[CWG-Stewardship] On "Entity" and incorporation - key questions to frame our discussion

Mon Dec 1 16:10:05 UTC 2014

Dear Greg, dear all,

Two things: 1) a comment on the notion of "entity" and 2) a few key
questions that I would like to see clearly answered to move forward

*1) ON THE NOTION OF "ENTITY" AND COMMON UNDERSTANDING*

In your exchange below with Holly, you mentioned two definitions of the
term "entity". She rightly pointed there were of two types: one from a
legal perspective and another one a more general, layman's perspective.

Naturally, the first one (the legal one) focuses on incorporation, with
mentions such as "separate existence for tax purposes".

The second one, however, from the Merriam-Webster was more generic:

*1 a :  being <http://www.merriam-webster.com/dictionary/being>, existence
<http://www.merriam-webster.com/dictionary/existence>; especially :
independent, separate, or self-contained existence*
*b :  the existence of a thing as contrasted with its attributes*
*2:  something that has separate and distinct existence and objective or
conceptual reality*
*3:  an organization (as a business or governmental unit) that has an
identity separate from those of its members*

I have a simple question: is the IETF an "entity" acccording to that
definition, although it is not incorporated? I believe the answer is yes.

As you know, the W3C, at least for a long period of time, was not
incorporated, relying on three separate MoUs with "host" structures. (It
may have changed since then but that was the case for several years). Isn't
the W3C an "entity" for the purpose of the discussion we're having?

Likewise, aren't the gNSO and the ccNSO, "organizations" (it is in their
name) that have "an identity separate from those of (their) members", and
"something that has a separate and distinct existence and objective or
conceptual reality", and a "self-contained existence"? And therefore
"entities" in light of the MW definition above?

You may have had a legal meaning in mind for the term "entity" because of
your own background but it seems clear that in Frankfurt, several people
clearly understood the word in its more general meaning.

*2) KEY QUESTIONS*

In my view, the core of the discussion here can be summarized as follows:

1) *Is incorporation required to "contract"?* Given that the IETF seems to
have an MoU with ICANN (among other arrangements with other "entities"), I
would suppose that the answer is no. Can someone clarify this important
point?

2) If the answer above is indeed no, is there any practical, legal or other
constraint that would *expressly forbid IETF, the NRO (or ASO), the ccNSO
and the gNSO to have each an MoU* with ICANN or any other contractor for
the IANA functions?

3) If the answer to 2) above is no, what are *the pros and cons to
establishing instead a specific contracting Corporation*, in terms of
simplicity, compatibility between the mechanisms for the different groups
(parameters, numbers, names), guarantee of accountability, stability and
security of the system.

Unless these questions are clearly answered, I am afraid we will be running
in circles and losing time.

Thanks for the feedback.

Best

Bertrand

"*Le plus beau métier des hommes, c'est d'unir les hommes*", Antoine de
Saint Exupéry
("*There is no greater mission for humans than uniting humans*")BERTRAND DE
LA CHAPELLEInternet & Jurisdiction Project | Director

On Sun, Nov 30, 2014 at 7:42 AM, Greg Shatan <gregshatanipc at gmail.com>
wrote:

