ICANN has initiated arbitration [PDF] (before the ICC’s International Court of Arbitration) against VeriSign under the .net Registry Agreement, seeking declaratory judgments that many things VeriSign has done or attempted to do over the years (Sitefinder, ConsoliDate, IDN, WLS, and stemming the abusive actions of shell registrars when they destructively query the registry for secondary market purposes) violate that agreement.

ICANN has asked the California state court hearing VeriSign’s lawsuit to stay [PDF] its proceedings in favor of this arbitration, because the two matters concern many of the same questions. (The .com agreement says that both parties have to agree to arbitration, but the .net agreement allows either party to initiate arbitration without the agreement of the other.)

This is a religious war, but there’s a contract at the heart of it. What’s at issue here is ICANN’s belief that a registry is a public trust, and not a business.

VeriSign signed a contract with ICANN that gives ICANN very narrow approval power (price and fit with specifications) over new services that are “provided as an integral part of the operation of the Registry TLD.” VeriSign’s view is that these recently launched (or attempted-to-be-launched) services are not “integral” to its function of adding information to the zone file. ICANN has never liked this contract, and appears to want to convert its contractual relationship with VeriSign into something much more like the relationship the FCC has with common carriers.

VeriSign, for its part, has acted abruptly on more than one occasion (Sitefinder is the example that comes to mind) and is probably tired of having to ask for permission even for services that ARE “registry services”—ICANN has read its approval scope more broadly than the contract may indicate, and it currently takes years for the process to roll to completion.
The .net registry is also now being competed for by other registry operators, and ICANN plainly would like to hand it to someone other than VeriSign:

ICANN has the right to terminate the .net agreement, in accordance with paragraph 5.4.5 of the agreement, if the arbitration panel finds that VeriSign has certain obligations under the .net agreement and VeriSign subsequently or concurrently violates those obligations. In addition, ICANN has the right to take VeriSign’s conduct, as alleged herein, into account in connection with the future appointment of operators for new and/or existing TLDs.

So, once again, we’re back in the swamp—this time with ICANN on the offensive. The California court will decide on December 7 whether to hold on to the case before it or defer to the international arbitration proceeding.