[Ws2-jurisdiction] [EXTERNAL] issues on applicable law

Fri Sep 8 22:21:03 UTC 2017

Dear Jorge,

Thank you for providing details on your proposal. I will take the time to
reply to some specific items in another email tomorrow (including your
suggestion, Becky,) but since your proposal is also somewhat in line with
mine, please allow me to respond here to some comments that were made
during the call on the issue(s) of choice of law in registry agreements.
And so these comments are not directed at your proposal but I just post
them here for convenience's sake.

-My initial intuition regarding this issue was that certainty of choice of
law is *always* better than uncertainty. Obviously, input from registries
on this matter would be important. I get that for you Jorge, or at least as
far as .swiss is concerned, this is indeed an issue.

-I made a distinction between between registry and registrar agreements
because registrar agreements are not submitted to mandatory arbitration,
but may be settled in court, which complicates the matter slightly. Courts
are bound by their own private international law rules if they have to
decide on the applicable law (which is not the case with arbitration.) Part
of how I presented my issue revolves around the fact that arbitrators are
free to choose the governing law as they see fit (or almost so) while
courts are not. If you determine the court but not the choice of law, you
can still reasonably predict the outcome the court will come to in matters
of governing law given that they have set private international law (aka
conflict of laws in the English-speaking world) rules.

-To me the "flexibility" that may be provided by having no set law is more
illusory than real to the extent that it becomes a liability. And in any
case, what are the advantages of such a flexibility? What is it about?
Arbitrators will still decide on one single governing law for the contract
and the parties' place of registration is only one factor among other and
generally not a determining one. I do not want to imply any "bad faith" on
ICANN's part, however it remains that this "flexibility" plays much more to
their advantage than anyone else's and may very well serve to hold them
less accountable if the current setup forestalls litigation by registries.

-All this being said, I do agree that all this is a non-issue if all the
registries either collectively do not care and/or do not want to undergo
contract modifications with ICANN. I have no view on how complex that can
be in terms of process and how amenable registries would be to such
changes. However, let us say that we agree as a subgroup that this is a
valid issue, wouldn't it be more productive to gather the registries'
comments during the public comments period?

More to follow tomorrow...

Best,

2017-09-07 13:55 GMT+02:00 Burr, Becky via Ws2-jurisdiction <
ws2-jurisdiction at icann.org>:

