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

Jordan Carter jordan at internetnz.net.nz
Fri Jan 23 10:56:21 UTC 2015


Interesting thread.

My knowledge of trust law is not extensive but it does always involve the
creation of a legal personality, at least in my jurisdiction (Nz - Anglo
common law).

Thus it's difficult to see how the AUDA proposal is internally coherent.

Either

A) the trust is a separate entity owning the right to the Iana functions,
as it can then transfer these away from Icann if the guardian (the
trustees?) trigger the applicable processes,

Or

B) the trust isn't an entity in which case it isn't a trust - it's just
some sort of agreement to do something in a given circumstance.

In the former case many of the issues are the same as contract co. In the
latter case, it isn't clear why this is better than a simpler internal
solution involving ICANN's bylaws, which would at least be clear.

Decent advice on this would need to be urgently procured if the CWG intends
to pursue it.

Either way, the ambition is to concentrate stewardship of the DNS in Icann,
which I do not support - I don't believe we should be concentrating power
over core Internet infrastructure compared with how this is managed today.
I still haven't heard a reasoned argument as to why it's a good idea to do
so.

But that point of view is well known and one on which Chris and I do not
see eye to eye. :-)

Best
Jordan

On Friday, 23 January 2015, Guru Acharya <gurcharya at gmail.com> wrote:

> As I understand, trusts are generally established between three legal
> entities: the author, trustee and the beneficiary. Under trust law in my
> jurisdiction, the person who reposes or declares the confidence is called
> the "author of the trust"; The person who accepts the confidence is called
> the "trustee"; the person for whose benefit the confidence is accepted is
> called the "beneficiary".
>
> <I quote Greg from a previous exchange on the list>
> Under US law, trusts operate essentially the same way as you describe.
> The "author" is typically called the "Settlor" or the "Grantor," but the
> role is the same.  Typically, a trust is used for the holding of money or
> other assets.  The Settlor typically donates the assets to the Trust, and
> the Beneficiary ultimately gets the benefit of these assets.  The Trustee
> (sometimes also called the Administrator) manages the Trust, and has a
> "fiduciary responsibility" to both the Settler and the Beneficiary (but
> typically, no responsibility to anyone else).  Sometimes, the Trustee
> legally named in the document will hire a professional "Administrator" to
> run the trust (this often happens where a family member is the Trustee).
> </quote>
>
> In the AUDA proposal and from the discussions on this thread, I identify
> the following entities:
>
> 1) Trustee - IANA Functions Operator (IFO) - Presently ICANN
> 2) Author/settlor/grantor - Guardian - Community - Respresented through a
> CCWG
> 3) Beneficiary - Community/customers of IANA
>
> Please correct me if I'm wrong.
>
> Im curious to know:
> 1) Will the Guardian be a legal entity?; if not, how is it represented in
> the trust?
> 2) Will the Beneficiary also be a legal entity?; if not, how is it
> represented in the trust?
>
>
> Thanks.
>
> On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc at gmail.com
> <javascript:_e(%7B%7D,'cvml','gregshatanipc at gmail.com');>> wrote:
>
>> Thanks, and safe travels.
>>
>> Greg
>>
>> *Gregory S. Shatan *
>>
>> Partner | *Abelman Frayne & Schwab*
>>
>> *666 Third Avenue **|** New York, NY 10017-5621*
>>
>> *Direct*  212-885-9253 *| **Main* 212-949-9022
>>
>> *Fax*  212-949-9190 *|* *Cell *917-816-6428
>>
>> *gsshatan at lawabel.com
>> <javascript:_e(%7B%7D,'cvml','gsshatan at lawabel.com');>*
>>
>> *ICANN-related: gregshatanipc at gmail.com
>> <javascript:_e(%7B%7D,'cvml','gregshatanipc at gmail.com');> *
>>
>> *www.lawabel.com <http://www.lawabel.com/>*
>>
>> On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo at auda.org.au
>> <javascript:_e(%7B%7D,'cvml','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 <javascript:_e(%7B%7D,'cvml','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
>>> <javascript:_e(%7B%7D,'cvml','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
>>> <javascript:_e(%7B%7D,'cvml','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
>>>> <javascript:_e(%7B%7D,'cvml','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
>>>> <javascript:_e(%7B%7D,'cvml','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 <javascript:_e(%7B%7D,'cvml','ceo at auda.org.au');> |
>>>>>  W: www.auda.org.au
>>>>>
>>>>> auDA - Australia's Domain Name Administrator
>>>>>
>>>>>
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>>>>> _______________________________________________
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>>>>>
>>>>>
>>>>
>>>>
>>>
>>
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>

-- 
Jordan Carter
Chief Executive, InternetNZ

+64-21-442-649 | jordan at internetnz.net.nz

Sent on the run, apologies for brevity
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