[CCWG-ACCT] A plea for time

[Greg Shatan]

Chris,

Thank you for your email.  Your email raises a number of issues; my
responses are in-line in *bold* below.

Greg

On Sun, Oct 11, 2015 at 12:05 PM, Chris Disspain <ceo at auda.org.au> wrote:

> Greetings,
>
> As we approach ICANN Dublin I have been asked by some of my ccTLD
> colleagues to set out clearly why as a ccTLD manager I support the Board
> proposals for improving ICANN's accountability as part of the transition.
>
> In essence for me it’s all about time.
>

​*GS: Time is a double-edged sword in this case.  I believe that a revised
CCWG proposal that adopts the Board's comments will differ significantly
enough from the Second Draft that a third public comment period will be
required.  As such, I think the shortest path leads through the Single
Member model, not away from it.  While there are still questions under
discussion regarding the Second Draft Proposal, I believe that there at
least as many, if not more, stemming from the Board's proposal.  (I note
the questions raised in my chart analyzing the Board's comments, most of
which I believe remain unanswered.)*

I believe that we, the community, can get the enhanced accountability we
> want now without the need for wholesale structural change.
>

​*GS:  I remain concerned about the level of true accountability in the
Board's proposal.  Accountability is inextricably intertwined with
enforceability, and I believe the Board's proposal fails to deliver on
enforceability. ​*


> I'm not against change or indeed any of the models being proposed but I am
> against making such changes without carefully considering them over time.
> There is a significant amount of work to be done before deciding to make
> such important structural changes and all of that will take time and more
> research and stress testing and unf
> ​​
> oreseen consequence analysis and impact analysis.
>
> *GS:  I think this discounts the significant level of work and
consideration that has already occurred in the CCWG, and the amount of time
that has gone into this process.*


> In essence the Board has supported the CCWG’s proposed fundamental bylaws
> and the binding IRP and has suggested that there be a Community IRP and a
> further fundamental bylaw setting in place an ongoing improvement mechanism
> that will allow the community to take the necessary time to consider the
> structural changes and to have confidence that the proposals arising from
> such a process will be implemented.
>

​*GS:  It's good that the Board supports the fundamental bylaws and the
concept of a binding IRP, but these are only two (or maybe only one and a
half) steps in the right direction.  I think the Board's proposals
regarding the IRP and the MEM proceeding vary in such significant ways from
the CCWG's IRP proposals​*
* ​that support does not extend much beyond the concept of making the IRP
binding (and even the interpretation of "binding" is troublesome -- see
below).​*

>
>
> I believe that the Community IRP does provide the community with the
> rights it seeks and that it can be implemented in a timeframe that does not
> jeopardise the transition.
>

​*GS: I am confident that the CCWG proposal can be implem​ented in a
timeframe that does not jeopardize the transition, and I would be even more
confident if the Board would join the CCWG in improving the CCWG proposal
within the structural framework proposed by the CCWG.  If the tug-of-war
continues, that could jeopardize the transition.*

 The Community IRP is an independent arbitration process for hearing
community claims that the Board has acted outside of its by-laws. Under the
process there is a legally enforceable and contractual obligation on ICANN
to comply with a decision of the arbitration panel.

​*GS: Under the Board's proposal, the Community IRP​ would be limited to
fundamental bylaws, which is a concern.  While a binding arbitration
decision is generally "legally enforceable," the issue of whether there
will be a legal person with standing to enforce is very much still open.  I
believe this would require the "MEM Issue Group" to form an Unincorporated
Association (or force one or more SOACs to form UAs) before commencing the
Community IRP (or would force SOAC leaders to bring both the IRP and any
enforcement action in their individual names).  The issue of whether a
"default judgment" in an IRP is enforceable is also an open question.
According to advice received today from CCWG counsel, there would likely be
significant additional hurdles in attempting to enforce a default judgment
(as well as hurdles in getting a default judgment in the first place).*

