[CCWG-ACCT] Legal question

Greg Shatan gregshatanipc at gmail.com
Wed Apr 22 05:10:01 UTC 2015


Chris,

Can you explain your statement "The change to a members based structure
would mean that for certain issues the actions of members will trump GAC
advice."?  I don't see how you came to that conclusion.  I don't think we
are proposing any different powers under a member structure as opposed to a
designator structure (or any other structure).

On Tue, Apr 21, 2015 at 7:07 PM, Chris Disspain <ceo at auda.org.au> wrote:

> Hi Keith,
>
> As promised I set out in brief below some of the reasons why, in respect
> to the membership model and any model requiring the SOs and ACs to convert
> to legal entities, I have serious concerns and why I referred to
> significant sacrifices.
>
> GAC
>
> The current recommended model does not provide any viable solution for
> dealing with the GAC. It seems obvious to me that the governments involved
> in the GAC are not going to agree to form an unincorporated association
> under Californian law. If I'm right then presumably the GAC would remain as
> an advisory committee and would not be able to have a vote in any of the
> escalation mechanisms. That may be fine as the GAC may not want to have a
> vote anyway.
>
> However I see a serious incompatibility between the members’ powers and
> the standing of GAC advice to the Board. It’s not that GAC advice is or
> indeed should be invariably followed but currently where GAC advice is at
> odds with the position of others in the community the advice carries
> significant weight and there is a bylaw mandated process for rejecting the
> advice through a process which takes around 6 months. The change to a
> members based structure would mean that for certain issues the actions of
> members will trump GAC advice. So there is a significant shift in the
> carefully constructed balance of power. Now, many of us may think that such
> a shift is no bad thing but I wonder whether the governments of the world
> are going to agree?
>
> ccTLDs
>
> When we set up the ccNSO and when we did the structural review of it some
> time thereafter there was considerable discussion about how it could be
> structured precisely to avoid the need for ccTLDs to join anything. There
> was even significant concern about having to fill out a form and whether
> that implied the existence of some organisation. The concerns included
> joining something in the jurisdiction of the US and whether that would make
> a ccTLD manager in any way subject to US law, the possibility of being sued
> in the US because the manager would be deemed to have a presence there, how
> such a structure would be funded (especially if it was sued), whether there
> was any liability on ‘officers’ of the entity and so on. I believe that
> many of these concerns will still exist for many ccTLDs.
>
> Further, quite a number of ccTLD managers are departments of the relevant
> government or quasi-government bodies. Not everyone runs their ccTLD with
> the degree of freedom that .au, .ca, .uk and .nl are privileged to enjoy. I
> consider it highly unlikely that sovereign governments will permit a
> government department to join an association in the US (or any other
> country for that matter).
>
> At Large
>
> I don’t know the answer to this but it strikes me that the structure may
> also be problematic for At Large community as opposed to ALAC. On that one
> over the ALAC folks to comment.
>
> There’s more but I'm rushing for my flight now. Hope this gives you a
> flavour.
>
>
>
> Cheers,
>
>
> Chris
>
> On 21 Apr 2015, at 20:46 , Chris Disspain <ceo at auda.org.au> wrote:
>
> Hi Keith,
>
> Thanks for the below. You ask a valid question and Kavouss has sent me an
> email asking the same.  I will respond in detail in the next 7 hours or so.
>
> Chris Disspain
> CEO - auDA
>
> On 21 Apr 2015, at 20:16, Drazek, Keith <kdrazek at verisign.com> wrote:
>
>  Thanks Chris, no apologies necessary...this is exactly the kind of
> dialogue needed to advance our work.
>
>  Can you be more explicit about the "significant number of sacrifices
> that would need to be made in a membership scenario" that ccTLDs face?
> Particularly if any are unique to ccTLDs?
>
>  Sacrifices may be needed (including from the Board) if we are to
> accomplish the community's broader goal of ensuring the ICANN Board and
> Staff are truly accountable to the ICANN community for the next decade. As
> such, it would be good to know, as early as possible, what those sacrifices
> might be.
>
>  In simple terms, I agree that determining what can and cannot be
> accomplished within the existing structure is a worthwhile exercise and
> will help to inform the community.
>
>  Based on our work and the relevant independent legal analysis to date,
> it appears to me that the current construct has significant gaps and
> shortcomings and won't deliver on our goals, but I support seeking further
> advice on the topic from our independent legal advisors.
>
>  Thanks and regards,
> Keith
>
> On Apr 21, 2015, at 5:08 AM, Chris Disspain <ceo at auda.org.au> wrote:
>
>   Thanks Keith.
