[CCWG-ACCT] Legal question
Chris Disspain
ceo at auda.org.au
Tue Apr 21 23:07:12 UTC 2015
Hi Keith,
As promised I set out in brief below some of the reasons why, in respect to the membership model and any model requiring the SOs and ACs to convert to legal entities, I have serious concerns and why I referred to significant sacrifices.
GAC
The current recommended model does not provide any viable solution for dealing with the GAC. It seems obvious to me that the governments involved in the GAC are not going to agree to form an unincorporated association under Californian law. If I'm right then presumably the GAC would remain as an advisory committee and would not be able to have a vote in any of the escalation mechanisms. That may be fine as the GAC may not want to have a vote anyway.
However I see a serious incompatibility between the members’ powers and the standing of GAC advice to the Board. It’s not that GAC advice is or indeed should be invariably followed but currently where GAC advice is at odds with the position of others in the community the advice carries significant weight and there is a bylaw mandated process for rejecting the advice through a process which takes around 6 months. The change to a members based structure would mean that for certain issues the actions of members will trump GAC advice. So there is a significant shift in the carefully constructed balance of power. Now, many of us may think that such a shift is no bad thing but I wonder whether the governments of the world are going to agree?
ccTLDs
When we set up the ccNSO and when we did the structural review of it some time thereafter there was considerable discussion about how it could be structured precisely to avoid the need for ccTLDs to join anything. There was even significant concern about having to fill out a form and whether that implied the existence of some organisation. The concerns included joining something in the jurisdiction of the US and whether that would make a ccTLD manager in any way subject to US law, the possibility of being sued in the US because the manager would be deemed to have a presence there, how such a structure would be funded (especially if it was sued), whether there was any liability on ‘officers’ of the entity and so on. I believe that many of these concerns will still exist for many ccTLDs.
Further, quite a number of ccTLD managers are departments of the relevant government or quasi-government bodies. Not everyone runs their ccTLD with the degree of freedom that .au, .ca, .uk and .nl are privileged to enjoy. I consider it highly unlikely that sovereign governments will permit a government department to join an association in the US (or any other country for that matter).
At Large
I don’t know the answer to this but it strikes me that the structure may also be problematic for At Large community as opposed to ALAC. On that one over the ALAC folks to comment.
There’s more but I'm rushing for my flight now. Hope this gives you a flavour.
Cheers,
Chris
On 21 Apr 2015, at 20:46 , Chris Disspain <ceo at auda.org.au> wrote:
> Hi Keith,
>
> Thanks for the below. You ask a valid question and Kavouss has sent me an email asking the same. I will respond in detail in the next 7 hours or so.
>
> Chris Disspain
> CEO - auDA
>
> On 21 Apr 2015, at 20:16, Drazek, Keith <kdrazek at verisign.com> wrote:
>
>> Thanks Chris, no apologies necessary...this is exactly the kind of dialogue needed to advance our work.
>>
>> Can you be more explicit about the "significant number of sacrifices that would need to be made in a membership scenario" that ccTLDs face? Particularly if any are unique to ccTLDs?
>>
>> Sacrifices may be needed (including from the Board) if we are to accomplish the community's broader goal of ensuring the ICANN Board and Staff are truly accountable to the ICANN community for the next decade. As such, it would be good to know, as early as possible, what those sacrifices might be.
>>
>> In simple terms, I agree that determining what can and cannot be accomplished within the existing structure is a worthwhile exercise and will help to inform the community.
>>
>> Based on our work and the relevant independent legal analysis to date, it appears to me that the current construct has significant gaps and shortcomings and won't deliver on our goals, but I support seeking further advice on the topic from our independent legal advisors.
>>
>> Thanks and regards,
>> Keith
>>
>> On Apr 21, 2015, at 5:08 AM, Chris Disspain <ceo at auda.org.au> wrote:
>>
>>> Thanks Keith.
>>>
>>> I apologise for pinging back and forth on this but I hope the list will appreciate that it as an indication of how important auDA believes this point is.
>>>
>>> As I said on the CCWG call last week, I have serious concerns about the viability of the lawyers' recommended structural changes (at least from a cc point of view) and want to be crystal clear about what we can do or cannot do within the current structure.
>>>
>>> For a ccTLD there are a significant number of sacrifices that would need to be made in a membership scenario and I don't believe the cc community can decide whether those sacrifices are worth making unless we can weigh them against what we would be able to achieve using the current structure.
