Greg, This all looks good and typically thorough, so thanks for all your hard work on it. As a non-lawyer (and as someone entirely ignorant about US competition legislation), I remember your comment a couple of RFP3 calls ago that it might be that the CSC would be seen as an example of cartel-like behaviour. (I forget and didn’t write down the technical term that you used.) As someone who would see the CSC role very much as one of being first line of discussion with the IANA functions operator about issues that come out of its regular reports, and seeking to resolve these concerns as a first-line response, I wonder whether we could slip in a question on the boundary between the CSC and the IANA functions operator where the behaviour slips into the potentially illegal. I suppose the question would be around two parts: · Would discussing and seeking (non-financial) redress of deteriorating performance between a group of customers and its supplier be seen as acceptable behaviour? · Would a complete transparency of the exchanges help ensure that there were no questions of impropriety? · Would the involvement of other – non-customer – stakeholders help ensure general acceptability (or be detrimental or entirely irrelevant to considerations)? Is this a useful direction of enquiry? Thanks Martin From: cwg-stewardship-bounces@icann.org [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Greg Shatan Sent: 21 January 2015 18:06 To: Christopher Wilkinson Cc: cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Revised Scoping Document for Legal Advice Chris, I'm not too surprised at the length of the document, since we have now turned it into an educational tool. Even beginning to communicate the intricacies of ICANN and IANA in a few pages is a challenge -- but we decided to make this "primer" a part of the document. (I'm not sure the questions are entirely "distinct", a number of them are related, but that is of no particular moment.) In any event, my understanding is that a small group of members/participants in the CWG would select the lawyers, with some assistance from ICANN, and that ICANN will pay. It's always been clear to me that we would need to engage a law firm, and not merely a single lawyer, to get the advice we need. Most lawyers of the calibre we need work in law firms, not as solo practitioners, and don't work in isolation in any event. It will be important to engage a lead counsel with the core skill sets we need, who will coordinate and provide the bulk of the advice, but would do that with the assistance of his/her colleagues. Greg On Wed, Jan 21, 2015 at 7:50 AM, Christopher Wilkinson <lists@christopherwilkinson.eu<mailto:lists@christopherwilkinson.eu>> wrote: Well Greg: We now have a 6 page legal brief including thirty (30) distinct questions! Allow me to repeat my earlier query: "Who is going to select the lawyer(s) and pay for the costs of this advice?" (Particularly as I recall more than a hint on the List, that an individual lawyer might not be able to respond to all of these questions … ) Regards CW On 21 Jan 2015, at 09:36, Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: All: Attached is a revised "scoping document" for the request for legal advice. We need to finalize this document no later than Thursday's call of the CWG. While we could spend more time working on the document, it is more important to get access to legal counsel than to wordsmith this document. I have also uploaded this as a new Google Doc: https://docs.google.com/document/d/1EUtXShskfHF6DRyVwTnAMG3eQ0DcFMca4Eovrwkc... Please make any suggested changes in the new Google Doc. Greg <CWG Legal Questions v2.docx>_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship

Dear Chris Disspain ...Ongoing oversight and monitoring of IANA’s work would be undertaken by

the CSC... The CSC would perform a[n] ... operational and administrative role, setting and reviewing metrics for IANA...

auDA appears to accord a more than proportionate role, even if the CSC is to include representatives from other parts of ICANN. In the case of a more serious complaint or failure regarding IANA, any

individual stakeholder (registry) or group (such as the ccNSO or GAC) would raise their concerns with the CSC in the first instance.

Where does this place the CSC ? Sivasubramanian M Sivasubramanian M <https://www.facebook.com/sivasubramanian.muthusamy> On Fri, Jan 23, 2015 at 1:43 AM, Chris Disspain <ceo@auda.org.au> wrote:

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders. With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community. And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

*Important Notice* *- *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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Chris, A few quick comments, inline below: *Greg* On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote:

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? And the Guardian of the Trust (see the proposal for details) would control

the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks, Greg

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

*Important Notice* *- *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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Hi Greg, Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like. I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”). The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves). The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee. Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above. The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF. The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries. All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law. Cheers, Chris On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

Greg

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote: Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org https://mm.icann.org/mailman/listinfo/cwg-stewardship

Greg, In haste from Dubai runway. Thanks! Will respond in 24 hours or so. Cheers, Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

...

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote: Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally:

...

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out.

...

...

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

...

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”).

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

...

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

...

The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF.

The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

...

