Monday, April 20th, 2009
The Supreme Court's decision to grant a temporary injunction against the Australian Domain Name Administrator (auDA) on behalf of Bottle Domains has thrown the domain industry into a week of instability and chaos. There is now the possibility that - if Bottle Domains wins its case - auDA may be subject to severe damages for loss of business, potentially bankrupting the tightly budgeted administrator. "Chris Disspain of auDA has acted as judge, jury and executioner by cancelling Bottle Domains' accreditation so suddenly, and this action is now proving to be grossly negligent," says Larry Bloch, CEO and co-founder of Netregistry.

"This was always going to end up in the courts and Disspain was naïve to think Bottle Domains would allow its accreditation to be taken away without a fight. auDA should have ensured that its actions were proportionate and minimised negative impacts to domain name holders. auDA should have maintained Bottle Domains’ accreditation whilst the matter was resolved between them,” Bloch says.

Bottle Domains is a Melbourne-based domain registrar owned by Australian Style, an investment company of Nicholas Bolton. Bolton came in for a lot of criticism last week after selling his voting shares in the BrisConnections project for $4.5 million, scuppering his own resolution and leading to claims of greenmailing in the press.

AuDA's actions follow a security incident in February involving Bottle Domains and the disclosure by Bottle as part of that investigation of a previous unreported incident dating from April 2007. auDA claims Bottle's failure to report that alleged security breach is a contravention of Australian Style's obligations under the Registrar Agreement and decided to terminate its registrar accreditation. "Bottle Domains may or may not have breached its Accreditation Agreement, but by taking the action it did, auDA has precipitated an expensive legal battle and the domain name owners it is tasked to protect are stuck in the middle. Bottle’s 20,000 domain name customers have already been told by auDA that they are no longer Bottle customers, only to be told by auDA days later that that decision has been reversed – and may be reversed yet again pending Wednesday’s court battle.”

Although auDA denies there is any link between the announcement of the sudden de-accreditation on the day after the BrisConnections resolution threw Bolton under the media gaze, Bloch sees a link between the two events. “auDA would not normally gain mainstream publicity for its activities, but with Nick Bolton already being pilloried in the press, it not only provided an easy media story but automatically cast Bolton as the villain and Disspain and auDA as the white knight providing a come-uppance. This alleged security breach has been under investigation for months now, so the timing of the announcement is extremely curious at best.”

Bolton strenuously denied any wrongdoing and took the matter to the Supreme Court on Thursday last week. After Bolton won a temporary injunction, auDA appealed the decision on Friday last week. The Supreme Court rejected the appeal, ordering auDA to reinstate Bottle Domains' accreditation. auDA has now informed affected customers while preparing to fight in court to reinstate the de-accreditation next Wednesday, April 22.

"The turmoil in domains has caused confusion among domain holders - mostly businesses - as well as those companies reselling Bottle's services," says Bloch. "We have already received many calls from confused customers asking for help and clarification, and many resellers have already transferred their business to us, unable to wait for the outcome of the court proceedings. This leaves auDA exposed to pay significant damages should the de-accreditation be permanently overturned by the courts, as much of the damage to Bottle is irreversible, regardless of the legal outcome. What that means for auDA financially - which runs a tightly balanced budget ( - and how a bankrupt administrator would impact the entire Australian domain industry, is anyone's guess," Bloch says.

auDA has a constitutional objective to maintain the integrity and stability of the entire industry. Such integrity and stability has been severely compromised by Its actions these last three days and there is potential for further disruption to affect every Australian registrar and domain holder. This action by Chris Disspain and auDA sets another dangerous precedent of overbearingly harsh and ill-considered action to the detriment of registrars, domain name holders and the Australian domain name system in general, says Bloch.

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The Australian Domain Name Administrator (auDA) could pay significant damages should the de-accreditation of Bottle Domains be permanently overturned by the courts. auDA behaviour is reckless, claims Larry Bloch, CEO of Netregistry.



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