>>>
>>> I think that is essential that our output to the community contains a clear explanation of what the status quo can achieve. If it does not then IMO it is impossible to judge the other scenarios.
>>>
>>> I appreciate your second para and, as a lawyer, I know that time for a response is required. I also appreciate the time constraints under which we are operating. But we will lose more time if the result of our document is a series of questions about whether there really is a need to make the significant changes being recommended.
>>>
>>> In simple terms 'not nearly enough' is not an acceptable response. How can I know that "it" is not nearly enough unless I know what "it" is?
>>>
>>> Chris Disspain
>>> CEO - auDA
>>>
>>> On 21 Apr 2015, at 18:37, Drazek, Keith <kdrazek at verisign.com> wrote:
>>>
>>>>
>>>> Chris,
>>>>
>>>> I believe the answer to your question regarding the "no change scenario" and "what the current configuration can achieve" is, "Not nearly enough."
>>>>
>>>> That said, I think it's a reasonable question and it should be referred to the CCWG's lawyers and they should be permitted reasonable time to consider and respond.
>>>>
>>>> Regards,
>>>> Keith
>>>>
>>>>
>>>>
>>>> Sent from my iPhone
>>>>
>>>> On Apr 21, 2015, at 4:09 AM, Chris Disspain <ceo at auda.org.au> wrote:
>>>>
>>>>> Greg,
>>>>>
>>>>> Thanks. At the risk of repeating myself, whilst I understand what you are saying, it is precisely the no change scenario that I am seeking clarity on. I accept that the current configuration may not be "a very good vehicle for many of the enhanced powers" but I want clarity on what the current configuration CAN achieve. I don't believe we have that yet.
>>>>>
>>>>> Chris Disspain
>>>>> CEO - auDA
>>>>>
>>>>> On 21 Apr 2015, at 17:35, Greg Shatan <gregshatanipc at gmail.com> wrote:
>>>>>
>>>>>> Chris,
>>>>>>
>>>>>> The simple answer is that the SOACs as currently configured are not a very good vehicle for many of the enhanced powers we seek. Once you make them into members and give them legal personhood everything else becomes much easier.
>>>>>>
>>>>>> However, you assumed no change to the SOACs, which made the answers much harder.
>>>>>>
>>>>>> Greg
>>>>>>
>>>>>> On Tuesday, April 21, 2015, Chris Disspain <ceo at auda.org.au> wrote:
>>>>>> Greg, All,
>>>>>>
>>>>>> With respect, I think we are overcomplicating the issue. I simply want to gain a base line for the discussion about any changes necessary to achieve what we want. We agreed on jurisdiction that if we can get acceptable escalations and remedies without changing jurisdiction then we should leave well alone for now, I think we should apply the same principle here. I am clear what the lawyers recommend we do BUT I am not clear about what we can do or what compromises we need to make if we were to maintain the current structure. I think that is a key part of our deliberations.
>>>>>>
>>>>>>
>>>>>> Cheers,
>>>>>>
>>>>>>
>>>>>> Chris
>>>>>>
>>>>>>
>>>>>> On 21 Apr 2015, at 16:59 , Greg Shatan <gregshatanipc at gmail.com> wrote:
>>>>>>
>>>>>>> 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
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> ****************************************************************************************************
>>>>>>>>>>>> This e-mail is sent by a law firm and may contain information that is privileged or confidential.
>>>>>>>>>>>> If you are not the intended recipient, please delete the e-mail and any attachments and notify us
>>>>>>>>>>>> immediately.
>>>>>>>>>>>>
>>>>>>>>>>>> ****************************************************************************************************
>>>>>>>>>>>>
>>>>>>>>>>> <Legal Assessment_ Governance Chart.pdf>
>>>>>>>>>>>> _______________________________________________
>>>>>>>>>>>> Ccwg-accountability5 mailing list
>>>>>>>>>>>> Ccwg-accountability5 at icann.org
>>>>>>>>>>>> https://mm.icann.org/mailman/listinfo/ccwg-accountability5
>>>>>>>>>>>
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>>>>>>>>>>
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>>>>>>>>>> Ccwg-accountability5 mailing list
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>>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> _______________________________________________
>>>>>>>> Accountability-Cross-Community mailing list
>>>>>>>> Accountability-Cross-Community at icann.org
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>>>>>>>>
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>>>>>>>
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