<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class="">Dear Ed,<div class=""><br class=""></div><div class="">Thank you very much. That was fast!</div><div class=""><br class=""><div class="">
<div class="">Best regards,</div><div class=""><br class=""></div><div class=""><br class=""></div><div class="">León</div>
</div>
<br class=""><div><blockquote type="cite" class=""><div class="">El 16/10/2015, a las 8:23 p.m., McNicholas, Edward R. <<a href="mailto:emcnicholas@sidley.com" class="">emcnicholas@sidley.com</a>> escribió:</div><br class="Apple-interchange-newline"><div class=""><div style="font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=""><br class="webkit-block-placeholder"></div><div class="WordSection1" style="page: WordSection1; font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;"><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="color: rgb(31, 73, 125);" class="">Please use this version.</span></div><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-size: 11pt; font-family: Calibri, sans-serif; color: rgb(31, 73, 125);" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">León –<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">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</span><span style="font-family: Calibri, sans-serif; color: rgb(31, 73, 125);" class="">. It<span class="Apple-converted-space"> </span></span><span style="font-family: Calibri, sans-serif;" class="">is important to emphasize that the issue involves<span class="Apple-converted-space"> </span><i class="">binding</i><span class="Apple-converted-space"> </span>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.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">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).<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">There was a question about whether some case law suggests that even if an entity lacks legal personhood<span class="Apple-converted-space"> </span><i class=""> </i>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.” <span class="Apple-converted-space"> </span><i class=""> </i>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). <span class="Apple-converted-space"> </span><i class="">See, e.g.</i>,<span class="Apple-converted-space"> </span><i class="">O & Y Landmark Assocs. of Va. v. Nordheimer</i>, 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);<span class="Apple-converted-space"> </span><i class="">Local 4076, United Steelworkers of Am. V. United Steelworkers of Am., AFL-CIO</i>, 327 F. Supp. 1400, 1403 (W.D. Pa. 1971);<span class="Apple-converted-space"> </span><i class="">see also Day v. Avery</i>, 548 F.2d 1018, 1022 (D.C. Cir. 1976) (recognizing arbitration as a substantive right),<span class="Apple-converted-space"> </span><i class="">Laundry, Dry Cleaning & Dye House Workers Int’l Union v. Mahoney</i>, 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<i class=""> </i>– 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<span class="Apple-converted-space"> </span><i class="">Local 4076</i>, 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 trustees<i class="">ad litem</i><span class="Apple-converted-space"> </span>for the association. 327 F. Supp. at 1403. Rule 17(b) overrode this pleading requirement. <span class="Apple-converted-space"> </span><i class="">Id.</i> <span class="Apple-converted-space"> </span><i class="">Mahoney</i><span class="Apple-converted-space"> </span>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. <o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""> <o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">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);<span class="Apple-converted-space"> </span><i class="">see also<span class="Apple-converted-space"> </span></i>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.” <span class="Apple-converted-space"> </span><i class="">Barr v. United Methodist Church</i>, 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. <span class="Apple-converted-space"> </span><i class="">Cal. Clippers, Inc. v. U.S. Soccer Football Ass’n</i>, 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<span class="Apple-converted-space"> </span><i class="">lack</i><span class="Apple-converted-space"> </span>of personhood is problematic.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><i class=""><span style="font-family: Calibri, sans-serif;" class="">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</span></i><i class=""><span style="font-family: Calibri, sans-serif;" class=""><span class="Apple-converted-space"> </span>not have completely identified, researched and addressed all potential implications and nuances involved.</span></i><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">Please let us know if there are any questions or concerns.<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">All the best,<span style="color: rgb(31, 73, 125);" class=""><o:p class=""></o:p></span></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></span></div><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">Ed<o:p class=""></o:p></span></div><div class=""><div style="margin: 0in 0in 0.0001pt 0.5in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><b class=""><span style="font-size: 10pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class="">EDWARD</span></b><span style="font-size: 10pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class=""> <b class="">R. McNICHOLAS</b></span><span style="color: rgb(31, 73, 125);" class=""><br class=""></span><span style="font-size: 9pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class="">Partner \ Privacy, Data Security & Information Law Practice Co-Leader<br class=""></span><b class=""><span style="font-size: 10pt; font-family: Arial, sans-serif; font-variant: small-caps; color: rgb(31, 73, 125);" class="">Sidley Austin llp</span></b><b class=""><span style="font-size: 10pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class=""><br class=""></span></b><span style="font-size: 9pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class="">1501 K Street, N.W.<br class="">Washington, DC 20005<br class="">202 736 8010 office</span><span style="font-size: 10pt; font-family: Arial, sans-serif; color: rgb(31, 73, 125);" class=""> </span><i class=""><span style="font-size: 11pt; font-family: Calibri, sans-serif; color: rgb(31, 73, 125);" class=""><o:p class=""></o:p></span></i></div></div><div class=""><div style="border-style: solid none none; border-top-color: rgb(181, 196, 223); border-top-width: 1pt; padding: 3pt 0in 0in;" class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><b class=""><span style="font-size: 10pt; font-family: Tahoma, sans-serif;" class="">From:</span></b><span style="font-size: 10pt; font-family: Tahoma, sans-serif;" class=""><span class="Apple-converted-space"> </span>León Felipe Sánchez Ambía [<a href="mailto:leonfelipe@sanchez.mx" style="color: purple; text-decoration: underline;" class="">mailto:leonfelipe@sanchez.mx</a>]<span class="Apple-converted-space"> </span><br class=""><b class="">Sent:</b><span class="Apple-converted-space"> </span>Friday, October 16, 2015 2:49 PM<br class=""><b class="">To:</b><span class="Apple-converted-space"> </span>Gregory, Holly; Rosemary E. Fei<br class=""><b class="">Cc:</b><span class="Apple-converted-space"> </span>ACCT-Staff; Sidley ICANN CCWG; ICANN-Adler; Accountability Cross Community<br class=""><b class="">Subject:</b><span class="Apple-converted-space"> </span>Question on binding IRP<o:p class=""></o:p></span></div></div></div><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">Dear Holly, dear Rosemary,</span><o:p class=""></o:p></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">One key question that has been in the air and I believe is important to answer is the following:</span><o:p class=""></o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">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?</span><o:p class=""></o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><span style="font-family: Calibri, sans-serif;" class="">Could you please guide us on this issue. This, of course, certifies this question for you to work on it.</span><o:p class=""></o:p></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div><div class=""><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Best regards,<o:p class=""></o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div><div class=""><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">León<o:p class=""></o:p></div></div></div><div style="margin: 0in 0in 0.0001pt 1in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><o:p class=""> </o:p></div></div></div></div><div style="font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=""><br class="webkit-block-placeholder"></div><div style="font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=""> <br class="webkit-block-placeholder"></div><p style="font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class="">****************************************************************************************************<br class="">This e-mail is sent by a law firm and may contain information that is privileged or confidential.<br class="">If you are not the intended recipient, please delete the e-mail and any attachments and notify us<br class="">immediately.<br class=""><br class="">****************************************************************************************************</p></div></blockquote></div><br class=""></div></body></html>