[Ws2-jurisdiction] issues on applicable law

Tue Sep 12 12:11:50 UTC 2017

Dear Raphaël,

first of all let me thank you for your comments. Please find below in green some answers and remarks from my part.

Kind regards

Jorge

Von: Raphaël BEAUREGARD-LACROIX [mailto:raphael.beauregardlacroix at sciencespo.fr]
Gesendet: Sonntag, 10. September 2017 21:03
An: Cancio Jorge BAKOM <Jorge.Cancio at bakom.admin.ch>
Cc: ws2-jurisdiction <ws2-jurisdiction at icann.org>
Betreff: Re: [Ws2-jurisdiction] issues on applicable law

Dear Jorge,

Let me now comment on a few elements of your proposal

"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- (...) "

  *   I had a second look at the registry agreement and my understanding is that there is no way a court would entertain litigation over it, despite the ambiguous wording of the very last sentence of 5.2. I understand this last sentence as giving competence to LA courts for litigation over the arbitration agreement itself (which makes sense if the arbitration is seated in LA,) although I recognise that this is not very well drafted. The alternative, which is that you could also litigate over the RA in general in courts, defeats the whole purpose of the arbitration agreement.
  *   Hence, to me, it is not open for a litigant to sue ICANN in a "standard" court except if this suit is precisely targeted at the arbitration agreement contained within the RA.

è Perhaps ICANN legal may clarify this. As far as we know there is potential for litigating in court on the substance of the agreement.

è Furthermore, our point is that both in arbitration and court there is lack of clarity and certainty as to the applicable law to the issue under dispute.

"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."

  *   Yes, that is also one of my points; to the extent that the agreements are drafted with American/Californian law in mind, it seems to me it would make little sense to even attempt to make them fit into another legal system. Square pegs in round holes, in a way.

è The agreement is between two parties. Hence we feel that they should have effective freedom in defining the applicable law(s) to their contracts. The fact that the present situation is Californian law should not prejudge this, in our view.

"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."

  *   The legitimate expectations of the parties are a priori contrary, to the extent we can assume each party wants its domestic law to apply.
  *   As for uniform interpretation of these legitimate expectations, yes, but where from? If you want such an interpretation to be binding, better put it in the contract or invent a new dispute settlement body for ICANN contractual disputes and put that interpretation in its statute...

è Perhaps we did not express ourselves clear enough. What we mean is that there must be a true agreement between the parties regarding applicable law(s) – to just impose, explicitly or impliedly, one body of law does not reflect per se a crossing of legitimate expectations of both parties to the agreement.

è As to “fundamental provisions”: this is intended to reflect that some parts of the agreement may require an uniform treatment for all registry operators – and therefore maybe the definition of one common applicable law. This may refer to issues that affect the technical and operational stability of the registry. Other provisions in the agreement (e.g. eligibility rules for second level domains, privacy and data protection rules, etc.) the principle of subsidiarity should apply, i.e. the registry should mainly be guided and bound by its national (or supranational) laws.

"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."

  *   I could agree with your arguments, however we then come back to the square pegs in round holes problem. I do believe (but this is my very personal take on the matter) that the issue is more one of the venue than the governing law. In any case, if you need to find an attorney who knows 1) arbitration and 2) domain names industry, my bet is that this attorney will be somewhat conversant in California law, wherever this person may be situated.

è See my arguments above. If we intend the gTLD space to grow into all world regions in a more balanced fashion relying on the knowledge of all intricacies of Californian law by registry operators worldwide and their lawyers is in our view assuming too much.

"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"

  *   I do not see the point of this insert (7.16) in the RA at all actually. A registry may be a public (state-related) entity that falls under administrative law rather than private (companies) law, but how would public international law ever be applicable to such an entity? PIL is for state-state relations. Registries, whatever their form, would never be empowered to conclude treaties, much less be expected to respect international customary law and the like...

è Perhaps ICANN Legal may help. I guess that 7.16 has some value – otherwise it would not be there. If the registry is an IGO and/or a Government I can imagine that international law may well be applicable to them.

  *   However, building carve-outs for national laws of the parties into the contract is, I believe, not such a good idea. The governing law governs the contract. Any form of niche and carve-outs where other laws may apply is calling for endless interpretative complexity. Who says more complexity says more power to the powerful (read: ICANN) and less for the less powerful party, the registry. Confusion, complexity, niches and legalese can only serve the powerful and certainly do not increase accountability, in my opinion.

è The contract does not cover everything – I feel that is only natural – some aspects are affected by the surrounding legal order which may be different in California and in other parts of the world, e.g. data protection. If the parties agree on specific applicable law(s) to handle specific issues I don’t know how that wouldn’t be better than leaving the question unanswered in the contract.

"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.)"

  *   Yes, I do agree that they could add more options in terms of location for the arbitration, to be more in favour of the registries. In that sense, I would pick up Becky's idea but limit it to choice of venue; the RA could contain a slight amount of flexibility by allowing the registry to choose (at the moment the RA is concluded) between arbitration in let us say, LA, Geneva, and maybe Singapore, and we could also think of locations in countries such as Brazil, Mexico, Chile, UAE, South Africa, etc. Maybe that would already solve some issues even if the governing law were to remain California? That being said, the idea of choosing the governing law based on regional blocks is not a bad one either (and is certainly less fragmenting than the law of registry's location) but we are still stuck with the square pegs-round holes issue.

è I see some light at the end of the tunnel here – I feel the main issues are to enhance effective choice, flexibilities and subsidiarity.

Best,

2017-09-06 22:19 GMT+02:00 <Jorge.Cancio at bakom.admin.ch<mailto:Jorge.Cancio at bakom.admin.ch>>:
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
Federal Department of the Environment,
Transport, Energy and Communications DETEC
Federal Office of Communications OFCOM
Zukunftstrasse 44, CH 2501 Biel
Tel. +41 58 460 54 58 (direct)
Tel. +41 32 327 55 11 (office)
Fax +41 58 460 54 66
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