[CCWG-ACCT] Question on binding IRP

Sat Oct 17 14:19:15 UTC 2015

Some time ago I suggested that ICANN also needed an Inspector-General equivalent with greater enforcement powers than the Ombudsman.  Your position (which I support) that this is not the job for the Ombudsman reinforces my thought that an IG is also a good thing to have.  We could, in fact, give the IG rights of enforcement, I think – at least it works that way in the systems I know.  I hope we can address that in WS2 ….

Cheers

Paul

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From: Chris LaHatte [mailto:chris.lahatte at icann.org] 
Sent: Saturday, October 17, 2015 8:20 AM
To: Seun Ojedeji <seun.ojedeji at gmail.com>; Greg Shatan <gregshatanipc at gmail.com>
Cc: Sidley ICANN CCWG <sidleyicannccwg at sidley.com>; ACCT-Staff <acct-staff at icann.org>; McNicholas, Edward R. <emcnicholas at sidley.com>; ICANN-Adler <ICANN at adlercolvin.com>; accountability-cross-community at icann.org
Subject: Re: [CCWG-ACCT] Question on binding IRP

I agree with you Seun about this being out of the scope of an Ombudsman. We do not in the standard model, have enforcement powers, and I would not support my office having those. We recommend, and hope that those to whom this would be addressed, would consider what is suggested. It doesn’t get stronger than that. No ombuds office would support that power.

Chris LaHatte

Ombudsman

Chris LaHatte

Ombudsman

Blog  https://omblog.icann.org/

Webpage http://www.icann.org/en/help/ombudsman

Confidentiality

All matters brought before the Ombudsman shall be treated as confidential.  The Ombudsman shall also take all reasonable steps necessary to preserve the privacy of, and to avoid harm to, those parties not involved in the complaint being investigated by the Ombudsman.The Ombudsman shall only make inquiries about, or advise staff or Board members of the existence and identity of, a complainant in order to further the resolution of the complaint.  The Ombudsman shall take all reasonable steps necessary to ensure that if staff and Board members are made aware of the existence and identity of a complainant, they agree to maintain the confidential nature of such information, except as necessary to further the resolution of a complaint

From: accountability-cross-community-bounces at icann.org <mailto:accountability-cross-community-bounces at icann.org>  [mailto:accountability-cross-community-bounces at icann.org] On Behalf Of Seun Ojedeji
Sent: Saturday, October 17, 2015 11:28 AM
To: Greg Shatan <gregshatanipc at gmail.com <mailto:gregshatanipc at gmail.com> >
Cc: ICANN-Adler <ICANN at adlercolvin.com <mailto:ICANN at adlercolvin.com> >; accountability-cross-community at icann.org <mailto:accountability-cross-community at icann.org> ; ACCT-Staff <acct-staff at icann.org <mailto:acct-staff at icann.org> >; Sidley ICANN CCWG <sidleyicannccwg at sidley.com <mailto:sidleyicannccwg at sidley.com> >; McNicholas, Edward R. <emcnicholas at sidley.com <mailto:emcnicholas at sidley.com> >
Subject: Re: [CCWG-ACCT] Question on binding IRP

On Sat, Oct 17, 2015 at 10:53 AM, Greg Shatan <gregshatanipc at gmail.com <mailto:gregshatanipc at gmail.com> > wrote:

The only entities that can seek to enforce an arbitration judgment are the parties to the arbitration (and it would typically be the prevailing party seeking to enforce the judgment against a losing party that refused to honor the judgment).

The IRP is an arbitration panel (essentially, private judges by contract).  I recognize that there are some legal systems in which judges have prosecutorial powers (i.e., they can act more like a party).  Under the US system and under any arbitration rules I'm familiar with, that is not the case -- they are purely judicial.

This adequately answers my question on whether option 1 will be possible(thats assuming that you are saying this in line with the CA legal requirements). Thanks

Since the Ombudsman is not a party, they would not be able to enforce.  Also, I think that's way out of scope of what an Ombudsman is tasked to do.

