Initial comments on CWG-Stewardship draft proposal
I refer to: https://www.icann.org/en/system/files/files/cwg-stewardship-draft-proposal-w ith-annexes-22apr15-en.pdf General comment =============== On page 19 it states that the following element is required: "A contract similar to the current NTIA IANA Functions Contract to perform the IANA Functions post-transition". A contract is an agreement between two parties. No entity (whether a physical person or a legal person) may contract with itself. On page 20, it states that the transition will involve "Creating PTI, a separate legal entity that would be a 'wholly owned subsidiary' of ICANN - in legal terms, an 'affiliate.' The creation of PTI ensures both functional and legal separation within the ICANN organization." PTI would for sure be functionally separate from ICANN, and it would be legally separate in the same sense that, for example, FOO SA (a Swiss corporation) is legally separate from FOO, Inc. (a US corporation), even if FOO SA is wholly owned by FOO, Inc. [NOTE: the name FOO is used here to refer to fictitious entities: no reference is intended to any real entity with that name or a similar name.] But there is no "real" separation between FOO SA and FOO, Inc.: FOO SA will do whatever FOO, Inc. (its owner) tells it to do. And FOO, Inc., may be legally liable for some actions or inactions of FOO SA (under the doctrine of piercing the corporate veil). Where or not there is "real" separation between ICANN and PTI, and thus whether or not ICANN and PTI could really conclude a meaningful contract (in the sense of an agreement between two separate entities) depends on the details of how PTI would be set up. Since those details are not provided in the draft proposal, it is not possible to say at this stage whether or not the proposal provides for sufficient separation of the IANA function from ICANN. That is, the proposal is incomplete. III.A.i.a ========= Section III.A.i.a states: "The existing IANA naming functions department, administrative staff and related resources, processes, data and know-how would be legally transferred to PTI." "At the outset, PTI would have as its sole member ICANN. PTI would be a 'wholly owned subsidiary' of ICANN - in legal terms, an 'affiliate' of ICANN if PTI is a California public benefit corporation without owners. ICANN would provide funding and administrative resources to PTI through an agreed upon budget." As noted above, I don't understand how PTI would be really separate from ICANN if it is fully controlled by ICANN, which is what the description above appears to imply. Nor do I understand how, in such a setup, an agreement between ICANN and PTI would be construed as a real contract between two independent entities, rather than an internal arrangement between ICANN and one of its subsidiaries. III.A.i.b ========= Section III.A.i.b states: "As a separate legal entity, PTI would have a board of directors or managers. The PTI Board could be an ICANN-designated board and have the minimum statutorily required responsibilities and powers." If ICANN designates the PTI Board, then how is PTI independent from ICANN? For sure it is legally separate, but, as noted above, that does not necessarily result in "real" separation. Again, consider that FOO SA (a Swiss corporation that is wholly owned by FOO, Inc., a US corporation), is not really separate from FOO, Inc. Especially if (as is commonly the case in the real world) the board of FOO SA is named by the board of FOO, Inc. III.A.iii.a =========== Section III.A.iii.a, no. 4, states "Post transition there will only be the IFO and the Root Zone Maintainer." IFO stands for IANA Functions Operator, meaning PTI. Thus PTI would decide on all changes to the root zone file. If PTI is a wholly-owned subsidiary of ICANN (which is what is proposed), then that means that, in effect, ICANN is in control of the root zone file. In my view, this creates a dangerous concentration of power. In particular if ICANN and PTI are legally resident in the USA, because they would be subject to US private law, meaning to US Congress and US court interpretations of US laws. Annex C ======= Annex C lists principles and criteria that should underpin the transition. I don't see anything in that Annex regarding jurisdiction and intellectual property rights. As indicated above, I think that these are very important issues that should be reflected in Annex C. For example, it should be explicitly stated that the intellectual property rights regarding the IANA function should be transferred to an independent entity, as proposed by the numbers community. And it should be explicitly stated that the IFO should be granted immunity of jurisdiction (but subject to suitable binding arbitration) or, failing that, be incorporated/registered/resident in an a neutral jurisdiction, such as Switzerland. Annex E ======= Annex E lists contract provisions to be carried over. The existing provisions on intellectual property rights and data rights should be added. Annex F ======= Annex F describes a future IANA functions review mechanism. The composition of the review teams is specified on page 52. The proposed review team consists entirely of stakeholders from ICANN. This is not representative of the global multistakeholder community, which is broader than ICANN. The NTIA's intent is "to transition key Internet domain name functions to the global multistakeholder community". The current proposal is not consistent with that intent, because it proposes to transition a key element, the review process, to the ICANN community, which is much narrower than the global multistakeholder community. Missing elements ================ I don't see any references to where PTI would be legally resident/incorporated, nor to the jurisdiction that would apply to PTI and to agreements between PTI and ICANN. As I've stated before, this is a key issue. If PTI is resident in the USA, it would be subject to US law, which has significant implications, in particular if, as is proposed, PTI has full authority over changes to the root zone file. For example, the US Congress could pass a law that would force PTI to delete some particular ccTLD from the root zone. I don't see any references to who would own the IANA trademark (currently owned by ICANN) and the IANA.ORG domain name. Nor any references to who (if anybody) owns the rights to the IANA databases. Both of the elements mentioned above are, in my view, essential elements for the transition. So, again, it is my view that the current proposal is incomplete.