> Holly and all:
>
> If we are turning to the dictionary, please consider the following:
>
> Entity
>
> *A real being; existence. An organization or being that possesses separate
> existence for tax purposes. Examples would be corporations, partnerships,
> estates, and trusts. The accounting entity for which accounting statements
> are prepared may not be the same as the entity defined by law.*
>
> Entity *includes corporation and foreign corporation; not-for-profit
> corporation; profit and not for-profit unincorporated association;* Business
> Trust <http://legal-dictionary.thefreedictionary.com/Business+Trust>, *estate,
> partnership, trust, and two or more persons having a joint or common
> economic interest; and state, U.S., and foreign governments.*
>
> *An existence apart, such as a corporation in relation to its
> stockholders.*
>
> *Entity includes person, estate, trust, governmental unit.*
> West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale
> Group, Inc. All rights reserved.
>
> This is what I mean when I say "entity."  I'll try to say "legal entity"
> to avoid any doubt in future.  But there was no doubt in my mind (or many
> others) that when we were talking about creating an entity -- and in
> particular, an entity that could enter into a contract -- that this is what
> we were talking about.
>
> For what it's worth, the Merriam-Webster's definition that I found first
> when searching the Internet is as follows:
>
> 1* a* *:*  being <http://www.merriam-webster.com/dictionary/being>,
> existence <http://www.merriam-webster.com/dictionary/existence>;
> *especially* *:*  independent, separate, or self-contained existence
> *b* *:*  the existence of a thing as contrasted with its attributes
> 2*:*  something that has separate and distinct existence and objective or
> conceptual reality
> 3*:*  an organization (as a business or governmental unit) that has an
> identity separate from those of its members
>
> Greg
>
> On Sat, Nov 29, 2014 at 11:16 PM, Holly Raiche <h.raiche at internode.on.net>
> wrote:
>
>> Thank you Alan for the time and thought you have put into this.  My
>> comments, for what they are worth, interspersed.
>>
>> Holly
>>
>> On 29 Nov 2014, at 4:23 pm, Alan Greenberg <alan.greenberg at mcgill.ca>
>> wrote:
>>
>>  As I have mentioned during the F2F meeting in Frankfurt and on the most
>> recent teleconference, I have significant problems with the proposal
>> currently on the table. I am taking this opportunity to present my concerns
>> in somewhat more detail, and I will also present what I believe to be a
>> viable alternative. The ideas presented are my own, but I do know that they
>> are largely shared by my At-Large colleagues and by some others in the
>> community.
>>
>> I am also quite aware that my alternative options are likely to be
>> vehemently opposed by some.
>>
>> I should also add that there are aspects of the current draft CWG
>> proposal that I strongly support. The Independent Appeals Panel is perhaps
>> the most important one.
>>
>>
>>
>> *Overview *Many of my concerns are due to the large number of "details"
>> that are, as yet, unspecified. Perhaps some of my concerns will be negated
>> once there are sufficient answers, but I have the nagging feeling that for
>> many, there will be no viable answer. This message will necessarily be long
>> - my apologies for that.
>>
>>
>>
>> *Contract Co. *Many of the issues surround the "entity" (as it was
>> referred to in Frankfurt).
>>
>>
>> First - using a Webster’s Dictionary (for the many Americans commenting)
>> entity is defined as a ‘thing which has reality and distinctness’.  NB: It
>> does NOT NECESSARILY imply any corporate status.  So there was a big and
>> surprising leap from entity - which many of us supported - to some kind of
>> corporate structure - which seems to have become a done deal in the minds
>> of some. However, if it ‘signs a contract’, it necessarily has some legal
>> status. And the tasks given below suggest it should. Is it too late to ask
>> whether it is possible to have the PRT without a contract company.
>>
>> The draft somewhat glibly says that it will only sign the contract. But
>> it seems to be outsourcing much of its responsibility to the
>> Multistakeholder Periodic Review Team (PRT), and that seems problematic.
>> Perhaps the intent is not that all of these things go to the PRT, but there
>> does not seem to be anywhere else for the functions to go. Among the tasks
>> that it has outsourced are consultation regarding the contents of future
>> RFPs, RFP issuance, RFP evaluation, contract negotiation and contract
>> enforcement. What it cannot outsource is addressing legal issues such as
>> being sued by a bidder who failed for win the contract and other such
>> possibilities. Whether it is possible to have such an empty company do all