>
>  I apologise for pinging back and forth on this but I hope the list will
> appreciate that it as an indication of how important auDA believes this
> point is.
>
>  As I said on the CCWG call last week, I have serious concerns about the
> viability of the lawyers' recommended structural changes (at least from a
> cc point of view) and want to be crystal clear about what we can do or
> cannot do within the current structure.
>
>  For a ccTLD there are a significant number of sacrifices that would need
> to be made in a membership scenario and I don't believe the cc community
> can decide whether those sacrifices are worth making unless we can weigh
> them against what we would be able to achieve using the current structure.
>
>  I think that is essential that our output to the community contains a
> clear explanation of what the status quo can achieve. If it does not then
> IMO it is impossible to judge the other scenarios.
>
>  I appreciate your second para and, as a lawyer, I know that time for a
> response is required. I also appreciate the time constraints under which we
> are operating. But we will lose more time if the result of our document is
> a series of questions about whether there really is a need to make the
> significant changes being recommended.
>
>  In simple terms 'not nearly enough' is not an acceptable response. How
> can I know that "it" is not nearly enough unless I know what "it" is?
>
>  Chris Disspain
> CEO - auDA
>
> On 21 Apr 2015, at 18:37, Drazek, Keith <kdrazek at verisign.com> wrote:
>
>
>  Chris,
>
>  I believe the answer to your question regarding the "no change scenario"
> and "what the current configuration can achieve" is, "Not nearly enough."
>
>  That said, I think it's a reasonable question and it should be referred
> to the CCWG's lawyers and they should be permitted reasonable time to
> consider and respond.
>
>  Regards,
> Keith
>
>
>
> Sent from my iPhone
>
> On Apr 21, 2015, at 4:09 AM, Chris Disspain <ceo at auda.org.au> wrote:
>
>   Greg,
>
>  Thanks. At the risk of repeating myself, whilst I understand what you
> are saying, it is precisely the no change scenario that I am seeking
> clarity on. I accept that the current configuration may not be "a very good
> vehicle for many of the enhanced powers" but I want clarity on what the
> current configuration CAN  achieve. I don't believe we have that yet.
>
> Chris Disspain
> CEO - auDA
>
> On 21 Apr 2015, at 17:35, Greg Shatan <gregshatanipc at gmail.com> wrote:
>
>  Chris,
>
>  The simple answer is that the SOACs as currently configured are not
> a very good vehicle for many of the enhanced powers we seek. Once you make
> them into members and give them legal personhood everything else becomes
> much easier.
>
>  However, you assumed no change to the SOACs, which made the answers much
> harder.
>
>  Greg
>
> On Tuesday, April 21, 2015, Chris Disspain <ceo at auda.org.au> wrote:
>
>> Greg, All,
>>
>>  With respect, I think we are overcomplicating the issue. I simply want
>> to gain a base line for the discussion about any changes necessary  to
>> achieve what we want. We agreed on jurisdiction that if we can get
>> acceptable escalations and remedies without changing jurisdiction then we
>> should leave well alone for now, I think we should apply the same principle
>> here. I am clear what the lawyers recommend we do BUT I am not clear about
>> what we can do or what compromises we need to make if we were to maintain
>> the current structure. I think that is a key part of our deliberations.
>>
>>
>>
>> Cheers,
>>
>>
>> Chris
>>
>>  On 21 Apr 2015, at 16:59 , Greg Shatan <gregshatanipc at gmail.com> wrote:
>>
>>  Kavouss,
>>
>>  That is not a correct summary of my views.  Bylaws provisions are
>> generally enforceable.  (As an aside, "enforceable" can be use to mean two
>> different things: (1) is the provision valid, so that an enforcement effort
>> will not fail, and (2) can the other party or parties undertake an effort
>> to enforce the provision by commencing litigation.  I have tried to deal
>> with both aspects of "enforceability," without veering too far into other
>> ways of getting ones way (e.g., California AG, political pressure,
>> Congressional investigation, pulling out and creating an alternate IANA,
>> etc.)
>>
>>  In spite of the general rule, there are two issues in this specific
>> circumstance that undercut this general rule of enforceability.  First, a
>> couple of the specific powers that Chris mentions are ones where a third
>> party is given a right superior the Board to make a decision regarding the
>> management of the company (veto of budget and arbitration to enforce the
>> veto of budget).  In a member organization, the members can appropriately
>> be in this superior position.  In a non-member organization, that is
>> inconsistent with the role of the Board, which brings the validity of these
>> bylaw changes as hypothesized by Chris into question.  Second, the SO/ACs,
>> as entities currently without legal personhood, would likely not be able to
>> participate in a litigation to enforce these bylaws; thus, the second type
>> of enforceability is also an issue.
