Aggrieved Third Party Beneficiaries Of Domain Names Cannot Challenge Arbitration Award U/s 34 Of Arbitration Act: Delhi High Court
The Delhi High Court single bench of Justice Pratibha M. Singh held that only parties to an arbitration agreement can challenge the award under Section 34 of the Arbitration and Conciliation Act, 1996. It was further held that 3rd-party beneficiaries of domain names in India, who are impacted by the arbitral award, lack the standing to challenge the award.
Brief Facts:
Jindal Steel & Power Ltd. (“JSPL”) discovered that a different entity named Nspire Solutions Pvt. Ltd. (“Nspire”) registered 'jsplsteel.in' as its domain name. JSPL lodged a complaint under the .IN Domain Name Dispute Resolution Policy (INDRP), which is managed by a non-profit organisation named 'NIXI' in India. NIXI received the complaint and issued a notice to Nspire on February 8, 2023.
Nspire responded to the notice and subsequently, the dispute was referred to arbitration and was heard by a sole arbitrator. The sole arbitrator found that JSPL had been using the name since 1998 and held considerable reputation and goodwill. The domain name wholly incorporated the JSPL mark, and the addition of the word 'steel' in it did not prevent it from creating a confusing similarity. Nspire contended that the domain name was registered for a client named Mukesh Udeshi (“Mr Mukesh”). However, the arbitrator held that the claim was unsupported by evidence.
Therefore, the arbitrator held that Nspire had no legitimate interests in the domain name and that it was registered or used in bad faith. The arbitrator also noted that the domain name was registered to sell to a third party or to mislead users and divert traffic from JSPL. The arbitrator ordered Nspire to transfer the domain name to JSPL.
Aggrieved by the award, Mr Mukesh, who claimed to be the beneficial owner of the impugned domain name, challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). He argued that the award was against the principles of natural justice as it was issued without giving him a hearing.
Contentions by JSPL:
JSPL contended that Nspire was the official registrant of the domain name. The INDRP Rules of Procedure applied only to the complainant, the registrar, and the registrant. Therefore, Mr Udeshi was not included in the matter. Further, Mr Udeshi was aware of the proceedings but chose not to appear before the sole arbitrator.
Additionally, under Section 34 read with Section 2(1)(h) of the Arbitration Act, only a party to the impugned award could challenge it. Hence, Mr Udeshi's petition under Section 34 was not maintainable.
Observations by the High Court:
The High Court noted that Internet Corporation for Assigned Names and Numbers (ICANN), governs the globally operating domain name registration system. It is an international organization free from governmental control. ICANN maintains policies through various supporting organizations and advisory committees representing diverse stakeholder groups.
It also recognizes registries under which registrars operate and enables domain name registrations. The registry maintains a master database of all registered domain names within each top-level domain (“TLD”) and generates the zone file essential for internet traffic routing globally. The Uniform Domain Name Dispute Resolution Policy (“UDRP”") by ICANN is a highly successful online dispute resolution mechanism, governing domain name disputes for over 25 years. Registrants must agree to UDRP conditions at the time of registering generic top-level domains (“gTLDs”). The UDRP provides an online dispute resolution framework involving the registrar, registrant, complainant, and the administering Centre.
Upon filing a complaint, the accredited Centre issues a notice to the registrar to block the infringing domain name and the registrant is allowed to respond. A panellist is appointed to decide the dispute and the decision is binding on the complainant, the registrar and the registrant.
The High Court noted that country code top-level domains (“ccTLDs”) are governed by domestic dispute resolution policies. For instance, in India, the '.in domain' is managed by NIXI, with similar procedures as UDRP under INDRP Rules of Procedure.
Mr Mukesh claimed to be the beneficial owner of the domain name but was not reflected as the registrant in the WHOIS database maintained by NIXI. The listed Registrant, Nspire claimed to be a service provider for Mr Mukesh. Mr Mukesh failed to seek impleadment in the INDRP proceedings, resulting in no notice issued to him by NIXI or the panellist.
The High Court concluded that since Mr Mukesh was not a party to the arbitral proceedings, he was not entitled to file a petition under Section 34 of the Arbitration Act. Reliance was placed on M/s Tara Logitech Pvt. Ltd. vs Religare Finvest Ltd. [2014:DHC:7410] to hold that Section 34 permits only parties to the arbitration agreement to challenge an arbitral award.
Therefore, the High Court did not examine the merits of the impugned award and held that Mr Mukesh could pursue other legal remedies if available. The petition was dismissed.
Case Title: Mukesh Udeshi vs Jindal Steel Power Ltd. and Anr.
Case No.: O.M.P. (COMM) 213/2023 and I.A. 11241/2023
Advocate for the Petitioner: Mr. Hrishikesh Chitaley
Advocate for the Respondent (Jindal Steel): Mr Gopal Jain with Mrs Gauri Rasgotra, Mr B. Arutsivan, Mr Sharad Kumar Sunny, Ms Priyashree Sharma PH, Ms Shruti Joshi, Mr Aniket Kumar Singh, Mr Gunav Gujral & Mr Keshav Mann