[CWG-Stewardship] Another alternative proposal - addressing some questions

[Greg Shatan]

Thanks, and safe travels.

Greg

*Gregory S. Shatan *

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On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo at auda.org.au> wrote:

> But really quickly -
>
> Just to confirm, the registries (and not the larger multistakeholder
> community)  are the beneficiaries of the trust.  This has some downstream
> consequences (see below).
>
>
> Not necessarily. That is a matter for the community to discuss and come to
> consensus on. Certainly the proposal envisages that the Guardian would be
> multistakeholder.
>
> 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
>
> On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc at gmail.com> wrote:
>
> Chris,
>
> Please see below.
>
> Greg
>
>
>
> On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo at auda.org.au> wrote:
>
>> Hi Greg,
>>
>> Thanks for your comments. My apologies for mischaracterising contract co
>> as having ‘shareholders’. To your other comments and generally:
>>
>> Also, trusts are separate legal entities, so it is similar to Contract Co
>> in that regard (and thus prey to many of the same "complexities.")
>>
>>
>> A trust is not a legal entity. A trustee is a legal entity.
>>
>
> Chris:  I think there are nuances here that are beyond both of us (hence
> the need for targeted legal expertise).  Here is an excerpt from the US
> government website (www.usa.gov), describing trusts:
>
>  Creating a trust (or trust fund) establishes a legal entity that holds
> property or assets for the person who created it. The person who creates
> the trust can be called a grantor, donor, or settlor. When the grantor
> creates the trust he or she appoints a person or entity (like the trust
> department of a bank) to manage the trust. This person or entity is called
> a trustee. The grantor also chooses someone who will ultimately benefit
> from the trust, this person is the beneficiary.
>
> http://www.usa.gov/topics/money/personal-finance/trusts.shtml
>
> Further research reveals apparently contradictory statements regarding the
> legal and juristic standing of trusts, as well as instances in which trusts
> are legal entities for certain purposes (e.g., tax) and not others (e.g.,
> standing to sue).  I can only conclude that some real expertise in trust
> law is needed to sort this out.
>
>> It's my understanding that trusts are created to hold property.
>> Shouldn't the Trust (and not the Trustee) own the IANA function?  If the
>> Trust doesn't hold the IANA Functions, what assets are held by the Trust?
>>
>>
>> Because the trust is not a legal entity, the trustee holds the property
>> for the benefit of the beneficiaries. The asset is the right to run the
>> IANA function and that is what is held by the trustee.
>>
>> I'm not familiar with this "guardian" concept (unless it was created
>> uniquely for this proposal).  Is this an Australian law concept?  Do you
>> know if this is similar to the "trust protector" concept in the US?
>>
>>
>> It’s not an Australina concept however the word may be different. It is
>> used synonymously with protector, appointor, supervisor and the like.
>>
>> I believe this proposal simplifies the contract co proposal, by removing
>> the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN
>> is performing the IANA naming functions, for the benefit of the “customers”
>> of the IANA naming functions (who are the stated beneficiaries of the
>> trust, replacing the need to create “Contract Co.”).
>>
>
> Justin to confirm, the registries (and not the larger multistakeholder
> community)  are the beneficiaries of the trust.  This has some downstream
> consequences (see below).
>
>>
>>
>> The Trustee also has higher fiduciary obligations, which require them to
>> always act in the best interests of the beneficiaries (not just for
>> themselves).
>>
>
> What if the interests of the beneficiaries (i.e., the registries) diverge
> from the interests of the multistakeholder community generally or the
> public interest?  Wouldn't that require the Trustee (i.e., ICANN) to act in
> the registries' interest, even if it is to the detriment of other
> stakeholders?  That seems at odds with the idea of accountability to
> stakeholders, generally.  We would need to find a way to deal with this.
>
>>
>> The Trust can be “settled” by the NTIA passing on the “right to perform
>> the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA
>> as settlor; ICANN as trustee.
>>
