[CCWG-ACCT] question on fiduciary duties and their objectivity

Fri Oct 2 19:34:08 UTC 2015

+1 that reflects my understanding of your question Jorge.

-James

On 02/10/2015 20:33, "Jorge.Cancio at bakom.admin.ch" <Jorge.Cancio at bakom.admin.ch> wrote:

>Dear all,
>As you know various participants (including me) have worked for the issue of jurisdiction to be included under WS2.
>However, all our present analysis at this stage and in WS1 are based on the arcane art of californian corporate law. That's the reason why my questions asks about solutions/options within that specific body of law.
>regards
>Jorge
>
>Von meinem iPhone gesendet
>
>Am 02.10.2015 um 21:25 schrieb James Gannon <james at cyberinvasion.net<mailto:james at cyberinvasion.net>>:
>
>The ICANN bylaws are not an international agreement, they are expressly subject to Californian/US statutes.
>If California corporate law changes then yes ICANN will be bound to also change with it, that’s one thing I don;t think the CCWG is able to change unless we want to add running for public office to our list of goals!
>
>-James
>
>From: <accountability-cross-community-bounces at icann.org<mailto:accountability-cross-community-bounces at icann.org>> on behalf of Kavouss Arasteh
>Date: Friday 2 October 2015 20:05
>To: Greg Shatan, "<Jorge.Cancio at bakom.admin.ch<mailto:Jorge.Cancio at bakom.admin.ch>>"
>Cc: Thomas Rickert, "accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>"
>Subject: Re: [CCWG-ACCT] question on fiduciary duties and their objectivity
>
>Dear All,
>What Jorge asking is legitimate question but ,the way he wishes to enforce them is very complex as he wants to include parts of California Corporate law relating to fiduciary  in the ICANN Bylaws.
>According to applicable international law one can not subordinate an international agreement ( such as ICANN Bylaws ) to national or even lowe than national ( state laws) .
>Moreover, one can not link one agreement to any provision that may change in future such as California corporate law as it may change in future which automatically requires adjustment of ICANN Bylaws to cover the changes ,if agreed by the community
>Thirdly I support the valid analysis provided by Geg
>Tks
>Kavouss
>
>2015-10-02 17:06 GMT+02:00 Greg Shatan <gregshatanipc at gmail.com<mailto:gregshatanipc at gmail.com>>:
>I believe the business judgment rule gets interpreted somewhat differently in the non-profit context, since the duties of a non-profit director are not solely to the corporation, but need to take into account the public benefit for which the corporation was established.  It's all part of the bigger question about fiduciary duty.
>
>The idea of independent counsel for board members is an interesting one.  It's not uncommon in the corporate governance world, as far as I understand.
>
>Greg
>
>On Fri, Oct 2, 2015 at 10:43 AM, Rubens Kuhl <rubensk at nic.br<mailto:rubensk at nic.br>> wrote:
>
>Mathieu,
>
>I think Jorge might be wanting the opposite of what you described, which is imposing constraints in fiduciary duties trumping community interests.
>Either way, it could also be interesting to understand if under California law the "business judgment rule" (https://en.wikipedia.org/wiki/Business_judgment_rule) could allow a board member to choose a course of action that contradicts the corporation interests, as long as it follows community interests. Even though the Bylaws already contain deference to such community interests, in real life a board member might feel under pressure of the corporate machine to follow such a direction...
>
>... I also wonder whether what the CCWG has, independent Legal Counsel, also could be useful to board members so they can be assured that they can vote with the community best interest in mind, when the corporation starts pushing toward a direction that does not fit the community or his/her own beliefs of where global public interest would be.
>
>
>Rubens
>
>
>
>Em 2 de out de 2015, à(s) 11:25:000, Mathieu Weill <mathieu.weill at afnic.fr<mailto:mathieu.weill at afnic.fr>> escreveu:
>
>Hi Jorge,
>
>Thanks for providing these additional thoughts and refinements. The way I read these is that you are not only looking for clarity of what fiduciary duties imply, but also on potentialoptions to make them enforceable (by specifying them in the Bylaws, etc.) ?
>
>This is certainly an aspect we need to clarify .
>
>Best
>Mathieu
>
>Le 02/10/2015 11:43, Jorge.Cancio at bakom.admin.ch<mailto:Jorge.Cancio at bakom.admin.ch> a écrit :
>Hi Mathieu,
>
>After reviewing the legal memo you just sent and what it says about fiduciary duties, I feel that the question I’m presenting is not tackled in that Memo and that we still would largely benefit right now from a better understanding of the question I was proposing.
>
>I’ve tried to specify the question a bit more, and it would look as follows:
>
