Dear CCWG ACCT Co-Chairs, Members, Participants and ICANN Staff, We are writing to raise with you the following issues that we identified in our high-level review of the above- referenced Annexes: Annex 1 (GAC as Decisional Participant): We did not have any high-level comments on this Annex. Annex 8 (Reconsideration): With respect to the timing requirements discussed in Paragraph 25 and elsewhere in the Annex, there appears to be some inconsistency: If the Board Governance Committee (BGC) takes its full 90 days to make a recommendation after receiving the request, the Board would not meet its 60 day timeline, and it would be tight for it to meet the 120 day time line (particularly if the requestor files a rebuttal to the BGC’s recommendation within 15 days of receipt). We recommend that these time frames be re-considered to remove the inconsistency, for example by deleting the language relating to Board action within 60 days and, if necessary, providing the Board with additional time to consider the BGC recommendations. Annex 9 (AOC Reviews): We recommend that consideration be given to further clarifying the Review Team provision in Paragraph 54 (1) to specify the type of “diversity” desired (geographic or otherwise) for Review Team members and (2) to state whether, in determining the composition of the members of the Review Teams they select, the group of chairs can solicit additional nominees or appoint less than 21 members to avoid potential overrepresentation of particular ACs or SOs if some nominate less than 3 members. Annex 10 (SO/AC Accountability): We did not have any high-level comments on this Annex. Annex 11 (GAC Advice): We were asked to review the current Bylaws provision addressing GAC advice and determine whether the ambiguities we identified in our review of the proposed revisions to this provision are new or stem from ambiguities under the current Bylaws text. We have determined that there are ambiguities under the current Bylaws text, which provides as follows: ICANN Bylaws Article XI, Section 2.1.j. The advice of the Governmental Advisory Committee on public policy matters shall be duly taken into account, both in the formulation and adoption of policies. In the event that the ICANN Board determines to take an action that is not consistent with the Governmental Advisory Committee advice, it shall so inform the Committee and state the reasons why it decided not to follow that advice. The Governmental Advisory Committee and the ICANN Board will then try, in good faith and in a timely and efficient manner, to find a mutually acceptable solution. The phrase “duly taken into account” is ambiguous, but reading it together with the next sentence, which requires that the Board follow a specific procedure before taking actions inconsistent with GAC advice, we believe the best interpretation of this phrase is to mean “do not act inconsistently with.” Based on this interpretation, we recommend the following clarification (underlined) to the first sentence of this Bylaws provision: “The advice of the Governmental Advisory Committee on public policy matters shall be duly taken into account, both in the formulation and adoption of policies, and ICANN shall not act inconsistently with that advice except as otherwise provided in this paragraph.” We also note that there is no meaningful legal distinction between voting and determining to take an action, as some commenters have suggested. The only way the Board can legally determine or decide anything under California law is by voting. The proposed addition to the current Bylaws text is underlined below: ICANN Bylaws Article XI, Section 2.1.j. The advice of the Governmental Advisory Committee on public policy matters shall be duly taken into account, both in the formulation and adoption of policies. In the event that the ICANN Board determines to take an action that is not consistent with the Governmental Advisory Committee advice, it shall so inform the Committee and state the reasons why it decided not to follow that advice. Any Governmental Advisory Committee advice approved by a full Governmental Advisory Committee consensus, understood to mean the practice of adopting decisions by general agreement in the absence of any formal objection, may only be rejected by a vote of 2/3 of the Board, and the Governmental Advisory Committee and the ICANN Board will then try, in good faith and in a timely and efficient manner, to find a mutually acceptable solution. Based on our interpretation of the current Bylaws text, described above, we believe this proposed provision results in the following process: 1. If GAC provides advice (whether by a full GAC consensus or a lesser approval threshold), the ICANN Board must “duly take[] into account” that advice -- i.e., ICANN must not act inconsistently with that advice, unless #2 and/or #3 below apply. 2. If GAC provides advice (whether by a full GAC consensus or a lesser approval threshold), and the ICANN Board decides to take an action inconsistent with that advice, the ICANN Board must first give GAC notice and provide a rationale. · In addition, f the GAC advice was by a full GAC consensus, the ICANN Board may decide to take an action inconsistent with that advice only by a vote of 2/3 of the ICANN Board. If that 2/3 threshold is reached, GAC and ICANN must then try in good faith to find a mutually acceptable solution. If the 2/3 threshold is not reached, ICANN is required to act consistently with the consensus GAC advice. We recommend that consideration be given to further clarifying this process, and we agree with commenters who have concluded that the proposed provision does not impose an affirmative obligation upon ICANN’s Board to vote on GAC consensus advice every time that advice is provided. We note that additional Bylaws language is being proposed to clarify that, in any case, the Board needs to act in compliance with the ICANN Bylaws. Thus, if the Board were to determine that following GAC advice would result in non-compliance with the Bylaws, the Board should be able to reject the advice (with a majority or two-thirds vote, depending on whether the GAC advice was consensus advice) and explain its position to GAC. Please let us know if we can assist in any way with your further consideration of these issues. Kind regards, Holly and Rosemary HOLLY J. GREGORY Partner and Co-Chair Global Corporate Governance & Executive Compensation Practice Sidley Austin LLP +1 212 839 5853 holly.gregory@sidley.com<mailto:holly.gregory@sidley.com> [http://www.sidley.com/files/upload/signatures/SA-autosig.png]<http://www.sidley.com/> SIDLEY AUSTIN LLP **************************************************************************************************** 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. ****************************************************************************************************