Thursday , December 8 2022

Nominet may owe its members millions, top lawyer says

Nominet has been charging its thousands of members annual subscription fees unlawfully for the last quarter-century, it has been claimed.

Ian Mitchell KC, who you may recall was hired by a handful of members to opine that Nominet’s voting system may be illegal, has now delivered a follow-up opinion saying that any subscription fees it has collected since 1997 should not have been paid.

Nominet non-executive director election candidate Jim Davies, one of the members who obtained the opinions, is now calling for Nominet to postpone its Annual General Meeting and the election, scheduled to take place next week, while these legal issues are addressed.

Mitchell’s opinion states that Nominet’s Articles allowed it to set a membership fee for members prior to August 29, 1997, barely a year after the company was founded, but that subsequent fees had to be set with a bylaws change approved by 75% of the membership.

That never happened, he says, meaning:

there has been no basis within the terms of the articles for subscriptions to be set and collected from and after 31st August, 1997. It follows, therefore, that the subscriptions which were collected ought not to have been paid.

Nominet has about 2,500 members, each of whom pay a £400 application fee and a £100 per year subscription. Clearly, over 25 years, that could amount to many millions of pounds.

But Mitchell also suspects Nominet could be protected by the UK’s statute of limitations, reducing its exposure to just the last six years and around £1.5 million.

Mitchell’s opinion was paid for by member Dulwich Storage, owned by former director Angus Hanton, as part of the Davies-led WeightedVoting.uk campaign, which is calling for Nominet to scrap its system that gives its members more votes depending on how many .uk domains they have registered.

Davies says he informed Nominet’s board about Mitchell’s latest opinion last week but has not received a response. So he’s now also written to Civica, the election services company that oversees Nominet ballots, to “to step in and adjourn the AGM”.

Postponing the AGM would also postpone the NED election in which Davies, former reporter Kieren McCarthy and CentralNic lawyer Volker Greimann are vying for an opening seat on the board. Voting closes in a couple of days.

While Mitchell called the subscriptions situation a “recipe for litigation”, Davies says he has no intention of suing Nominet. He says he wants, in Mitchell’s words, for “members [to] come together to see if it is possible to find a consensual way out of the mess which has undoubtedly been created”.

It’s not entirely clear what a solution would look like.

Scrapping the voting system in favor of one-member-one-vote would likely disadvantage candidates relying on winning with the backing of a small number of large registrars, which Davies believes is Greimann’s strategy.

Davies’ headline policy has been to slash .uk registration fees back to £2.50, while McCarthy and Greimann have platforms focused on transparency and member engagement.

Nominet has said that it believes its weighted voting system is lawful. The company has been contacted for comment on the latest legal drama.

The post Nominet may owe its members millions, top lawyer says first appeared on Domain Incite.

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