>> this remains to be demonstrated. I will deal with problems with this
>> outsourcing under the PRT.
>>
>> The jurisdiction under which the company is registered has been the
>> subject of some discussion. Clearly there are those who feel that under no
>> conditions can it be the US. At the same time, there are some indications
>> (such as terms in the Kelly bill) that imply that the US Government may not
>> be willing to accept anything other than the US. Note that I understand
>> that the Kelly bill itself may wither and die, but to quote Milton Meuller,
>> "We should also pay attention to it because the bill provides a very good
>> benchmark for preparing for the kind of questions that the NTIA is likely
>> to be asked after they get a complete proposal from the ICG and begin to
>> implement it. The Kelly bill can be considered a list of the concerns that
>> US-based interests are going to be using to assess the final proposal. The
>> GAO Report is equally important in this regard. Ignore them at your peril."
>> (E-mail to the CWG-Stewardship list on 23 Nov 2014)
>>
>> Without details of exactly how this corporation will exist, it is
>> impossible to assure oneself that it cannot be captured or controlled by
>> some entity or government(s). Running IANA will be a treasured target by
>> some countries and we do not know what lengths they would go to capture the
>> contract. NTIA had the strength of the US (and its battleships and such)
>> behind it. Contract Co. will not.
>>
>> There has been no discussion about how this entity, or any part of the
>> overall proposal, is funded. More on this later.
>>
>>
>> *Multistakeholder Periodic Review Team (PRT)*
>>
>>
>>
>> The PRT is effectively the operational arm of Contract Co. It is the
>> entity that makes decision for Contract Co., presumably including those
>> related to the RFP, contract negotiations, contract enforcement and much
>> more. But by its very name, it is Periodic. It does not exist at all times
>> and there are some in the community that have said it should be
>> re-constituted afresh every time it is needed (perhaps like the Phoenix
>> born from the ashes of its predecessor). I fail to understand to how it can
>> take action on problems if it is not an ongoing entity.
>>
>> The description says that it is a "body" with representatives selected by
>> the relevant bodies. Accepting that "relevant" is to be decided later, it
>> is unclear under whose auspices this body is convened, and how we can
>> ensure that it remains free from capture or malformation. It was suggested
>> in Frankfurt that this body could be akin to (or even identical to) the
>> IANA-CWG, but given that the entire concept of this elaborate
>> infrastructure is to allow ICANN to be completely excluded from the IANA
>> management process, presumably because it has ceased to carry out this
>> function as well as all parties claim it is now doing, what makes us think
>> that ICANN would take responsibility for this, or more to the point, could
>> be trusted to do it properly?
>>
>> The idea behind talking about an entity rather than a corporate structure
>> was to suggest that it is possible to have structures with functions,
>> without those structures have an individual corporate personality.  ALAC,
>> GNSO,ccNSO, SSAC are all examples of entities that have an ongoing
>> existence, functions, etc but do not have separate corporate identities.
>> It can be done - indeed, is being done.
>>
>>
>> So how this body, which is the critical keystone [
>> http://en.wikipedia.org/wiki/Keystone_(architecture)] on which this
>> entire superstructure depends, constituted, and funded. And how does one
>> ensure that it is not corrupted, or captured? Or sued.
>>
>> This was always my concern with creating a new corporate structure.
>>
>> A body as large as it will have to be will require infrastructure such as
>> a secretariat - how do we ensure that IT is not subverted (just look at all
>> the effort that has gone into ensuring an independent ICG secretariat)? And
>> without a corporate backing of the PRT, its members would be personally
>> liable in the case of a lawsuit. Who would want to serve on such a group?
>> Moreover, in an environment where the PRT is taking very significant
>> decisions, both financial offers and personal threats would be an effective
>> method of capture (and presumably this is all volunteer work, or at most a
>> modest stipend).
>>
>> For my money, these are critical questions - which remain unanswered.
>>
>>
>> Surely, the PRT, which is implicitly all powerful, would need a new
>> oversight mechanism over it! And who oversees THAT oversight body?
>>
>> EXACTLY - but the same can be said of the Contract Company.  Who funds
>> it, who monitors it. And do we not then wind up with accountability issues