>Is there any means under Californian Law that would allow to subject the exercise of fiduciary duties to objective and controllable standards? For example, could the following or similar means be acceptable and usable under Californian law:
>
>·         concretizing these fiduciary duties in the Bylaws;
>
>·         subjecting their correct interpretation to arbitration;
>
>·         imposing special requirements on the rationale needed to be provided if they are used to override community decisions;
>
>·         imposing extra-supermajorities in the Board in order to being able to invoke such duties?
>
>
>The underlying idea is IMHO very relevant to our present discussions on the Model, especially for those of us who are not experts in Californian Corporate Law: i.e. is there a legal means to subject those fiduciary duties to specific and objective standards and/or third-party control? If there are, could we use those means (if they exist) to develop our model? If they do not exist, or are too limited, this might speak for a membership structure.
>
>Please let me know if you can proceed with this.
>
>Regards
>
>Jorge
>
>
>Von: Mathieu Weill [mailto:mathieu.weill at afnic.fr]
>Gesendet: Freitag, 2. Oktober 2015 11:06
>An: Cancio Jorge BAKOM <Jorge.Cancio at bakom.admin.ch><mailto:Jorge.Cancio at bakom.admin.ch>; accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>
>Cc: leonfelipe at sanchez.mx<mailto:leonfelipe at sanchez.mx>; thomas at rickert.net<mailto:thomas at rickert.net>
>Betreff: Re: question on fiduciary duties and their objectivity
>
>Dear Jorge,
>
>You are rightly pointing out one of the key areas where a shared understanding of the concept and consequences has not been achieved so far. $
>
>Our 2nd report highlighted this issue for further investigation during WS2, but I note that some comments mentioned that this should not be clarified as part of WS1. The exact wording of our work item was :
>
>
>o   Clarifying understanding of the fiduciary duties of Board Directors and related expectations concerning Director behavior for the Board.
>
>Past work on the topic include several mentions in legal memos. Most notable is on page 4 of one of the initial memos from our Counsel dated 12 april (https://community.icann.org/download/attachments/52890082/Combined%20CCWG%20Cover%20Memo%20and%20Templates.pdf?version=3&modificationDate=1428797461000&api=v2) which addresses the balance between accountability and decision making authority.
>
>If we were to pursue this at this stage, we probably should flesh out some questions to direct work from our Counsel. What would be the type of questions you would raise Jorge ? (or others) ?
>
>Best
>Mathieu
>
>Le 01/10/2015 10:41, Jorge.Cancio at bakom.admin.ch<mailto:Jorge.Cancio at bakom.admin.ch> a écrit :
>Dear all,
>
>During the debates we had on the last conference call I put forward a question which I feel could be important to better understand under Californian corporate law.
>
>This is whether there are any means to subject the exercise of “fiduciary duties” (by the Board) to objective standards.
>
>As I have understood the discussion so far, the membership model allows the member to override “fiduciary duties” of the Board. However the member itself has no fiduciary duties vis-à-vis the organization.
>
>On the other hand, fiduciary duties are apparently a useful tool within corporate law, as it imposes a duty to care for the welfare of the whole of the organization.
>
>The argument which is made by some, as far as I understand it, is that there is however a problem in the exercise of “fiduciary duties” as it would provide the Board with an “arbitrary” power, e.g. to override community decisions (in exercise of community powers) without being bound to any objective standards.
>
>Considering all this, my question (to the Lawyers, if this is certified as a question to them) would be: is there any means under Californian Law (or other US jurisdictions…) that would allow to subject the exercise of fiduciary duties to objective standards? (e.g. be it through concretizing these duties in the Bylaws, subjecting them to arbitration, imposing special requirements on the rationale needed to be provided if they are used to override community decisions, or, for instance, imposing extra-supermajorities in the Board in order to being able to invoke such duties?)
>
>Hope this helps,
>
>Regards
>
>Jorge
>
>
>
>--
>
>*****************************
>
>Mathieu WEILL
>
>AFNIC - directeur général
>
>Tél: +33 1 39 30 83 06<tel:%2B33%201%2039%2030%2083%2006>
>
>mathieu.weill at afnic.fr<mailto:mathieu.weill at afnic.fr>
>
>Twitter : @mathieuweill
>
>*****************************
>
>
>--
>*****************************
>Mathieu WEILL
>AFNIC - directeur général
>Tél: +33 1 39 30 83 06<tel:%2B33%201%2039%2030%2083%2006>mathieu.weill at afnic.fr<mailto:mathieu.weill at afnic.fr>
>Twitter : @mathieuweill
>*****************************
>
>
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