I am actually not talking about the Ombudsman in the current definition of Ombudsman. I am talking about having a seperate legal person-hood that could actually enforce the will of the community after the board has refused to comply. 

Maybe what we need is a "Community Advocate" -- a legal entity to be instructed by the community to bring IRP cases for the community.  Not sure how that would differ from the single designator or single member, except that it would exist solely to bring these cases and not to exercise powers.

Yes! this is a better phrase as it carries the description of what i was trying to say. I think it differs in the sense that there won't be need to have either SD or SM and all structures will be kept intact (as it currently it).

Regards

Greg

On Sat, Oct 17, 2015 at 5:07 AM, Seun Ojedeji <seun.ojedeji at gmail.com <mailto:seun.ojedeji at gmail.com> > wrote:

Thanks for sharing this Leon, I expect this is one of the puzzle that will need to handled/cracked by the subgroup. Considering that there is still an ongoing concern of whether the SO/AC would want to have such legal status, 2 options comes to mind:

- Can the IRP be given this legal status to enforce? If yes how do we ensure they don't enforce unilaterally?

- Can an individual similar to the Ombudsman be engaged for such role?

It will be good to hear why those options may not work.

Regards
Sent from my Asus Zenfone2
Kindly excuse brevity and typos.

Dear Ed,

Thank you very much. That was fast!

Best regards,

León

El 16/10/2015, a las 8:23 p.m., McNicholas, Edward R. <emcnicholas at sidley.com <mailto:emcnicholas at sidley.com> > escribió:

Please use this version.

León –

Holly and Rosemary asked me to respond to the question about whether an entity that has no legal personhood ( i.e., is not an unincorporated association, partnership, corporation or natural person) can enter into binding arbitration under California law or applicable federal law.  It is important to emphasize that the issue involves binding arbitration.  Nonbinding arbitration and mediation proceedings can involve any sort of entity.  Ultimately they are not intended to be binding or enforceable, and so there is no significance to whether an entity could be bound or bind another entity in that context.

In contrast, if arbitration is intended to be binding, then the entity involved must be subject to be being bound itself and be able to bind the other entity.  Unless the losing party complies after the arbitrator’s decision, arbitral awards must be taken into a court and recognized in a court judgment in order to enforced.  Ultimately, arbitration relies upon the courts for enforcement; and courts must examine whether they are dealing with a legal entity.  The legally significant point is whether a non-legal person can enforce an arbitration award, and the answer to that question is “no.”  Federal Rule of Civil Procedure 17(b) (3)(A) provides that “a partnership or other unincorporated association with no . . . capacity under that state's law may sue or be sued in its common name to enforce a substantive right existing under the United States Constitution or laws.”  This Rule does not – and cannot – bestow capacity to sue on a non-legal person when that non-legal person tries to enforce a substantive right, and we are not aware of any case that stands for that proposition.  SO/ACs will need to demonstrate legal personhood to enforce an arbitration agreement (assuming that they are either parties themselves to the arbitration agreement or third-party beneficiaries).

There was a question about whether some case law suggests that even if an entity lacks legal personhood  and therefore cannot enforce an arbitration award under state law, Federal Rule of Civil Procedure 17(b) permits that entity to sue in federal court because arbitration is a “substantive right.”   Specifically,  some  case law indicates that an entity lacking capacity to compel arbitration or enforce an arbitration award in its own name under state law may in some circumstances do so under Rule 17(b).  See, e.g., O & Y Landmark Assocs. of Va. v. Nordheimer, 725 F. Supp. 578, 581 (D.D.C. 1989) (finding that a partnership seeking to compel arbitration had capacity even though D.C. law did not recognize such); Local 4076, United Steelworkers of Am. V. United Steelworkers of Am., AFL-CIO, 327 F. Supp. 1400, 1403 (W.D. Pa. 1971); see also Day v. Avery, 548 F.2d 1018, 1022 (D.C. Cir. 1976) (recognizing arbitration as a substantive right), Laundry, Dry Cleaning & Dye House Workers Int’l Union v. Mahoney, 491 F.2d 1029 (8th Cir. 1974) (enforcing arbitration in an equally divided concurring opinion).  None of these cases, however,  suggest that an entity entirely lacking legal personhood may file suit in federal court simply because the right to arbitrate is at issue.  Rather, Rule 17(b) lets the partnership, union, or other unincorporated association – each a legal person –  sue in its name, as opposed to forcing its members to sue in theirs.  It bears emphasis that in each instance these entities were legal persons.   For instance, in Local 4076, Pennsylvania law did not allow the local union to sue in its own name because its charter had been cancelled, requiring instead that the suit be filed in the name of a member or members as trusteesad litem for the association.  327 F. Supp. at 1403.  Rule 17(b) overrode this pleading requirement.  Id.  Mahoney dealt with a similar issue.  In each of these cases, an entity with legal personhood existed at some point; the question was whether the entity itself or the individual members must be the nominal party in the suit. 