>>
>>  It may be less troublesome for ICANN to enter into contracts and agree
>> with third parties (i.e., the SO/ACs) that these third parties have the
>> right to veto the budget. (Companies may be able to agree with third
>> parties to do things that could not be part of their internal governance
>> schema.) However, on further reflection, even this approach has its issues
>> -- as the SO/ACs lack legal personhood currently, they cannot enter into
>> contracts, either.  (By contrast, the bylaws changes can at least be put
>> into place without any action on the SO/AC's part.)
>>
>>  I should note that granting third parties the right to approve a bylaw
>> change (the third hypothetical action in Chris's email) is not as
>> exceptional, so is less likely to raise validity concerns.  This still
>> leaves the issue that the SO/AC's lack the requisite legal existence to
>> commence legal action to enforce a bylaws change in the event the Board
>> fails to recognize such a bylaws change.
>>
>>  In my opinion this kind of complexity and uncertainty is precisely why
>> the member model should be adopted.
>>
>>  Greg
>>
>> On Tue, Apr 21, 2015 at 2:25 AM, Kavouss Arasteh <
>> kavouss.arasteh at gmail.com> wrote:
>>
>>>  Dear All
>>> We complicating the case by envisaging the most extreme exceptional
>>> circumstances.
>>> In view of Greg, a Contract provisions are enforceable compared to
>>> Bylaws provisions which in his views are not enforceable!
>>> We may put the questions and answers to the lawyers and wait whether are
>>> consent?
>>> Could someone take necessary action ( e. g.) co chair in this regard?
>>> Tks
>>> Kavousd
>>>
>>>
>>> Sent from my iPhone
>>>
>>> On 21 Apr 2015, at 08:02, Greg Shatan <gregshatanipc at gmail.com> wrote:
>>>
>>>   ​The questions are simple.  The answers may not be....
>>>
>>>  Also, it depends on what the lawyers are currently working on.
>>> Further, the meeting is in about 13 hours, and ​I expect (given the time)
>>> at least 6-8 of those hours will be used for sleep and commuting.  So, it's
>>> not a lot of time.
>>>
>>>  My views are as follows:
>>>
>>>  On question 1, I think there may be issues in granting this right via
>>> bylaw, except to statutory members (and possibly to designators, at least
>>> where formally denoted as such), but these many not sufficient issues to
>>> cause the bylaw to be invalid.  If it's found to be invalid in court, then
>>> it would be unenforceable.  However, I believe that something similar could
>>> be achieved by contract, which should then be enforceable.
>>>
>>>  On question 2, I would say that the Board cannot ignore an action
>>> mandated by the bylaws without some consequences.  The SOs and ACs as
>>> currently constituted may not have the necessary legal personhood to pursue
>>> litigation.  However, this could be reported to the California Attorney
>>> General, who has broad oversight powers relating to non-profits, and would
>>> probably be quite interested to hear about a relatively high-profile
>>> non-profit where the Board was ignoring actions mandated by duly approved
>>> bylaws.  This could certainly be considered "enforcement," broadly
>>> speaking.  There may also be other parties with legal personhood that could
>>> pursue litigation, and other governmental entities (Congress?) that could
>>> make this an exceedingly difficult choice to sustain.
>>>
>>>  On 3, if the bylaw says the Board is bound, they're bound, unless the
>>> Board were to successfully challenge the validity of the bylaw.  Again, it
>>> may be possible to achieve this by contract, with fewer questions raised.
>>> And again, there may be issues in granting this right to parties other than
>>> members (or possibly formally recognized designators), but those issues may
>>> not invalidate the bylaw.
>>>
>>>  On 4, I think the answers to question 2 apply here as well.
>>>
>>>  We can see if counsel agrees with this....
>>>
>>>  Greg
>>> Caveat: not legal advice, not admitted in California
>>>
>>> On Tue, Apr 21, 2015 at 12:55 AM, Chris Disspain <ceo at auda.org.au>
>>> wrote:
>>>
>>>> Hi León,
>>>>
>>>>  Really? They are fairly simple questions. As I said, I can ask them
>>>> on the call.
>>>>
>>>>
>>>>
>>>>
>>>> Cheers,
>>>>
>>>>
>>>> Chris
>>>>
>>>>  On 21 Apr 2015, at 14:32 , León Felipe Sánchez Ambía <
>>>> leonfelipe at sanchez.mx> wrote:
>>>>
>>>>  Thanks Greg,
>>>>
>>>>  I just want to note that for the short notice it is unlikely we will
>>>> be able to have answers to feed the discussion in our call tomorrow.