>> Trustee can always unilaterally declare a trust - but this would be a
>> redundant question now in light of explanation above.
>>
>> The beneficiaries of the trust would be the “customers” of the IANA
>> naming functions - as described in the ICG RF.
>>
>> The guardian is the “protector” of the beneficiaries. It can’t be the
>> entire pool of beneficiaries, but it can be someone, or some group of
>> people, who represents  the beneficiaries.
>>
>> All of the above is subject to confirmation by the relevant legal experts
>> that this is workable under Californian law.
>>
>
> Thanks for the further explanation.  It is an interesting proposal, with
> some issues (as others have as well).  I look forward to working through
> it, getting the necessary legal advice, and seeing if this will work.
>
> Greg
>
>>
>>
>>
>> Cheers,
>>
>>
>> Chris
>>
>> On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc at gmail.com> wrote:
>>
>> Chris,
>>
>> A few quick comments, inline below:
>>
>> *Greg*
>>
>> On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo at auda.org.au> wrote:
>>
>>> Greetings All,
>>>
>>> Earlier today Paul Szyndler from auDA sent to RFP3 another alternative
>>> proposal (attached).
>>>
>>> I have received a number of questions off list from some ccTLD
>>> colleagues and others and thought it might be helpful to address them all
>>> in this email to the CWG.
>>>
>>> 1. Are there legal issues with the Trust solution? I am not an expert in
>>> Californian law but as a lawyer I do know a fair bit about trusts and their
>>> structure. The proposal is workable in general terms but there may be
>>> nuances of Californian law generally, or specifically as it applies to
>>> Californian corporations like ICANN, which would make the proposed
>>> structure overly complicated or problematic. Like the 'contract co’
>>> proposal and auDA’s original ‘golden by-law’ proposal I expect this to be
>>> put to independent legal experts who can advise on the merits of each of
>>> the proposals.
>>>
>>
>>> 2. Isn’t creating a trust just creating 'contract co' by another name?
>>> No. My understanding of 'contract co’ is that it would be a separate legal
>>> entity owned by some, yet to be identified, group of shareholders.
>>>
>>
>> Chris:  This is not correct. The proposal was that Contract Co would be a
>> not-for-profit corporation, which don't have shareholders (or any kind of
>> owner).  Also, trusts are separate legal entities, so it is similar to
>> Contract Co in that regard (and thus prey to many of the same
>> "complexities.")
>>
>>
>>> With the trust, ICANN would own the IANA function but declare in a
>>> legally binding document that it did so on trust for the relevant
>>> stakeholder community.
>>>
>>
>> It's my understanding that trusts are created to hold property.
>> Shouldn't the Trust (and not the Trustee) own the IANA function?  If the
>> Trust doesn't hold the IANA Functions, what assets are held by the Trust?
>>
>> And the Guardian of the Trust (see the proposal for details) would
>>> control the process by which ICANN could be replaced as trustee in a
>>> defined set of circumstances. This is thus an inherently ‘internal to
>>> ICANN’ approach.
>>>
>>
>> I'm not familiar with this "guardian" concept (unless it was created
>> uniquely for this proposal).  Is this an Australian law concept?  Do you
>> know if this is similar to the "trust protector" concept in the US?
>>
>>>
>>> 3. Why would ICANN be the trustee? In simple terms because auDA believes
>>> in an 'internal to ICANN’ approach. We believe that ICANN should run IANA
>>> but that there should be the ability to move the IANA function away in
>>> certain defined circumstances. That is what this proposal (and our first
>>> ‘golden by-law' proposal) achieve and that’s what differentiates them from
>>> the ‘contract co’ proposal.
>>>
>>> I know I don’t need to say this but for the avoidance of doubt, this is
>>> an auDA proposal. I have not discussed it with my fellow ICANN directors
>>>
>>> I will not be on the RFP3B call Friday as I’ll be somewhere mid-air
>>> between Dubai and Melbourne. However, Paul Szyndler will be on the call and
>>> will happily enter into any discussion on the proposal and answer (or
>>> undertake to get answers to) any questions that may be raised.
>>>
>>> I hope this is helpful.
>>>
>>> Cheers,
>>>
>>
>> Thanks,
>>
>> Greg
>>
>>>
>>>
>>> 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
>>>
>>>
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>>
>>
>
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