The question of legal personhood is a key enforcement issue for any model that relies on individual SOs and ACs for enforcement. It  would be necessary for the SO/ACs to show that they are unincorporated associations (or some other type of legal person) to enforce any arbitrator’s award.  In California, that is an uncertain test:  whether there is a “group of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not.”  Cal. Corp. Code § 18035(a); see also Cal. Code Civ. P. § 369.5.  “The criteria applied to determine whether an entity [is capable of suing or being sued as] an unincorporated association are no more complicated than (1) a group whose members share a common purpose, and (2) who function under a common name under circumstances where fairness requires the group be recognized as a legal entity.”  Barr v. United Methodist Church, 90 Cal. App. 3d 259, 266 (Cal. Ct. App. 1979).  And at least some courts have recognized that an “organization” that “has no charter, by-laws or articles, no office or place of business, no mailing address, no bank account, no assets or obligations, and has never transacted business” as an entity – is not an unincorporated association with capacity to sue or be sued.  Cal. Clippers, Inc. v. U.S. Soccer Football Ass’n, 314 F. Supp. 1057, 1068 (N.D. Cal. 1970).  In our case, some SO/ACs have indicated that they do not view themselves as unincorporated associations, and, in that case, it would involve a significant risk to enforceability to suggest that they could enforce an arbitration award.  Of course, if an unincorporated association exists or is timely created, it is a legal person and there will be no problem with lack of personhood; this email is only to be clear that lack of personhood is problematic.

Please note that, as a general matter, this legal analysis is provided on a level in keeping with the question posed.  Our legal analysis is tailored to the context in which the particular question arises.  It is provided to inform and help facilitate your consideration of the governance accountability models under discussion and should not be relied upon by any other persons or groups for any other purpose.  Unless otherwise stated, our legal analysis is based on California law and in particular the laws governing California nonprofit public benefit corporations (California Corporations Code, Title 1, Division 2).  In our effort to respond in a limited time frame, we may not have completely identified, researched and addressed all potential implications and nuances involved.

Please let us know if there are any questions or concerns.

All the best,

Ed

EDWARD R. McNICHOLAS
Partner \ Privacy, Data Security & Information Law Practice Co-Leader
Sidley Austin llp
1501 K Street, N.W.
Washington, DC 20005
202 736 8010 <tel:202%20736%208010>  office 

From: León Felipe Sánchez Ambía [ <mailto:leonfelipe at sanchez.mx> mailto:leonfelipe at sanchez.mx] 
Sent: Friday, October 16, 2015 2:49 PM
To: Gregory, Holly; Rosemary E. Fei
Cc: ACCT-Staff; Sidley ICANN CCWG; ICANN-Adler; Accountability Cross Community
Subject: Question on binding IRP

Dear Holly, dear Rosemary,

One key question that has been in the air and I believe is important to answer is the following:

Does an entity that has no legal personhood ( i.e., is not an unincorporated association, partnership, corporation or natural person) can enter into binding arbitration under California law or applicable federal law?

Could you please guide us on this issue. This, of course, certifies this question for you to work on it.

Best regards,

León

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