[Ws2-jurisdiction] FW: ISSUE - absence of choice of law clause in registry agreements

Tue Oct 3 12:29:11 UTC 2017

Greg,
 I am In Munich
Pls confirm the time and day on which Jurisdiction holds its meeting.
Is it 04 October at 13,00 UTC?
Regards

On Tue, Oct 3, 2017 at 1:39 PM, <Jorge.Cancio at bakom.admin.ch> wrote:

> Dear David and all,
>
> I'm not sure that there may be a valid argument that the recommendation
> has only been presented one and a half months ago (btw: quite a lot time) -
> this "lateness" if anything is only due to how the Subgroup has progressed
> in general.
>
> The issue itself (applicable law to contracts) is IMHO not only at the
> core of the mandate of this workstream, but has been mentioned time and
> again for over a year as an issue, including in the responses to the
> questionnaire put to open consultation.
>
> Hence, I feel that we should discuss on the substance, and see what
> possible recommendation may come out of this Subgroup - as flexible and
> generic as needed but also reflective of what is in our core mandate and
> has been subject of many discussions and exchanges during the last year. At
> least -as I have been proposing- this recommendation is all about
> increasing effective choice for registries - improving the uncertainty
> provided by the existing arrangements and increasing the options at their
> disposal.
>
> thanks for your consideration and kind regards
>
> Jorge
>
>
> ________________________________
>
> Von: McAuley, David via Ws2-jurisdiction <ws2-jurisdiction at icann.org>
> Datum: 3. Oktober 2017 um 13:23:39 MESZ
> An: ws2-jurisdiction at icann.org <ws2-jurisdiction at icann.org>
> Betreff: [Ws2-jurisdiction] FW: ISSUE - absence of choice of law clause in
> registry agreements
>
> Dear Greg, all:
>
> At tomorrow’s meeting, we will again address and attempt to finalize a
> recommendation on the issue of “Applicable Law and Choice of Venue
> Provisions.”
>
> Raphaël originally proposed this in the email below. Thanks to Raphaël for
> clear posts about this.
>
> I favor the status quo option. Here is why:
>
> First, the current contract provisions represent settled approaches,
> developed over time, among experienced practitioners
> (ICANN/registries/registrars) in a complex and well-developed DNS industry.
> On the other hand, our subgroup is an ad-hoc group assembled, in my
> opinion, to address high level jurisdiction issues. We are proposing to
> wander into an operational area (contract clauses) where we are simply not
> equipped to give direction to parties to such contracts.
>
> And, as Sam Eisner told us, these contract provisions are negotiated with
> the RySG and RrSG and cannot be changed without re-negotiation.
>
> Moreover, by not specifying a governing law, these contracts fall in the
> welcome ‘Goldilocks’ middle ground – neither forcing contract parties to
> accept California law nor forcing ICANN to accept laws that may not capable
> of ensuring adequate regard for the DNS. In short, the parties to the
> contract should make these decisions – they are the ones who have to, and
> will continue to, live with the real-world contractual consequences.
>
> Second, the proposal is too late for us to properly address even if we
> should for some unlikely reason get involved. It was formally put on the
> table just over a month ago, and it cannot be seriously assessed without
> seeking considered input from ICANN Legal, the RySG, and the RrSG. This is
> not theoretical to them - their viewpoints are essential. But, preferably,
> we should let them continue to do what they have been doing these many
> years without our direction - and stick to the status quo.
>
> Best regards,
> David
>
> David McAuley
> Sr International Policy & Business Development Manager
> Verisign Inc.
> 703-948-4154
>
> From: ws2-jurisdiction-bounces at icann.org [mailto:ws2-jurisdiction-
> bounces at icann.org] On Behalf Of Raphaël BEAUREGARD-LACROIX
> Sent: Thursday, August 17, 2017 5:58 AM
> To: ws2-jurisdiction <ws2-jurisdiction at icann.org>
> Subject: [EXTERNAL] [Ws2-jurisdiction] ISSUE - absence of choice of law
> clause in registry agreements
>
> Dear all,
>
> I would like to officially submit this issue to the attention of our
> subgroup.
>
> I attach here
> -the case in which I raised this as an issue
> -the question we formulated to ICANN legal
> -the response we got from ICANN legal.
> -the follow up
> -the response to the follow up
> I can also refer you all to an email from Bernie dated 26 July which
> contains links to these.
>
> and for reference purposes
> -The standard registry agreement (RA)
>
> I did not find ICANN legal's answer to be fully satisfying, especially
> regarding registries, and I would thus like this issue to be included in
> the final report, with a solution that we will hopefully all agree to!
>
> Because of the nature of the dispute resolution clause in RAA's concluded
> with registrars, I think they should be treated as a separate issue, if at
> all. At any rate, this submission is already long enough as it is!
>
> Issue
>