>> for ICANN AND its oversight body.
>>
>>
>>
>>
>> *Customer Standing Panel (CSC) *It is unclear exactly what this body
>> monitors. If it is JUST service levels committed to by IANA, the
>> composition may be ok. But if it is also responsible for ensuring that IANA
>> is following policy, then the composition MUST reflect the
>> multi-stakeholder body or bodies that created such policy. You cannot
>> presume that the customers, who may have been vehemently opposed to any
>> specific policy, will report that such a policy is not being policy. If the
>> CSC is NOT monitoring adherence to policy, then who is? It does not seem to
>> be covered in the proposal. During e-mail discussions, someone said it was
>> the job of the (for the gTLD space) GNSO. But it does not have the staff or
>> Bylaw mandate to do so, nor would it have any standing to complain to
>> whoever it is that would attempt enforcement (the PRT??).
>>
>> Absolutely agree.  I think the problem with the concept is the word
>> ‘customer’; it does not encompass all those who are impacted by IANA/ICANN
>> decisions.  And agree with the comment abut the GNSO.
>>
>>
>> There is reference to Liaison from ACs and SOs on the CSC. In the ICANN
>> context, a Liaison has no power other than that of persuasion. They have no
>> power to act if they are in disagreement with the majority of the full
>> members.
>>
>> Which is why a Standing Panel based on the MSM is the better model.
>>
>>
>>
>>
>> *Cost *Cost has been mentioned briefly above, but it is a significant
>> issue. Aside from the costs of the infrastructure we are discussing here,
>> there is the cost of IANA. Currently this is funded by ICANN. If ICANN were
>> to be taken out of the picture (and the possibility of doing that is the
>> ONLY reason for building all of this), where does the funding come from?
>> From ICANN, out of the goodness of its heart, despite no longer having ANY
>> control over how much money is demanded or how it is spent? By the gTLD
>> registries, who have said they would likely fund THEIR part of the costs,
>> but not the entire thing. By the ccTLDs who have clearly said we should not
>> depend on them (with a few exceptions)?
>>
>> WELL SAID
>>
>>
>>
>>
>> *Acceptability *The last time I heard Larry Strickling talk about the
>> stewardship transition, he said it would only take place if sufficient
>> controls were put in place to address ICANN messing up (i.e., in the
>> extreme, a rogue Board). That PRESUMES that it is ICANN at the centre of
>> the IANA stewardship - why else would we care about ICANN accountability if
>> ICANN were not involved. From that, my take is they envision the IANA
>> responsibility being transferred to ICANN. The Kelly bill clearly presumes
>> this as well - why else would it be attempting to put so many constraints
>> on ICANN?
>>
>> Again, well said
>>
>>
>> It is not at all clear that a proposal such as one that the CWG has put
>> in this draft would be acceptable to the US government.
>>
>> I don’t think it would be either.
>>
>>
>> It will certainly not be a favoured proposal from the point of view of
>> the ICANN Board (who may not have a direct say in this but cannot be
>> totally ignored either).
>>
>>
>>
>> *Integratability *The ICG will be tasked with integrating the CWG
>> proposal with that of the RIRs and the IETF. Although this is clearly their
>> job and not ours, I have always believed that one needs to look ahead to
>> ensure that there are no impassable roadblocks ahead.
>>
>> We do not definitively know what those proposals will be, but indications
>> are emerging. Both bodies seem to be happy with how ICANN is managing IANA,
>> but both feel that in the event of any untoward action, they could move the
>> responsibility associated with their areas somewhere else. Since in both
>> cases, it is the same body that sets the policy that would judge it, no
>> great complexity is involved. In ICANN's case, since the bodies that set
>> policy in the names space are (to a large extent) an integral part of
>> ICANN, they cannot take action against their "parent" (so to speak). Thus
>> this cumbersome alternative.
>>
>> Integrating these two approaches may be difficult.
>>
>>
>>
>> *Lost Opportunity *Part of the IANA Stewardship Transition is to put in
>> place suitable ICANN accountability and governance changes so as to ensure
>> the continuity of the IANA function.
>>
>> If all of the questions posed here, and the ones raised by others are
>> addressed, we would end up moving from a situation where an entity (the
>> NTIA of the US government) awards the IANA contract. The contract is
>> currently held by ICANN but in theory at some future date, it could be
>> awarded to some other organization, removing ICANN from any operational
