[Acct-Legal] Fwd: [CCWG-ACCT] Suggested text for designator model

Wed Apr 29 15:53:28 UTC 2015

Dear CCWG,  In the short time available, I have undertaken a quick mark up of the section that Jordan circulated.  My comments are in red.  Please note that these are my comments only and do not reflect input from my Sidley and Adler& Colvin colleagues, but in the interest of time I wanted to provide a flavor of some of our likely comments. Holly

1.6.1.1 The Community Mechanism: Reference Mechanism

1.        In its deliberations and in discussion with its independent legal counsel, it has become clear that ICANN as a non-profit corporation based in California is able to reserve to the multistakeholder community the powers the CCWG is proposing. To reserve these powers, however, ICANN needs to make use of membership or designator roles.

2.        While the status quo has elements of a designator model, efforts to expand the powers of designators under the ICANN bylaws would be insufficient because such bylaws would be unlikely to be enforceable to the degree the global multistakeholder community - or this CCWG - would expect. In preparing for the environment that emerges following the end of the post-NTIA contract, our task as a CCWG is to strengthen ICANN’s accountability, not to allow it to be weakened. So the status quo is not an option.

3.        California law, similar to the law of many other jurisdictions, allows for membership of non profit corporations. Members have certain powers provided by law that can be expanded upon through articles and bylaws in a manner that is enforceable.

4.        The CCWG has therefore decided to propose to the community in this Public Comment report a Reference Mechanism based on membership, as it is the approach that - based on analysis so far - fits requirements best. The Reference Mechanism would have the following key characteristics:

a.    The ICANN Supporting Organisations and Advisory Committees would each become a “Member” of ICANN, and as unincorporated associations would exercise the community powers set out in this part of this Report.

b.    In their role as Members, they would exercise the new community powers set out in 6.6.2-6.6.7 below. Our legal counsel have advised that this is the clearest path to realizing the powers we are proposing.

c.    There would be no need for individuals or organisations to “join” ICANN or to “join” the SOs or ACs they participate in to do anything that they currently do within ICANN. Community participants would have the choice of opting in and participating in this new accountability system, or to simply keep on doing what they do today in an ICANN that is more accountable than it is today.

d.    Our legal counsel have advised that through this structure, there would be no material increase in the risks and liabilities individual ICANN participants face today. In fact, in some respects individual participants may have greater protection from hostile legal action than they have today.

Our legal counsel have advised that under California law through this structure, there would be no material increase in the risks and liabilities individual ICANN participants face today.  [This last sentence is redundant and we would recommend it be omitted.]

e.    A set of practical questions and answers regarding unincorporated associations is also available in Appendix X (Sidley and Adler & Colvin Memo (Unincorporated associations))

5.        The powers sought by the CCWG can be implemented under the Reference Mechanism, and it has advantages in terms of enforceability. Because, according to legal counsel, the membership model provides the clearest path for the community to exercise the six community powers explicitly sought by the CCWG, it has been suggested as the Reference Mechanism by the group.

6.        In arriving at this Reference Mechanism, the primary alternative the CCWG has investigated is a model based on “designators”. In this part of the report, we refer to this as the Alternative Mechanism.

7.        Designators are a construct in California law that can achieve reliable enforcement of 4 of the 6 community powers sought, specifically with respect to community approval or blocking of changes of bylaws and the selection and removal of board members.  There is concern however, regarding the ease and reliability with which the other 2 community powers sought (approval of budget and strategic plan) can be enforced once created under the designator model, according to legal counsel.  Legal counsel further advises that the SOs and ACs should organize themselves into unincorporated associations in both corporate governance models, whether a designator or membership structure, to ensure their ability to enforce their rights. .

8.        Legal counsel advise that the membership model creates the clearest path for the community to hold the ICANN board accountable.  In preparing for the environment that emerges following the end of the post-NTIA contract, our task as a CCWG is to strengthen ICANN's accountability, not to allow it to be weakened.  So the status quo is not an option and the community should select either a true membership model or an empowered designator model to achieve that accountability.

9.        Variations of these mechanisms were also discussed:

a.    The notion of creating a permanent CCWG or a Community Council that was the sole “member” or “designator” was considered but rejected mainly because it created additional accountability problems and offered no accountability advantages compared with the Reference Mechanism;

b.    The notion of all SOs and ACs collectively creating an unincorporated association that would be the single member of ICANN. However this model “would add only complexity without contributing real advantages”.

c.    The notion of a first step of change (in a timeframe consistent with WS1) focusing on changes in the bylaws and current mechanisms only, while assessing the opportunity to goo one step further as part of WS2.

10.      None of the mechanism possibilities should be considered “off the table”. The work of the CCWG has proceeded quickly, and our counsel are rapidly becoming familiar with the complexities of ICANN’s history and current approach to dealing with many of these matters.

11.      That said, the CCWG is clearly of the view that the Reference Mechanism is the currently preferred approach, and relies on this in much of what follows.
12.

HOLLY J. GREGORY
Partner

Sidley Austin LLP
+1.212.839.5853
holly.gregory at sidley.com<mailto:holly.gregory at sidley.com>

From: ccwg-accountability5-bounces at icann.org [mailto:ccwg-accountability5-bounces at icann.org] On Behalf Of List for the work of CCWG-Accountability Legal SubTeam
Sent: Wednesday, April 29, 2015 10:45 AM
To: ccwg-accountability5 at icann.org
Subject: [Acct-Legal] Fwd: [CCWG-ACCT] Suggested text for designaor model

I am forwarding this document sent by Jordan. It contains the text version he suggests we discuss and review at our call today.

