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

Tue Oct 3 15:28:53 UTC 2017

Dear David, all

Thank you for your input. It is certainly valuable given the fact that you
speak (which I assume you do here) for a registry.

I would like to ask you for clarification on a few matters:

-I understand (although disagree) your point on the process (that this
subgroup is acting beyond its mandate,) but do you also make the point that
status quo is the best option in terms of accountability, or that it is the
best option because it is the option which has so far been "chosen" by
registries as part of the RA negotiation/amendment process? Or that it is
the best option according to another criterion? This is the passage I am
not sure I understand fully

*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*

In my view, there is still a governing law, it just that it is hovering
somewhere over there and crystallises during litigation. How can it not be
better to have a set governing law? In the end, if it always turns out to
be California law, ICANN *is* in effect "forcing" the contracted parties to
accept California law, it is just that they hide it behind this no-choice,
no?

-Regarding your point on the process, we noted on the previous call(s) that
this subgroup has no power to make contract changes at all; I think at this
point this is acknowledged by a "consensus." Do you mean to say that in
your opinion even a mere suggestion based on our assessment using
accountability is a criterion would be outside the mandate, to the extent
that such evaluation belongs to the contracted parties *only*?

Thanks

Best,

Raphael

P.S. I will not be able to attend tomorrow's call due to work commitments.

2017-10-03 13:23 GMT+02:00 McAuley, David via Ws2-jurisdiction <
ws2-jurisdiction at icann.org>:

> 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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>
>

-- 
Raphaël Beauregard-Lacroix
LinkedIn
<https://www.linkedin.com/in/rapha%C3%ABl-beauregard-lacroix-88733786/> -
@rbl0012 <https://twitter.com/rbl0112> - M: +33 7 86 39 18 15
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