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Net 4 India customers left in the lurch again, tribunal stays ICANN’s agreement termination

domain registration, iCANN

If you’re a Net 4 India customer with a domain name registered with the company, you might be wondering why your domains are still stuck. The reason: the National Company Law Tribunal (NCLT) has stopped the International Corporation for Assigned Names and Numbers (ICANN), which accredits domain registrars like Net 4, from terminating the registrar’s rights to issue domain names.

In February, ICANN announced that come March 13, Net 4’s accreditation would be terminated because of the registrar’s frequent delays in paying dues and serving users. But insolvency professionals working with Net 4, which is embroiled in bankruptcy proceedings, rushed to get the termination stayed, a request that the NCLT granted.

As a result, many customers whose domains are registered with Net 4 continue to not have access to their domains.

Maruti Suzuki recovers its domains: Small users are more affected than larger companies who can go to court. Maruti Suzuki, for instance, filed an appeal with the NCLT to get their domain names migrated out of Net 4 management. The insolvency professionals handling Net 4’s case accommodated that request. But several such requests by other users, even those referred to the registrar from ICANN, have gone unheeded. This led to ICANN terminating the registrar after giving Net 4 multiple opportunities to address their obligations.

56,000 users haven’t recovered .in domains: For .in domains, the National Internet Exchange of India (NICI) has been providing support to registrants. In a statement to MediaNama, NIXI said that it had put out ads in newspapers to make .in registrants aware of the ability to get their domain names ported to a different registrar directly through NIXI. “NIXI has solved the issues of 17000 Net 4 customers and 56000 people have not asked for any help and they are okay with the situation,” a NIXI spokesperson said in response to queries by MediaNama.

ICANN argues NCLT has no jurisdiction

ICANN roped in the Delhi-based law firm Trilegal to represent it before the NCLT. It arguedm in written briefs made public on its website, that NCLT has no jurisdiction over ICANN. Customers are facing inconvenience due to Net 4 not complying with its obligations as a domain registrar, ICANN argued and said that the stay on their termination of the accreditation should be immediately revoked. “The jurisdiction of this Hon’ble Tribunal is available only in limited circumstances when it will result in the corporate death of the corporate debtor, which is not the case in the current proceedings,” ICANN said. (emphasis added)

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ICANN moves cautiously: ICANN said it has no employees in India, and that the registrar accreditation’s jurisdiction is bound to Los Angeles. “ICANN affirmatively requests that this Hon’ble Tribunal issue an order denying the Application as soon as practicable given the serious repercussions that the Corporate Debtor’s non-compliances are having on the Internet community and the harm that is being caused on a daily basis to registrants,” ICANN said in a legal filing.

But the non-profit is acting cautiously, and hasn’t moved the tribunal to seek permission to implement the termination of the registrar. The natural next step would have otherwise been to put out an application form (like this one) to invite a different domain registrar to take over management of these domains. “This Hon’ble Tribunal’s jurisdiction is defined by Section 1(2) of the [Insolvency and Bankruptcy Code, 2016]. There is no provision which ipso facto makes the IBC applicable to foreign parties or contracts governed by foreign law,” ICANN argued.

Net 4 insolvency professional: jurisdiction not relevant: “Section 14 [of the Insolvency and Bankruptcy Code, 2016] does not make any distinction between counterparty to the right (creditor or supplier) being resident or non-resident in India. As such, the NCLT would have the jurisdiction to restrain Indian or non-Indian counterparty from interfering with such rights,” argued Vikram Bajaj, Net 4’s insolvency resolution professional. Bajaj cited a precedent from Jet Airways’s insolvency case where a Dutch entity was given orders in spite of jurisdictional issues.

Issue was already litigated: ICANN further argued that the registrar accreditation agreement does not constitute a contract for supplying critical goods and services.

This matter was previously heard, disposed of by this Hon’ble Tribunal in IA No 5761 of 2020, which was disposed of vide order dated 25 January 2021. In particular, there was no direction or injunction restraining ICANN from terminating the RAA as requested by the RP. Therefore, the present Application is essentially a re-agitation of the same issues and thus barred by res judicata / constructive res judicata. — ICANN rejoinder

“Further to the hearings on 18 January 2021, 20 January 2021 and 22 January 2021, it appears that the Resolution Professional himself is not satisfied with Respondent No. 3 and Respondent No. 4’s [Net 4’s promoters] alleged efforts to rectify the breaches [to the registrar’s accreditation] – despite several months of negotiation and discussions,” ICANN said in another filing. (emphasis supplied)

Resolution professional’s claim “false”: ICANN said that the degree of complaints from Net 4 customers was not usual for a registrar. “Unlike the Corporate Debtor’s false representations to this Hon’ble Tribunal that the volume of breaches are commonplace for all registrars, nothing can be farther from the truth,” the nonprofit argued. “At least within the last decade, ICANN has never before received this volume of complaints about a single Registrar in such a short period of time.” (emphasis added)

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Ownership surreptitiously moved: In a separate application, Bajaj argued that the control of Net 4 India was moved to another company, restraining insolvency professionals from complying with ICANN requirements. This was detailed earlier in an NCLT order that we reported on. Jasjit Singh Sawhney, Bajaj argued, was the one who would have to pay fees that are past due; Sawhney, who is now based in London, has routinely delayed paying dues to ICANN, according to an interim application filed by Bajaj.

What’s next?

If ICANN successfully gets the stay on its termination vacated, then it can transfer Net 4’s domains to another registrar. Once that process sees its end, customers will be able to reassert control over their domains. If the matter drags on, though, customers may have to end up waiting a whole lot longer, perhaps even long enough that their domain names expire and they are forced to rush to buy it after expiry from a different registrar before cyber squatters get to them first.

There are grave consequences for Net 4 too. The company, which is being run by outside insolvency professionals and is barely functioning, has a business model that relies heavily on domain names. Having that agreement terminated might mean that the company would become worthless to the asset reconstruction company that is trying to salvage what is left of the company. “The accreditation of the Corporate Debtor with the Respondent No. 1 is extremely critical for the business of the Corporate Debtor and for preserving the value of the Corporate Debtor and keeping it as a going concern,” Bajaj said in a submission.

Disclosure: MediaNama has domains under management by Net 4. 

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I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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