I believe that the community find ourselves in our current difficult
> situation because, with the best of intentions, the CCWG’s attorneys have
> been instructed to come up with models that deliver ‘the highest possible
> levels of enforcement’. It is not that the Community IRP cannot deliver the
> enhanced accountability that we want but rather that it is perceived, by
> some, as inadequate because there is a different mechanism that delivers a
> higher level of enforceability.
>

*​GS: I don't think this accurately reflects the instructions to counsel or
counsels' working methods.  Counsel are working for us, and not leading us
by the nose.  We've asked for alternatives and they have given us
alternatives.​  We generally didn't like the alternatives where
enforceability seemed uncertain.  In any case, all instructions to counsel
are transparent and available on the CCWG Wiki.  As for the Community IRP,
I think it is perceived as inadequate due to issues of standing to commence
a court action to enforce a binding arbitration and the proposed limitation
of scope to fundamental bylaws.  As such, it is far from clear that the
Community IRP can deliver the enhanced accountability that we want.*

The CCWG appears to be requiring a mechanism that allows the community (in
> whatever guise we finally agree is acceptable) the absolute final say. The
> right to step over the Board's fiduciary duty without any check or balance
> in place to allow for the testing of the Board's claim that acting would
> indeed be in breach of such duty.
>

*​GS:  The first sentence is true, with regard to certain narrowly defined
powers to exercised as a last resort -- removal of directors, recall of the
Board, approve fundamental bylaws changes, veto standard bylaws changes,
and veto budget/strat plan/op plan.  Outside of these areas, the community
would not have the "absolute final say."  With the IRP, this is clearly not
the case, since there the IRP panel would have the final say.​  In a
membership public benefit (non-profit) corporation, the members do indeed
get the last say on certain things, but certainly not on everything.  Where
the membership has the final say, the Board will not be in breach of its
fiduciary duty if it follows the directions of membership -- such is the
relationship of membership to Board.  Indeed, the Board would be in
violation of its bylaws, probably statutes and possibly its fiduciary
duties if it did not follow the directions of membership.  However, without
membership, the Board will be able to invoke fiduciary duty as a reason not
to follow the decision of the community.  We do have to look further into
the boundaries and obligations of members in a membership public benefit
corporation to understand better how to avoid a "rogue" membership, both as
a matter of law and as a matter of process.  For instance, the assets of a
public benefit corporation are always dedicated to the public good, and
cannot be used for private or personal gain; this applies equally to
decisions by membership as it does to Board decisions.  Similarly, I don't
believe the membership can cause the corporation to act in a way that
violates its Articles of Incorporation or Bylaws; this limits membership
just as much as it does the Board, "fiduciary duty" or no.  Finally, we
could consider instituting a consultative process where the Board would
have a limited period of time to make its case that in exercising one of
membership's powers (remove/recall directors, approve/veto bylaws, veto
budget/strat plan/op plan), the membership is violating the Articles or
Bylaws.*

I firmly believe in the corporate governance structures adopted by most
> corporate bodies around the world. Board members are appointed to manage
> the affairs of the organisation on the understanding that they are legally
> bound to act in the best interests of the organization rather than any one
> member or community. Such best interests are set out in the by-laws - in
> ICANN's case for example, the security and stability of the Internet as a
> whole. The Board has a fiduciary obligations to act in that way.
>

