[CCWG-ACCT] [Acct-Legal] Fwd: Legal question

Tue Apr 21 06:59:07 UTC 2015

Kavouss,

That is not a correct summary of my views.  Bylaws provisions are generally
enforceable.  (As an aside, "enforceable" can be use to mean two different
things: (1) is the provision valid, so that an enforcement effort will not
fail, and (2) can the other party or parties undertake an effort to enforce
the provision by commencing litigation.  I have tried to deal with both
aspects of "enforceability," without veering too far into other ways of
getting ones way (e.g., California AG, political pressure, Congressional
investigation, pulling out and creating an alternate IANA, etc.)

In spite of the general rule, there are two issues in this specific
circumstance that undercut this general rule of enforceability.  First, a
couple of the specific powers that Chris mentions are ones where a third
party is given a right superior the Board to make a decision regarding the
management of the company (veto of budget and arbitration to enforce the
veto of budget).  In a member organization, the members can appropriately
be in this superior position.  In a non-member organization, that is
inconsistent with the role of the Board, which brings the validity of these
bylaw changes as hypothesized by Chris into question.  Second, the SO/ACs,
as entities currently without legal personhood, would likely not be able to
participate in a litigation to enforce these bylaws; thus, the second type
of enforceability is also an issue.

It may be less troublesome for ICANN to enter into contracts and agree with
third parties (i.e., the SO/ACs) that these third parties have the right to
veto the budget. (Companies may be able to agree with third parties to do
things that could not be part of their internal governance schema.)
However, on further reflection, even this approach has its issues -- as the
SO/ACs lack legal personhood currently, they cannot enter into contracts,
either.  (By contrast, the bylaws changes can at least be put into place
without any action on the SO/AC's part.)

I should note that granting third parties the right to approve a bylaw
change (the third hypothetical action in Chris's email) is not as
exceptional, so is less likely to raise validity concerns.  This still
leaves the issue that the SO/AC's lack the requisite legal existence to
commence legal action to enforce a bylaws change in the event the Board
fails to recognize such a bylaws change.

In my opinion this kind of complexity and uncertainty is precisely why the
member model should be adopted.

Greg

On Tue, Apr 21, 2015 at 2:25 AM, Kavouss Arasteh <kavouss.arasteh at gmail.com>
wrote:

