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An arbitration panel’s decision in a dispute over the rights to an Internet domain name is not entitled to “extremely deferential” review in the federal courts because such proceedings do not fall under the Federal Arbitration Act, the 3rd U.S. Circuit Court of Appeals has ruled. In Dluhos v. Strasberg, a unanimous three-judge panel found that the dispute resolution policies established by the Internet Corporation for Assigned Names and Numbers does not qualify as a true arbitration under the FAA. As a result, the court found that “judicial review of those decisions is not restricted to a motion to vacate [the] arbitration award under Section 10 of the FAA, which applies only to binding proceedings likely to realistically settle the dispute.” The ruling revives a lawsuit brought by Eric Dluhos, a New Jersey man who registered the domain name leestrasberg.com in June 1999, incurring complaints from the widow of the renowned acting coach and his estate. According to court papers, Dluhos ignored letters from CMG Worldwide Inc., a company that represents and manages Internet sites for Strasberg’s estate at www.strasberg.com. CMG and Anna Strasberg then complained to ICANN and invoked its Uniform Domain Name Dispute Resolution Policy, or UDRP, which led to proceedings in a National Arbitration Foundation dispute resolution. But Dluhos refused to participate and instead filed suit in U.S. District Court. At first, NAF suspended the UDRP proceeding. But when Dluhos failed to serve the defendants, CMG asked NAF to lift the suspension order. In October 2000, the NAF panel issued a decision against Dluhos — without his participation — and directed that the domain name be transferred to Lee Strasberg’s estate. At that point, Dluhos revived his federal suit. U.S. District Judge John Lifland of the District of New Jersey dismissed Dluhos’ case after reviewing the NAF decision under the FAA’s extremely deferential standard. Now the 3rd Circuit has ruled that UDRP proceedings are not entitled to FAA review. “In our view, the UDRP’s unique contractual arrangement renders the FAA’s provisions for judicial review inapplicable,” Senior 3rd Circuit Judge Ruggero J. Aldisert wrote in an opinion joined by Judges Jane R. Roth and Julio M. Fuentes. A UDRP proceeding doesn’t qualify as a true arbitration, Aldisert found, because “the UDRP obviously contemplates the possibility of judicial intervention, as no provision of the policy prevents a party from filing suit before, after or during the administrative proceedings.” Aldisert also found that UDRP “was intended to ensure that the parties could seek independent judicial resolution of domain name disputes, regardless of whether its proceeding reached a conclusion.” Lifland’s decision to apply the FAA was wrong, Aldisert said, because “unlike methods of dispute resolution covered by the FAA, UDRP proceedings were never intended to replace formal litigation.” The hallmark of true arbitration is a provision that allows courts to suspend a lawsuit while arbitration proceeds, Aldisert said. By contrast, a UDRP proceeding is suspended whenever a lawsuit begins. “A UDRP proceeding settles a disputed proceeding only to the extent that a season-finale cliffhanger resolves a sitcom’s storyline — that is, it doesn’t,” Aldisert wrote. Aldisert said Judge Lifland must now reopen the case and apply a “de novo” standard of review to the NAF decision. “This decision in no way reflects an intimation that the NAF panel erred in its judgment, but merely that UDRP resolutions do not fall under the limited judicial review of arbitrators of the FAA,” Aldisert wrote.

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