> ICANN's standardised contracts with registries do not include a choice of
> law provisions and are subject to dispute resolution by arbitration under
> ICC rules. See RA, art. 5.2
>
> As for RAA's concluded with registrars, they can be litigated in court or
> in arbitration under American Arbitration Association rules. For the simple
> reason that they can be litigated in court, this makes this issue less of
> an issue for them.
>
> For RA litigation, the above clause means that in effect, the arbitrators
> are free to decide the applicable law according to various factors or
> methods generally accepted in private international law practice. See ICC
> Rules of Arbitration art. 21:
>
> 1)
> The parties shall be free to agree upon the rules of law to be applied by
> the arbitral tribunal to the merits of the dispute. In the absence of any
> such agreement, the arbitral tribunal shall apply the rules of law which it
> determines to be appropriate.
> 2)
> The arbitral tribunal shall take account of the provisions of the
> contract, if any, between the parties and of any relevant trade usages.
>
> This also means that we cannot rely on Californian private international
> law to predict which law is applicable. Moreover, as far as my
> understanding of commercial arbitration goes, arbitrators would always
> decide on a single law for the whole of the contract and will not start
> carving up legal niches here and there.
>
> Reasonably, there are two options as for the applicable law to these
> contracts: California law, or the law applicable to the registry, whether
> it be the law of its main place of business or its own company law.
>
> I would like to quote here ICANN legal's answer to our follow-up:
>
> "Historically, not having a choice of law clause seems to have worked out
> well in practice.
>
> The lack of a choice of law clause, as far as ICANN is aware, has not
> presented big problems for either ICANN or contracted parties.
>
> The plain language of the agreement has generally been sufficient to
> resolve questions between the parties and allow the parties to interpret
> the performance requirements, their rights and obligations in the ordinary
> course.
>
> Reliance on the plain language of the agreements normally does not depend
> on a choice of which jurisdiction’s laws would apply.
>
> As to why the contracts have evolved in this manner, it has essentially
> been a compromise that allows the choice of law issue to be handled on an
> issue-specific basis that takes into account the specific conduct being
> reviewed, the needs of the parties and ICANN’s global coordination function"
>
> I fail to see how the RA would satisfy registries outside of the US. Would
> not they prefer to have a set choice of law rather than an undefined one?
> And not there being a problem does not mean it cannot be improved.
> Registries can very well refuse to litigate because of the costs, and this
> will look like an absence of problem from ICANN's perspective.
>
> Moreover, I plainly reject the contention that "The plain language of the
> agreement (allows) the parties to interpret the performance requirements,
> their rights and obligations in the ordinary course." The only time this
> can be true is between US parties. This is just wrong for parties outside
> the US.
>
> We can all see that these contracts are drafted with US law in mind. I do
> not even want to imagine what kind of mess would result of trying to fit
> this contract into any continental European legal system! Or any other
> legal system for that matter. And even more so if you try to divide
> obligations between the parties and ascribe them a different governing
> law...
>
> The issue I see with this is that this situation 1) is detrimental to
> ICANN's accountability and 2) results in more costs for registries in case
> of dispute.
>
> As for 1), I believe it is detrimental because being accountable is also
> being predictable. ICANN has the means to figure out these legal questions
> well in advance and do a proper risk assessment, while registries and
> registrars (especially considering the small players) might not.
>
> As for 2), an undetermined choice of law means you need to hire a lawyer
> (and not just your ordinary lawyer, a specialised one) to do first and
> foremost an assessment of which law would be applicable and which is most
> likely to be applied by the arbitrator(s). This means more money (maybe too
> much money) gone into legal fees for the small businesses.
>
> Solution
> Set the choice of law in those contracts. Given their drafting style,
> California would make most sense. Now to jump the gun on some criticism
> that I can see coming, I do believe that most if not all lawyers who can
> handle domain name industry/ICANN disputes do know California law anyway.
> This is for the sake of predictability, not for the sake of favouring the
> US above anyone else.
>
> I went well beyond the "12 standard lines" rule, but I do hope I made it
> clear and understandable.
>
> Best,
>
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