Best regards,

León

Inicio del mensaje reenviado:

De: Jordan Carter <jordan at internetnz.net.nz<mailto:jordan at internetnz.net.nz>>
Asunto: Re: [Acct-Legal] [CCWG-ACCT] Suggested text for designaor model
Fecha: 29 de abril de 2015 8:09:26 GMT-5
Para: "ccwg-accountability5 at icann.org<mailto:ccwg-accountability5 at icann.org>" <ccwg-accountability5 at icann.org<mailto:ccwg-accountability5 at icann.org>>, Greg Shatan <gregshatanipc at gmail.com<mailto:gregshatanipc at gmail.com>>, "Gregory, Holly" <holly.gregory at sidley.com<mailto:holly.gregory at sidley.com>>, "Rosemary E. Fei" <rfei at adlercolvin.com<mailto:rfei at adlercolvin.com>>, León Felipe Sánchez Ambía <leonfelipe at sanchez.mx<mailto:leonfelipe at sanchez.mx>>, Thomas Rickert <rickert at anwaelte.de<mailto:rickert at anwaelte.de>>, Mathieu Weill <Mathieu.Weill at afnic.fr<mailto:Mathieu.Weill at afnic.fr>>, ACCT-Staff <acct-staff at icann.org<mailto:acct-staff at icann.org>>, Izumi Okutani <izumi at nic.ad.jp<mailto:izumi at nic.ad.jp>>, Robin Gross <robin at ipjustice.org<mailto:robin at ipjustice.org>>

Hi team

I've attached a Word document that actually has the current draft text for this that I am working on. It is NOT THE SAME as what Robin proposed.

I have copied lots of you in direct on this email as I don't have posting rights.

Can this be what Counsel review, please?

Sorry to intrude....

cheers
Jordan

On 30 April 2015 at 00:56, List for the work of CCWG-Accountability Legal SubTeam <ccwg-accountability5 at icann.org<mailto:ccwg-accountability5 at icann.org>> wrote:
Greg, we agree with your concerns regarding the language highlighted. Please let us know if you would like us to mark up the suggested text. Holly

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From: ccwg-accountability5-bounces at icann.org<mailto:ccwg-accountability5-bounces at icann.org> on behalf of List for the work of CCWG-Accountability Legal SubTeam
Sent: Wednesday, April 29, 2015 12:14:09 AM
To: Izumi Okutani; ccwg-accountability5 at icann.org<mailto:ccwg-accountability5 at icann.org>
Cc: Accountability Cross Community
Subject: Re: [Acct-Legal] [CCWG-ACCT] Suggested text for designaor model

I am forwarding this email into the Legal Subteam for discussion and possible referral to counsel.

In the "suggested text," which I've pasted in below, I believe the text that I have highlighted and bolded is contrary to the advice we have received from Sidley/Adler and in some cases may inadvertently misstate that advice.  Rather than pick it apart here, I think it makes more sense to discuss this with Sidley/Adler and then bring it back to the full list or the next full meeting if need be.

Greg

SUGGESTED TEXT

f) Designators are a construct in California law that can achieve some of the powers proposed below - As ICANN's SOs/ACs struture is consistent with this model, "the selection and removal of Board members" and "the approval or blocking of changes to bylaws" can be achieved by changing the ByLaws to define the role of SOs/ACs as designators, without the need to organise unincorporated association. But they cannot reliably deliver other aspects of the set of powers the CCWG believes the community needs, such as statutory power for full board dismissal and ability to have legal standing in court for enforcement of rights, if it is to fully hold ICANN to account.
Crucially, in the view of our counsel, to have dismissal of the entire board and for legal enforcement of rights in court, would require some additional contractual relationships between SOs/ACs and ICANN, which would also oblige SOs and ACs to establish themselves into unincorporated associations, so some of the perceived simplicity compared with the membership model isn't actually achievable.

On Tue, Apr 28, 2015 at 4:13 PM, Izumi Okutani <izumi at nic.ad.jp<mailto:izumi at nic.ad.jp>> wrote:
Dear all,

As mentioned at the # 30 CCWG call, I'd like to suggest text changes for 6.6.1.1 f).

6.6.1.1 The Community Mechanism: Reference
Mechanism

CURRENT TEXT
Designators are a construct in California law that can achieve some of the powers proposed below ‐
mainly those regarding the selection and removal of Board members and the approval or blocking of
changes to bylaws. But they cannot reliably deliver other aspects of the set of powers the CCWG
believes the community needs, if it is to fully hold ICANN to account. Crucially, in the view of our
counsel, this would also oblige the SOs and ACs to organise themselves into unincorporated
associations ‐ and so some perceived simplicity compared with the membership model isn’t actually
possible.

SUGGESTED TEXT

f) Designators are a construct in California law that can achieve some of the powers proposed below - As ICANN's SOs/ACs struture is consistent with this model, "the selection and removal of Board members" and "the
approval or blocking of changes to bylaws" can be achieved by changing the ByLaws to define the role of SOs/ACs as designators, without the need to organise unincorporated association. But they cannot reliably deliver other aspects of the set of powers the CCWG believes the community needs, such as statutory power for full board dismissal and ability to have legal standing in court for enforcement of rights, if it is to fully hold ICANN to account.
Crucially, in the view of our counsel, to have dismissal of the entire board and for legal enforcement of rights in court, would require some additional contractual relationships between SOs/ACs and ICANN, which would also oblige SOs and ACs to establish themselves into unincorporated associations, so some of the perceived simplicity compared with the membership model isn't actually achievable.

Izumi
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InternetNZ

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A better world through a better Internet

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