>>>>
>>>>
>>>>  Best regards,
>>>>
>>>>
>>>>  León
>>>>
>>>>  El 20/04/2015, a las 23:22, List for the work of CCWG-Accountability
>>>> Legal SubTeam <ccwg-accountability5 at icann.org> escribió:
>>>>
>>>>  I am forwarding Chris Disspain's email into the Legal Sub Team for
>>>> further consideration.  I will let our counsels respond, should the Legal
>>>> Sub Team's discussion result in a referral of the questions to counsel.
>>>>
>>>>
>>>>  Greg Shatan
>>>>
>>>>  ---------- Forwarded message ----------
>>>> From: Chris Disspain <ceo at auda.org.au>
>>>> Date: Tue, Apr 21, 2015 at 12:03 AM
>>>> Subject: [CCWG-ACCT] Legal question
>>>> To: Accountability Cross Community <
>>>> accountability-cross-community at icann.org>
>>>>
>>>>
>>>> Hello All,
>>>>
>>>>  I’m not sure if this email should be addressed to the whole group,
>>>> the legal sub-team or some other. Anyway, I have some questions that I
>>>> would appreciate answers to from the CCWG’s lawyers. Happy to discuss on
>>>> the upcoming CCWG call.
>>>>
>>>>  Under the current structure of ICANN and its SOs and ACs
>>>>
>>>>  1. Is it correct that a bylaw saying that a combination of those SOs
>>>> and ACs can veto the budget or veto a bylaw change can be drafted and put
>>>> in to the bylaws?
>>>>
>>>>  2. Is it correct that were there to be such a bylaw and the SOs and
>>>> ACs were to veto the budget or a bylaw change pursuant to that bylaw then
>>>> the Board of ICANN could ignore that veto and that the SOs and ACs could
>>>> not enforce the veto?
>>>>
>>>>  3. Is it correct that the veto bylaw could be drafted to require
>>>> binding arbitration in the event that the Board refused to follow the SO/AC
>>>> veto and if so would the Board be bound by the arbitration finding?
>>>>
>>>>  4. Is it correct that a Board spill bylaw could be inserted in to the
>>>> bylaws and if triggered would be enforceable?
>>>>
>>>>
>>>>
>>>> Cheers,
>>>>
>>>>
>>>> Chris
>>>>
>>>>  On 18 Apr 2015, at 14:50 , León Felipe Sánchez Ambía <
>>>> leonfelipe at sanchez.mx> wrote:
>>>>
>>>>  All,
>>>>
>>>>  I am forwarding this document from Counsel for your records and for
>>>> its relevance for our overall work.
>>>>
>>>>
>>>>  Best regards,
>>>>
>>>>
>>>>  León
>>>>
>>>>  Inicio del mensaje reenviado:
>>>>
>>>> *Para: *"ccwg-accountability5 at icann.org" <
>>>> ccwg-accountability5 at icann.org>
>>>>  *Fecha: *17 de abril de 2015 22:21:36 GMT-5
>>>>  *De: *List for the work of CCWG-Accountability Legal SubTeam <
>>>> ccwg-accountability5 at icann.org>
>>>>  *Asunto: **[Acct-Legal] (no subject)*
>>>>  *Responder a: *ccwg-accountability5 at icann.org
>>>>
>>>>
>>>>
>>>>  Dear Legal Sub-Team,  Attached please find revisions to the chart
>>>> comparing the member and designator approaches  from Sidley and Adler &
>>>> Colvin as requested.  Please note that in our cover memo we have posed
>>>> several questions for your consideration.  We have also provided a
>>>> discussion of some considerations regarding implementation of both
>>>> approaches.  We are look forward to discussing with CCWG next week.  Kind
>>>> regards, Holly
>>>>
>>>>  *HOLLY J.  GREGORY*
>>>>
>>>> * Partner *
>>>> *Sidley Austin LLP*
>>>> +1.212.839.5853
>>>> holly.gregory at sidley.com
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> ****************************************************************************************************
>>>> This e-mail is sent by a law firm and may contain information that is
>>>> privileged or confidential.
>>>> If you are not the intended recipient, please delete the e-mail and any
>>>> attachments and notify us
>>>> immediately.
>>>>
>>>>
>>>> ****************************************************************************************************
>>>>
>>>>   <Legal Assessment_  Governance Chart.pdf>
>>>>
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