​*GS: This is comparing apples and oranges, assuming we are talking about
for-profit corporate bodies.  Corporate bodies have owners/shareholders.
In that corporate governance​ structure, the Board is ultimately
accountable to the owners of the company.  When shareholders vote for
directors (and especially when a shareholder has a large enough position to
appoint a board member), they appoint that Board member because their views
are consistent with that shareholder's (or those shareholders') view of the
best interests of the corporation.  The best interests of a corporation
(any corporation) are open to differing views and judgments. If we are
talking about non-profit corporate bodies, then that firm belief should
include a belief in the membership structure as a widely-recognized,
well-tested form of corporate governance structure.  Finally, "fiduciary
duty" should not be used as a monolithic mantra -- a non-profit board
member has three specific duties that make up their fiduciary duty -- the
duty of care, the duty of loyalty, and the duty of obedience.  The first
two are firmly owed to the organization alone.  Only the duty of obedience
binds the board member to act consistently with the mission, purpose and
core values of the corporation, primarily as set forth in its Articles and
Bylaws.  As noted above, I don't believe the Members have the right or
ability to cause the corporation to violate its Articles or Bylaws, as
measured by the reasonable judgment of the Membership.   *



> The ICANN Board has proposed the Community IRP as binding arbitration. The
> CCWG’s attorneys have said that the Board can refuse to implement such a
> binding arbitration decision if it claims that to implement it would be a
> breach of its obligations to act in the best interests of ICANN. This is
> true BUT the community representatives can then go to court and a court
> will enforce the arbitration decision if it disagrees with the Board's
> view. In my opinion this is precisely the type of safeguard we need to have
> in place because it ensures that an elected board made up of
> representatives of the multi-stakeholder community will always act, first,
> in the interests of a stable and secure Internet and it puts in place an
> independent arbiter to decide, in the final analysis, if the community or
> the board is right.
>

​*GS:  This paragraph reveals a fundamental misunderstanding of what an
enforcement proceeding is, at least in US courts (and most courts I'm
familiar with, other than perhaps Dubai).  In a proceeding to enforce a
judgment resulting from binding arbitration, the court does not see "if it
disagrees with the Board's view."  The court does not conduct a substantive
review of the arbitration decision at all, much less a "de novo" review, to
see whether it agrees with the arbitrators.  The court, in reviewing the
award, is supposed draw all reasonable inferences to support the award and
display substantial deference towards the panel's determination.  (One
exception, under California state law, is that the parties to an
arbitration can expand the scope of review by putting a differest standard
in their initial agreement to arbitrate, but that would be highly unusual,
and could essentially gut the idea of an enforcement proceeding.)  An
enforcement proceeding is basically a proceeding to turn the arbitral award
(which only has the force and effect of a contract between the parties)
into a final and non-appealable court judgment.  The court can modify,
correct or overturn a binding arbitration decision only if it fails the
"reasonable inference/substantial deference" test, or if the losing party
files a petition based on bad acts by the arbitrator (e.g., corruption,
fraud, misconduct, exceeding arbitrator's powers, unduly prejudicial acts,
failure to disqualify).*

>
>
> The alternative, it seems to me, is to create, now, a system where
> fiduciary duty is abandoned and the will of the community holds sway. That
> is in effect what happens under the membership model as described by the
> CCWG’s attorneys.
>

​*GS:  I disagree strongly with that characterization of the Single Member
model.  This makes the Single Member model sound like some anarchic
combination of the worst excesses of the French Revolution and the "Lord of
the Flies." (apologies for culturally-based references.)  Fiduciary duty is
absolutely not "abandoned."  The Board has absolutely the same obligations
to act with a duty of care and a duty of loyalty to the corporation, and a
duty of obedience toward the ICANN mission, purpose and core values.  In
most cases, its actions are not subject to review, or if they are, it is in
an IRP, where the mission, purpose and core values of ICANN (the heart of
the duty of obedience) will be the standard for measurement.  Only in the
exercise of the powers would the "will of the community" get the last word,
and only after a substantial process designed to resolve matters before the
powers must be exercised.  Even then, the community is not free to do as it
pleases -- it cannot convert the use of assets so they are no longer
benefiting the public, and the community must in its judgment still be
honoring the ICANN mission, purpose and core values.  Just because the
community as member doesn't have "fiduciary duties" to the corporation, it
doesn't mean that the community is without duties, obligations and
boundaries.  Finally, I'm not sure if the reference to the CCWG's attorneys
is meant to imply "look at what your own counsel told you" or "blame your
counsel for what they got you into," but I reject both. *


