[client com] Request for legal feedback

Flanagan, Sharon sflanagan at sidley.com
Wed Apr 6 20:38:32 UTC 2016

If CWG is looking for that type of clarity, I think you would need  to be explicit on the number of years to be covered.  That could be done in the contract – or in the bylaws.   Concepts like “future” and “sufficient” are open to interpretation.


+1 415 772 1271
sflanagan at sidley.com<mailto:sflanagan at sidley.com>

From: Greg Shatan [mailto:gregshatanipc at gmail.com]
Sent: Wednesday, April 06, 2016 1:14 PM
To: Flanagan, Sharon
Cc: Lise Fuhr; Client; Gomes, Chuck
Subject: Re: [client com] Request for legal feedback

Apologies for chiming in late.

In reading this thread over, and somewhat in isolation, I'm concerned the language may not be explicit enough that the focus here is on contingent/reserve/"rainy day" funding, as opposed to the obligation to provide present-day operational funding for the IANA functions/PTI.

On a related note, should it be more explicit that the reference to "to ensure uninterrupted performance of those IANA functions and PTI." is in the event that the "present-day operational funding" dries up -- and not just that sufficient funds are going in on an ongoing basis to keep things running under normal circumstances?

Maybe when this language is placed in context (which I apologize for not doing) it will be clear that we are talking about money for extraordinary times in the future, and that money for ordinary times in the (then) current day is dealt with elsewhere.  But read here, it does not seem clear to me....



On Wed, Apr 6, 2016 at 3:40 PM, Flanagan, Sharon <sflanagan at sidley.com<mailto:sflanagan at sidley.com>> wrote:
Dear All,

The language suggested by DT-O is helpful language and could be included in the ICANN bylaws.  A few thoughts on the language itself:

1.  In response to your question, the language below doesn’t necessarily addresses multi-year funding.  It depends on what one views as “sufficient”.   We could envision an argument that 12 months of funding at a time is sufficient.  But see below for a suggestion on how we could address a longer period in the IANA Functions Contract instead.

2.  As for whether the wording is “fund” or “allocate funds”, “allocate funds” has a more prospective/forward-looking aspect to it which we think captures more of the intent.  The IANA Functions Contract should include the ICANN obligation to actually fund PTI.  As a result, we would suggest “allocate funds” here and “fund” in the IANA Functions Contract.  We would also suggest adding reference to PTI below unless that is not the intent.

“To maintain ongoing operational excellence and financial stability of the IANA functions (so long as they are performed by ICANN or pursuant to contract with ICANN) and PTI, ICANN shall be required to plan for and allocate funds to the IANA functions and PTI that are sufficient to cover the future expenses and contingencies to ensure uninterrupted performance of those IANA functions and PTI.”

With respect to greater clarity on the commitment, the IANA Functions Contract would be a place where a more specific commitment could reside.   Specifically, the IANA Functions Contract could include a contractual obligation on the part of ICANN to provide multi-year funding directly to PTI or to an escrow for the benefit of PTI.  In the contract, you could specify the number of years of funding required and the mechanics of the funding.  This would allow greater flexibility to handle in implementation.

If added, this provision of the IANA Functions Contract should also be added to Section 16.3 of the ICANN Bylaws as one of the provisions  of the IANA Functions Contract that if it were amended, would require ccNSO and GNSO Council approval.

One question we continue to have – is it clear what role CWG or a successor will have in determining the IANA Functions Contract?  It will be very important for the reasons above and for other reasons that the contract reflect the intent of the CWG proposal.



+1 415 772 1271<tel:%2B1%20415%20772%201271>
sflanagan at sidley.com<mailto:sflanagan at sidley.com>

From: Lise Fuhr [mailto:Fuhr at etno.eu<mailto:Fuhr at etno.eu>]
Sent: Wednesday, April 06, 2016 4:35 AM
To: Flanagan, Sharon
Cc: Client; 'Gomes, Chuck'
Subject: Request for legal feedback
Importance: High

Dear Sharon,

Below are some questions in relation to ICANN Bylaws and secured funding from the DTO which the Client Committee would like you to review and give feedback on. Jonathan has provided some additional context  which is also included. Because DTO have the next call at 20:00 UTC on Thursday so it would be very helpful if we could get some feedback before then.


1.       ICANN Maintains a reserve fund. The target size of the fund is to cover in the region of 1 year of ICANN’s operating expenses (including IANA / PTI).

2.       The DT-O / CWG has been concerned that PTI funding is ensured and protected in the event of financial difficulties or significant related issues at ICANN (to include but not limited to ICANN bankruptcy)

3.       The implementation of a PTI has been discussed and consideration has been given to ring fenced funds (in escrow?) which would provide for up to three years future funding of PTI IANA. Such funds to be assessed on an annual basis and the quantum adjusted for the then projected future expenditure.

Therefore the new bylaws need to cover for the above and it may be that they simply provide for future funding and then our work on implementation deals with the quantum (3 years) OR the bylaws hard code the quantum and the mechanism. What is and isn’t necessarily contained in the bylaws seems to be the crux of the legal advice (in addition to the actual wording of the bylaws).

DTO questions:

1.       Understanding that we are not qualified to draft the language but also realizing that time is of the essence, here is how we changed the wording:  “To maintain ongoing operational excellence and financial stability of the IANA functions (so long as they are performed by ICANN or pursuant to contract with ICANN), ICANN shall be required to plan for and fund sufficiently the future expenses and contingencies to ensure uninterrupted performance of those IANA functions.”

Some in DT-O preferred the word ‘allocate’ instead of ‘fund’ or ‘allocate funds’.  Also some suggested that it might be good to include the concept of multi-year funding.  We will leave it to Sidley to decide how best to draft the language.
Note that the concept of ‘uninterrupted’ was quite important in our discussion.

2.       In conjunction with the request below, a response to this question would be appreciated:  "Does the proposed text cover the case where there is need for ongoing funding beyond a single year’s budget?

Please let us now if there is a need for further explanations in relation to the questions above and if the deadline can be met.
I have copied Chuck in order to have him in the loop and by this ensure a quick response if there is a need for clarification.

On behalf of the Client Committee,

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