>> connection to ICANN.
>>
>> The new situation would be where Contract Co. awards the IANA contract.
>> The contract will initially be held by ICANN but in theory at some future
>> date, it could be awarded to some other organization, removing ICANN from
>> any operational connection to ICANN.
>>
>> Notice the parallel wording. ICANN really has no motivation to change to
>> effect this change. And in all likelihood any change associated with this
>> transition will be minimal.
>>
>> If we go down the path of the current draft CWG proposal, I believe that
>> a major opportunity will have been lost to reform ICANN.
>>
>>
>>
>> *Alternative *Simply criticizing the current CWG draft proposal is not
>> particularly useful without alternatives. My alternative is certain to not
>> please some of the parties in this discussion, but I believe that it is
>> both possible and viable.
>>
>> All of the complexity of the CWG draft proposal is there to cover the
>> eventuality that ICANN suddenly or gracefully stops performing the IANA
>> function to the satisfaction of the community. That was indeed the
>> situation a number of years ago, and ICANN took effective action to rectify
>> the problems (that is, the NTI did not have to yank the contract to fix the
>> problems). At the moment all parties seem to agree that there are no
>> significant outstanding major problems, certainly none that could justify a
>> change in the status quo. But there is a recurrent fear of "what if". What
>> if ICANN had the IANA responsibility in perpetuity and stopped caring. Or
>> had a Board that deliberately and without community support took action or
>> inaction to harm how the IANA functions are carried out (the "rogue Board
>> scenario).
>>
>> These worst case alternatives are indeed possible. And since under the
>> current ICANN Bylaws, the Board is effectively sovereign, little could be
>> done short of changing the Board over a period of 3+ years.
>>
>> And this is what worries Larry Strickling - what he said publicly at the
>> last ICANN meeting.  He does want a credible answer that will satisfy his
>> masters (including Congress)
>>
>>
>> I suggest that there are ways to alter ICANN's Bylaws to allow the
>> effective control of an out-of-control Board. These mechanisms will not be
>> particularly appreciated by the ICANN Board, but I believe that such
>> measures (or something similar) would be adopted if that is what is
>> required to be granted IANA.
>>
>> There are a number of components that I will describe. They are not
>> necessarily a complete or even the correct set. Putting in place a complete
>> set of cohesive recommendations is what the Accountability CCWG is being
>> convened for. But the existence of the following as a starting point, I
>> believe, demonstrates that there IS a way to proceed forward.
>>
>> -       ACs and SOs must be given the ability to recall their sitting
>> Board member. There will be no need to await the end of the current 3-year
>> term.
>> -       Certain classes of decision regarding IANA can only be made with
>> (for an example) a supermajority (2/3) of the Board's maximum
>> Bylaw-mandated membership approving the decision. Without the bulk of the
>> AC/SO Board members, there will not be a critical mass of Board members to
>> take such a decision.
>> -       Certain classes of decision regarding IANA may only be made
>> after notification period and public comment. This would allow the ACs and
>> SOs sufficient time to act to recall their Board members
>> -       It is possible that the composition of the Board might need to
>> be slightly altered to ensure that a recall of most but not all AC/SO Board
>> members would be effective in halting action. Or a higher threshold than
>> supermajority might be needed.
>> -       Bylaws regarding GAC advice related to IANA might need to
>> somewhat altered to compensate for the GAC not having sitting Board members.
>> -       Similarly, non-affiliated ccTLDs would need to be worked into
>> the equation.
>> -       If allowed under California law, the Bylaws could be require
>> that under certain circumstances, a Board decision could be appealed to an
>> external body (similar to the proposal's Independent Appeal for IANA
>> decisions) and that the decision would be binding and enforceable in courts.
>>
>> I don’t think this is the entire answer BUT it goes a long way towards a
>> workable response that can dovetail nicely with what both the numbers and
>> protocols community are coming up with.
>>
>> Again, that you Alan - this is a really good summary of both concerns and
>> a very positive way forward.
>>
>>
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>>
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>>
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