> This may well be acceptable in the future when all of the nuances have
> been thought through and the necessary community conflicts and ethics
> rules, accountability mechanisms and disclosure requirements have been
> agreed. But it will take time and testing and a fuller discussion.
>

*​GS:  This is based on the false premises of abandonment of fiduciary duty
and that the community is simply not ready for the task of holding ICANN
accountable.  If the community is not ready, how can ICANN be ready? I'm
not saying the community is perfect, and there are potential implementation
matters such as those above that could improve the community's abilities to
act as the party that will hold ICANN to account.  I don't think these will
take so much time and testing and discussion that we should abandon our
path.  If we need to choose between an inadequate set of accountability
mechanisms and giving the community we have the accountability mechanisms
it needs, the choice is easy. ​*

>
>
> Fiduciary responsibilities and duties are there for a reason. I think that
> some in the community feel that the Board and ICANN legal sometimes use the
> ‘cloak’ of fiduciary responsibility to avoid doing what the community
> wants. Whilst I don’t believe that is true I do empathise with the feeling.
> To my mind the solution (at least at this time during the transition) is
> NOT to create a mechanism under which fiduciary duty is held by no one but
> rather to create a mechanism where the community can test the Board's
> claims about such duty. The Community IRP as suggested by the Board does
> just that.
>

*​GS:  Again, no one is proposing a mechanism "under which fiduciary duty
is held by no one."  The Board's duties remain unchanged under any
proposal.  The IRP remains a method of testing the Board's claims about
those duties under any proposal. The differences lie elsewhere -- in
whether the community powers will be diluted (to the point where they
cannot be considered powers) and whether the IRP is a readily enforceable
arbitration. ​*

 I want to stress again that I am not against any of the proposed models
put forward by the CCWG. But I can't agree the models at this stage because
I don’t believe we have enough detail and I think the community as a whole
should take their time in considering making such important changes. And I
do not agree with those who claim that "we must do it now because it's our
only chance".

*​GS:  I'm glad you don't think it's our only chance, and I trust you on
that.  Where we disagree is on whether we have sufficient detail and
whether we've taken sufficient time, and whether the outcome of the CCWG
process is sufficiently well-crafted.  Trading the CCWG proposal for one
with even less detail and less time devoted to it, and which raises serious
concerns about sufficiency, does not seem like an improvement.  At best, it
trades one set of problems for another.  I don't deny we can use some good
tightening up and some good implementation planning.  If you will join us
in tightening the bolts, rather than having us park the car and board the
bus, we'll get to our destination faster.​*


> I am very much looking forward to spending time with my ccTLD colleagues
> during the Dublin meeting and hope we will have the opportunity to talk,
> and not just about the transition.
>

​*GS:  Although I'm not a ccTLD colleague I still look forward to Dublin
and the opportunity to talk ... and possibly about something besides the
transition!*

*Greg​ *

>
> Cheers,
>
>
> Chris Disspain | Chief Executive Officer
>
> .au Domain Administration Ltd
>
> T: +61 3 8341 4111 | F: +61 3 8341 4112
>
> E: ceo at auda.org.au | W: www.auda.org.au
>
> auDA – Australia’s Domain Name Administrator
>
>
> *Important Notice* *- *This email may contain information which is
> confidential and/or subject to legal privilege, and is intended for the use
> of the named addressee only. If you are not the intended recipient, you
> must not use, disclose or copy any part of this email. If you have received
> this email by mistake, please notify the sender and delete this message
> immediately. Please consider the environment before printing this email.
>
>
> _______________________________________________
> Accountability-Cross-Community mailing list
> Accountability-Cross-Community at icann.org
> https://mm.icann.org/mailman/listinfo/accountability-cross-community
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mm.icann.org/pipermail/accountability-cross-community/attachments/20151012/dd88d431/attachment.html>