Graceful Withdrawal Proposal

["Werner Staub (CORE)" <werner.staub@xxxxxxxxxxx>]

This is a proposal to facilitate the graceful withdrawal of an
application by deferring the due date for part of the
application fee.

The first Draft Application Guidebook suggests that applicants
may be refunded part of their application fee if they withdraw
their application. However, the conditions and amounts are not
specified yet.

It is desirable for all parties that an application facing
opposition or contention can be withdrawn as gracefully as
possible. To achieve this, applicants must be able to apply in
a context where the possibility of withdrawal is a reasonable
option. They must also be able to withdraw without losing face
and without a substantial monetary loss. Negotiations between
contenders should be encouraged, and their outcome should not
be affected by the financial burden of a failed application.
Finally, ICANN should facilitate withdrawal before any money
has been spent on evaluation or objections.

I propose the following mechanism (it is based on Fred
Krueger's idea of slightly deferring the application fee due
date):

Rather than paying the full application fee prior to
submission of the application, the applicant initially only
has to pay a fraction thereof, such as USD 20,000. This
payment (in addition to the TAS fee) is required for the
application to be accepted. Of this amount, only USD 1,000
constitue a non-refundable expense.

Once the all the applications are published, a 2-week deadline
is awarded to all applicants. If the application is explicitly
withdrawn, the USD 19,000 of the USD 20,000 paid become
refundable. To obtain the refund, an applicant must issue
withdrawal declaration over the TAS and confirm it by email.
Evaluation does not start prior to expiration of that
deadline, so ICANN does not spend any money on withdrawn
applications.

Based on a joint request by all applicants in the same
contention set, the 2-week deadline can be extended.

If the applicant wishes to proceed with the application, the
remaining application fee (i.e. USD 165,000 if the total
application fee is 185,000, or USD 80,000 if the total
application fee were USD 100,000 ) must be paid to ICANN
before the deadline.

If an application is withdrawn, or if the applicant failed to
make the full payment by the deadline, the application does
not proceed any further. However, for the public record, all
applications remain published on the ICANN web site; withdrawn
or failed applications are marked accordingly.


Discussion:

The submission of an application should not be totally free.
This is why the proposal here implies a net cost of USD 1000
for a withdrawn application. This cost reflects the fact that
an application requires a minimum of attention in all cases.

The order of magnitude of USD 20,000 as an initial financing
burden appears adequate to ensure that seriously prepared
applications are submitted. It also makes sense to set a
higher initial financial barrier than just the cost of the
application submission. At the same time, it is good to obtain
a formal confirmation of withdrawal. Rejection for non-payment
should be an exception, and it should not make any sense for
an applicant to leave an application in an unclear state. This
is obtained by requiring an initial payment in the order of
USD 20,000 and repaying USD 19,000 in case of confirmed
withdrawal.

Overall, this proposal does have the effect of making it
easier to apply. However, it allows smarter decisions, in the
interest of everyone. Thanks to the ability to withdraw, it is
easier for contending applicants to merge their bids, as the
application given up does not cost an unreasonable amount of
money. Finally the ability to withdraw gracefully reduces the
pressure towards litigation, which is in the interest of all
ICANN stakeholders.

The graceful withdrawal principle combines well with multiple
application windows per round. In this case, the early
applicant's decision to withdraw is further facilitated by the
ability to re-apply within a short and known time period.


Werner Staub

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