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

Wed Sep 6 15:44:12 UTC 2017

Raphael,

I am sorry to hear that you are not well.  Thank you for helping to prepare
us for this issue.

We shall forge ahead in your absence.  I hope you feel better soon!

Greg

On Wed, Sep 6, 2017 at 6:17 AM, Raphaël BEAUREGARD-LACROIX <
raphael.beauregardlacroix at sciencespo.fr> wrote:

> Dear all,
>
> Due to illness I will unfortunately not be able to attend today's/tonight
> call where this issue I have introduced is planned to be discussed. I do
> believe however that I have provided everything required in terms of
> documentation, as well as my own opinion on the matter, in the email above.
>
> If there is one thing I would add, is that the lack of control of risks
> associated with an unclear choice of law might be discouraging some
> registries to sue ICANN; they might then prefer to cave in and it is my
> opinion that such a situation is detrimental to accountability in general.
> Of course I invite all involved with registries here to comment on that :)
>
> I am fully aware that this particular issue might not be as engaging as
> other issues we have been discussing. Still, it would be good to know what
> is the general opinion on this one. I will follow up with whatever any
> member of this subgroup has to say, may it be through the transcript of the
> call or directly here.
>
> While I will certainly try to make my point understood, please note that I
> have no personal feelings about it and should it emerge in the end that
> there is no consensus on the fact that this is an issue, then so be it! We
> have enough contention as it is on other fronts...
>
> Best,
>
> 2017-08-17 11:57 GMT+02:00 Raphaël BEAUREGARD-LACROIX <
> raphael.beauregardlacroix at sciencespo.fr>:
>
>> 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,
>>
>>
>
>
> --
> 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
> <+33%207%2086%2039%2018%2015>
>
>
>
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