine Kessedjian, ICANN chose William Cahill after the death of Richard C. Neal, and the Centre appointed Babak Barin as chair. The process included discovery, witness declarations, a two-day hearing, and resulted in a 63-page final ruling on July 9, 2015. DotConnect secured seven procedural victories and two substantive victories, including a stay on ICANN’s assignment of .africa, extensive document discovery, live witness testimonies, and a cost award of $198,046.04 against ICANN. Throughout the arbitration, DotConnect maintained that it had signed a binding waiver limiting recourse to courts, which was a basis for its procedural benefits.

The Independent Review Panel accepted DotConnect’s arguments regarding ICANN's decision-making process. It determined that the only independent third-party review available for board actions is through this panel, as applicants cannot pursue court actions against ICANN based on the waiver included in ICANN’s Guidebook. DotConnect achieved two favorable arbitral rulings. 

First, the panel criticized ICANN for failing to adequately investigate the Governmental Advisory Committee’s (GAC) advice, which lacked transparency and rationale, suggesting it was politically motivated rather than legally grounded. The arbitrators noted that ICANN's New gTLD Program Committee improperly accepted this advice without a meaningful review, violating ICANN’s founding documents. DotConnect was not given the opportunity to present its case before the GAC, leading the panel to conclude that ICANN's treatment of DotConnect's application for the .AFRICA gTLD was inconsistent with its Articles of Incorporation and Bylaws.

Second, the arbitrators directed ICANN to refrain from delegating the .AFRICA name and to allow DotConnect’s application to continue through the process. However, despite prevailing in arbitration, DotConnect did not receive rights to the .africa name, as it had not sought such a ruling, and the panel did not address other criticisms raised by DotConnect regarding potential favoritism or the actions of specific individuals associated with ICANN. Thus, while DotConnect was partially victorious, the arbitrators' ruling was limited in scope.

DotConnect requested that the arbitrators either grant it 18 months to secure support from 60% of relevant governments or declare that it had already met this requirement. The arbitrators did not grant this request, allowing ICANN to act promptly after their ruling. DotConnect accused ICANN of deceptive practices and undermining its procedural protections, but the arbitrators found ICANN had acted in good faith. On July 16, 2015, ICANN's board agreed to comply with the arbitrators' order by suspending the delegation of the .africa name, allowing DotConnect to continue its application process, and reimbursing its arbitration costs. 

The African Union Commission reaffirmed its support for ZA as the sole endorsed applicant, subsequently withdrawing support for DotConnect with its knowledge. ICANN resumed evaluation of DotConnect's application at the Geographic Names Panel stage, where DotConnect insisted that its existing letters of support were sufficient. The Panel determined that these letters were inadequate, leading to DotConnect's failure in the evaluation. Although ICANN offered an extended evaluation process, DotConnect did not revise its letters of support. 

ICANN procedures allowed for requests for reconsideration or independent review, which DotConnect chose not to pursue, opting instead to file a lawsuit against ICANN in Los Angeles Superior Court on January 20, 2016. The trial court conducted a three-day bench trial focused on ICANN's defense of judicial estoppel, ultimately rendering its decision on October 3, 2019. DotConnect appealed, and the Court of Appeal consolidated the appeals, affirming the judgment. 

Judicial estoppel was discussed, defining it as preventing a party from gaining an advantage by taking inconsistent positions in judicial or quasi-judicial proceedings. The doctrine requires five conditions: the same party must have taken two positions in judicial proceedings; must have succeeded with the first position; the two positions must be inconsistent; and the first position must not have been taken due to ignorance, fraud, or mistake. The ruling applies California law, noting that federal law has a similar doctrine.

The trial court's factfinding is reviewed for substantial evidence, while the appropriateness of judicial estoppel is independently evaluated. If the elements for judicial estoppel are met, the application of the doctrine is at the trial court's discretion, reviewed for abuse of that discretion. The court found that DotConnect's actions met the elements of judicial estoppel. DotConnect initially claimed it could not sue in court during arbitration but later filed a lawsuit, constituting two contradictory positions in quasi-judicial and judicial contexts. The arbitration conducted by the American Arbitration Association had legal procedures, and DotConnect's initial stance was crucial in securing seven victories against ICANN.

These positions are fundamentally inconsistent, as claiming one cannot sue contradicts later suing. DotConnect did not take its initial position due to fraud or mistake; it was represented by competent counsel who were well-informed. The trial court had sufficient grounds to apply judicial estoppel, noting the prolonged dispute delayed valuable opportunities for the African continent to enhance internet domain capabilities through the .africa domain. DotConnect's arguments against judicial estoppel are unpersuasive, as the record shows its statements about not suing were consistent and repeated, which the arbitration panel utilized in its decision. DotConnect's assertion that the context changed after the panel's ruling does not hold, as the litigation waiver it signed was unequivocal and unconditional, reinforcing its obligation to not resort to the courts.

DotConnect's argument is undermined by its inconsistent positions regarding its waiver and subsequent actions. After initiating legal proceedings, DotConnect challenged the waiver's scope but ultimately lost in a bench trial where the ruling favored ICANN based on judicial estoppel. The prior pretrial rulings do not alter the analysis, as DotConnect initially presented one position to arbitrators but then contradicted itself by filing a lawsuit. The document critiques DotConnect's reliance on irrelevant case law and clarifies that there is no unfair strategy in varying positions between different cases. It highlights that judicial estoppel can apply to legal assertions, contrary to DotConnect's claims, which misinterpret relevant cases. Additionally, DotConnect's arguments that ICANN’s independent review process was not binding or quasi-judicial are rejected; the trial court found that ICANN accepted the review panel's ruling, rendering it effectively binding. The assertion that the lack of judicial review negates quasi-judicial status is also refuted, as arbitration aims to bypass judicial processes, and DotConnect provides no supporting case law for this claim.

In Risam v. County of Los Angeles, Bray v. International Molders, and Powers v. Northside Independent School Dist., judicial estoppel was not upheld. DotConnect argued that its previous position—that it could not sue ICANN—did not succeed, thereby challenging the third element of judicial estoppel, which requires that the tribunal adopted the position as true. However, the trial court found that DotConnect's assertion influenced the arbitrators, resulting in seven significant victories: emergency interim relief, document discovery, extended briefing, live witness testimony, a de novo review standard, a binding declaration, and a cost award. Substantial evidence supported the trial court's conclusion. DotConnect's claim that it did not act in bad faith was deemed irrelevant, as judicial estoppel does not necessitate bad faith. The trial court determined DotConnect's position was strategically consistent, not based on ignorance, fraud, or mistake. Additionally, DotConnect's challenge against the trial court's discretion in applying judicial estoppel was rejected, and the court's decision to award costs against DotConnect was found reasonable. The judgment was affirmed in all respects, with costs awarded to the respondents.