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

Tue Oct 3 13:17:13 UTC 2017

Correct Kavouss.

B.

On Tue, Oct 3, 2017 at 8:29 AM, Kavouss Arasteh <kavouss.arasteh at gmail.com>
wrote:

> 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-bounc
>> es 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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>
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