> Dear All
> We complicating the case by envisaging the most extreme exceptional
> circumstances.
> In view of Greg, a Contract provisions are enforceable compared to Bylaws
> provisions which in his views are not enforceable!
> We may put the questions and answers to the lawyers and wait whether are
> consent?
> Could someone take necessary action ( e. g.) co chair in this regard?
> Tks
> Kavousd
>
>
> Sent from my iPhone
>
> On 21 Apr 2015, at 08:02, Greg Shatan <gregshatanipc at gmail.com> wrote:
>
> The questions are simple.  The answers may not be....
>
> Also, it depends on what the lawyers are currently working on.  Further,
> the meeting is in about 13 hours, and I expect (given the time) at least
> 6-8 of those hours will be used for sleep and commuting.  So, it's not a
> lot of time.
>
> My views are as follows:
>
> On question 1, I think there may be issues in granting this right via
> bylaw, except to statutory members (and possibly to designators, at least
> where formally denoted as such), but these many not sufficient issues to
> cause the bylaw to be invalid.  If it's found to be invalid in court, then
> it would be unenforceable.  However, I believe that something similar could
> be achieved by contract, which should then be enforceable.
>
> On question 2, I would say that the Board cannot ignore an action mandated
> by the bylaws without some consequences.  The SOs and ACs as currently
> constituted may not have the necessary legal personhood to pursue
> litigation.  However, this could be reported to the California Attorney
> General, who has broad oversight powers relating to non-profits, and would
> probably be quite interested to hear about a relatively high-profile
> non-profit where the Board was ignoring actions mandated by duly approved
> bylaws.  This could certainly be considered "enforcement," broadly
> speaking.  There may also be other parties with legal personhood that could
> pursue litigation, and other governmental entities (Congress?) that could
> make this an exceedingly difficult choice to sustain.
>
> On 3, if the bylaw says the Board is bound, they're bound, unless the
> Board were to successfully challenge the validity of the bylaw.  Again, it
> may be possible to achieve this by contract, with fewer questions raised.
> And again, there may be issues in granting this right to parties other than
> members (or possibly formally recognized designators), but those issues may
> not invalidate the bylaw.
>
> On 4, I think the answers to question 2 apply here as well.
>
> We can see if counsel agrees with this....
>
> Greg
> Caveat: not legal advice, not admitted in California
>
> On Tue, Apr 21, 2015 at 12:55 AM, Chris Disspain <ceo at auda.org.au> wrote:
>
>> Hi León,
>>
>> Really? They are fairly simple questions. As I said, I can ask them on
>> the call.
>>
>>
>>
>>
>> Cheers,
>>
>>
>> Chris
>>
>> On 21 Apr 2015, at 14:32 , León Felipe Sánchez Ambía <
>> leonfelipe at sanchez.mx> wrote:
>>
>> Thanks Greg,
>>
>> I just want to note that for the short notice it is unlikely we will be
>> able to have answers to feed the discussion in our call tomorrow.
>>
>>
>> Best regards,
>>
>>
>> León
>>
>> El 20/04/2015, a las 23:22, List for the work of CCWG-Accountability
>> Legal SubTeam <ccwg-accountability5 at icann.org> escribió:
>>
>> I am forwarding Chris Disspain's email into the Legal Sub Team for
>> further consideration.  I will let our counsels respond, should the Legal
>> Sub Team's discussion result in a referral of the questions to counsel.
>>
>>
>> Greg Shatan
>>
>> ---------- Forwarded message ----------
>> From: Chris Disspain <ceo at auda.org.au>
>> Date: Tue, Apr 21, 2015 at 12:03 AM
>> Subject: [CCWG-ACCT] Legal question
>> To: Accountability Cross Community <
>> accountability-cross-community at icann.org>
>>
>>
>> Hello All,
>>
>> I’m not sure if this email should be addressed to the whole group, the
>> legal sub-team or some other. Anyway, I have some questions that I would
>> appreciate answers to from the CCWG’s lawyers. Happy to discuss on the
>> upcoming CCWG call.
>>
>> Under the current structure of ICANN and its SOs and ACs
>>
>> 1. Is it correct that a bylaw saying that a combination of those SOs and
>> ACs can veto the budget or veto a bylaw change can be drafted and put in to
>> the bylaws?
>>
>> 2. Is it correct that were there to be such a bylaw and the SOs and ACs
>> were to veto the budget or a bylaw change pursuant to that bylaw then the
>> Board of ICANN could ignore that veto and that the SOs and ACs could not
>> enforce the veto?
>>
>> 3. Is it correct that the veto bylaw could be drafted to require binding
>> arbitration in the event that the Board refused to follow the SO/AC veto
>> and if so would the Board be bound by the arbitration finding?
>>
>> 4. Is it correct that a Board spill bylaw could be inserted in to the
>> bylaws and if triggered would be enforceable?
>>
>>
>>
>> Cheers,
>>
>>
>> Chris
>>
>> On 18 Apr 2015, at 14:50 , León Felipe Sánchez Ambía <
>> leonfelipe at sanchez.mx> wrote:
>>
>> All,
>>
>> I am forwarding this document from Counsel for your records and for its
>> relevance for our overall work.
>>
>>
>> Best regards,
>>
>>
>> León
>>
>> Inicio del mensaje reenviado:
>>
>> *Para: *"ccwg-accountability5 at icann.org" <ccwg-accountability5 at icann.org>
>> *Fecha: *17 de abril de 2015 22:21:36 GMT-5
>> *De: *List for the work of CCWG-Accountability Legal SubTeam <
>> ccwg-accountability5 at icann.org>
>> *Asunto: **[Acct-Legal] (no subject)*
>> *Responder a: *ccwg-accountability5 at icann.org
>>
>>
>>
>> Dear Legal Sub-Team,  Attached please find revisions to the chart
>> comparing the member and designator approaches  from Sidley and Adler &
>> Colvin as requested.  Please note that in our cover memo we have posed
>> several questions for your consideration.  We have also provided a
>> discussion of some considerations regarding implementation of both
>> approaches.  We are look forward to discussing with CCWG next week.  Kind
>> regards, Holly
>>
>> *HOLLY J.  GREGORY*
>>
>> *Partner*
>> *Sidley Austin LLP*
>> +1.212.839.5853
>> holly.gregory at sidley.com
>>
>>
>>
>>
>>
>> ****************************************************************************************************
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>>
>>
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>>
>> <Legal Assessment_  Governance Chart.pdf>
>>
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