> FWIW, punitive damages are not usually permitted in contract disputes – I
> wonder why ICANN includes them at all.
>
> Also, rather than requiring ICANN to agree to submit to the jurisdiction
> of every country where it has a relationship with a registry or registrar,
> is it worth considering regional jurisdiction?  Contracts with European
> registries and registrars could specify Swiss or Dutch or some other law,
> etc.?
>
> *J. Beckwith Burr*
> *Neustar, Inc.* / Deputy General Counsel & Chief Privacy Officer
> 1775 Pennsylvania Avenue NW DC 20006
> *Office:* +1.202.533.2932  *Mobile:* +1.202.352.6367
>
>
> *Follow Neustar:* LinkedIn */* Twitter
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> From: <ws2-jurisdiction-bounces at icann.org> on behalf of "
> Jorge.Cancio at bakom.admin.ch" <Jorge.Cancio at bakom.admin.ch>
> Date: Wednesday, September 6, 2017 at 4:19 PM
> To: "ws2-jurisdiction at icann.org" <ws2-jurisdiction at icann.org>
> Subject: [EXTERNAL] [Ws2-jurisdiction] issues on applicable law
>
> Dear all,
>
>
>
> Here are, for your convenience, the two issues I have tried to briefly
> explain during today’s conference call, for your consideration.
>
>
>
> As said, the main thought is to reduce uncertainty, and clarify that the
> parties to the registry agreements have an effective freedom to choose the
> applicable law and to apply a principle of subsidiarity that may reduce
> potential conflicts with the national laws where they are based.
>
>
>
> ==
>
>
>
> 1.    *Issue: *The law applicable to the Registry Agreement has been
> identified as being the main issue:
>
>
>
> The Registry Agreement contains no provision relative to the choice of
> jurisdiction, the applicable law consequently not being defined by the
> Agreement.
>
> This creates great legal uncertainty and a potential issue as regards the
> jurisdiction given that it would be the prerogative of the arbitrators or
> the judges having jurisdiction -who could come from a US Court- to
> determine what law governs the relationship between ICANN and the registry.
>
> Pursuant to the current business practice, the applicable law is that of
> the party that provides the service in question, i.e. ICANN, a priori. A
> registry should therefore expect the potentially applicable law to be the
> law of the State of California.
>
> The applicable law further determines the faculty of ICANN to claim
> punitive or exemplary damages (i.e. under US law, damages highly surpassing
> the damage actually suffered, in order to punish a behavior), in the event
> the registry were to breach the contract in a deliberate and repeated
> manner (section 5.2 of the Registry Agreement.) This well-established
> institution of Common Law is non-existent under Swiss law, which follows
> the principle of compensation (damages are used to repair the damage but
> cannot enrich the claimant,) and should be considered to be contrary to
> public order. Were the Swiss law to apply to the Agreement, such damages
> would not be granted. Following the principles of the institutions typical
> to the Common Law provided for in the Registry Agreement poses issues of
> compatibility with other legal orders and suggests that Californian law
> would -a priori- apply to the Registry Agreement.
>
>
>
> *Possible solutions:*
>
>
>
> The applicable law should be determined on the basis of the legitimate
> expectations which the parties may have in terms of applicable law. It is
> understandable and appropriate that the fundamental provisions or duties
> contained in the Registry Agreement should apply equally to all registries
> around the world and be therefore interpreted in a uniform way.
>
>
>
> Beyond a few provisions and duties which are absolutely fundamental, it
> would be judicious and consistent with a legitimate expectation that the
> contractual relationship between ICANN and a registry be subject to the
> national law of the latter. The foregoing is all the more reasonable given
> that the manager of a generic domain (TLD) is delegated broad powers, as it
> is within its scope to establish the purpose of the domain, the
> eligibility, or the terms of the assignment of domain names, not to mention
> that it has great freedom as to the way in which a domain is actually
> managed.
>
>
>
> There already exist special provisions for registries that are
> IGO/Governmental entities (section 7.16 registry agreement): if
> international law is at stake, there is a procedure (mediation and
> arbitration ex 5.2.) to resolve disputes between the registry and ICANN –
> this special provision could be extended:
>
> -           To other registries that are not IGOs/Public authorities
>
> -           To cover not only “international law obligations” but also
> national law obligations
>
>
>
>
>
> 2.    *Issue: **arbitration clause*
>
>
>
> With regard to territorial jurisdiction, the arbitration clause (section
> 5.2 of the Registry Agreement entitled "Arbitration text for
> intergovernmental organizations or governmental entities") has allowed the
> ".swiss" registry to submit itself to the arbitration of the International
> Court of Arbitration of the International Chamber of Commerce in Geneva,
> Switzerland. This provision also provides for some flexibilities restricted
> to IGOs or governmental entities as regards the competent court.
>
>
>
> However these flexibilities are not open to all registry operators.
>
>
>
> *Possible solutions:*
>
>
>
> It would be wise in our opinion:
>
> - to also allow private registries to decide on the choice of their
> arbitration/competent court;
>
> - to broaden the possibilities of choice for all registries (by principle,
> to choose an arbitration recognized in each country.)
>
>
>
>
>
> ==
>
>
>
> Hope this may be considered.
>
>
>
> Regards
>
>
>
> Jorge
>
>
>
>
>
>
>
>
>
> *Jorge Cancio *
>
>
>
> International Relations
>
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>
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>
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>
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>
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>
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>
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>
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