Cheers,

Chris

...

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

Greg

...

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote: Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

...

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

...

And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

...

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

...

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org https://mm.icann.org/mailman/listinfo/cwg-stewardship

Thanks, and safe travels. Greg *Gregory S. Shatan * Partner | *Abelman Frayne & Schwab* *666 Third Avenue **|** New York, NY 10017-5621* *Direct* 212-885-9253 *| **Main* 212-949-9022 *Fax* 212-949-9190 *|* *Cell *917-816-6428 *gsshatan@lawabel.com <gsshatan@lawabel.com>* *ICANN-related: gregshatanipc@gmail.com <gregshatanipc@gmail.com> * *www.lawabel.com <http://www.lawabel.com/>* On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au> wrote:

But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder.

Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote:

...

Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out.

...

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”).

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

...

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

...

The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF.

The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

...

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

*Greg*

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote:

...

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

...

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

...

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would

...

control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

...

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

...

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

*Important Notice* *- *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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Interesting thread. My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law). Thus it's difficult to see how the AUDA proposal is internally coherent. Either A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes, Or B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance. In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear. Decent advice on this would need to be urgently procured if the CWG intends to pursue it. Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so. But that point of view is well known and one on which Chris and I do not see eye to eye. :-) Best Jordan On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com> wrote:

As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the "author of the trust"; The person who accepts the confidence is called the "trustee"; the person for whose benefit the confidence is accepted is called the "beneficiary".

<I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote>

In the AUDA proposal and from the discussions on this thread, I identify the following entities:

1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA

Please correct me if I'm wrong.

Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust?

Thanks.

On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com <javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote:

...

Thanks, and safe travels.

Greg

*Gregory S. Shatan *

Partner | *Abelman Frayne & Schwab*

*666 Third Avenue **|** New York, NY 10017-5621*

*Direct* 212-885-9253 *| **Main* 212-949-9022

*Fax* 212-949-9190 *|* *Cell *917-816-6428

*gsshatan@lawabel.com <javascript:_e(%7B%7D,'cvml','gsshatan@lawabel.com');>*

*ICANN-related: gregshatanipc@gmail.com <javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');> *

*www.lawabel.com <http://www.lawabel.com/>*

On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au <javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote:

...

But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder.

Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au <javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');> | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com <javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au <javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote:

...

Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having 'shareholders'. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out.

...

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It's not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not "ICANN". ICANN is performing the IANA naming functions, for the benefit of the "customers" of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create "Contract Co.").

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

...

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

...

The Trust can be "settled" by the NTIA passing on the "right to perform the IANA naming functions" to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the "customers" of the IANA naming functions - as described in the ICG RF.

The guardian is the "protector" of the beneficiaries. It can't be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

...

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com <javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote:

Chris,

A few quick comments, inline below:

*Greg*

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au <javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote:

...

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co' proposal and auDA's original 'golden by-law' proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

...

2. Isn't creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co' is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

...

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would

...

control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently 'internal to ICANN' approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

...

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN' approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first 'golden by-law' proposal) achieve and that's what differentiates them from the 'contract co' proposal.

I know I don't need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I'll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

...

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au <javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');> | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

*Important Notice* *- *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org <javascript:_e(%7B%7D,'cvml','CWG-Stewardship@icann.org');> https://mm.icann.org/mailman/listinfo/cwg-stewardship

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-- Jordan Carter Chief Executive, InternetNZ +64-21-442-649 | jordan@internetnz.net.nz Sent on the run, apologies for brevity

Folks Trust law does NOT involve the creation of a legal entity in Australia or other jurisdictions based on English law. A trust is about a relationship that is set down in a trust deed, with responsibilities on the names trustees to manage a property, money, etc in accordance with the trust deed. (And I’d be very surprised if that is not the case in NZ, which is also based on Anglo common law) If, everyone, you don’t have access to the law books, then at least google trust law, and the discussion will be in terms of the trust - a deed recognised in the relevant jurisdiction - and named trustees - managers of whatever - whose equitable duty is to manage the named property/money/whatever - in accordance with the legal trust deed. It is possible to create an entity under the trust deed to manage the property/money in accordance with the trust need - but not necessary under trust law Holly On 24 Jan 2015, at 12:57 am, Milton L Mueller <mueller@syr.edu> wrote:

Ah, I see that Jordan has spotted the same problem I did, only he provided a much more intelligent elaboration. --MM

From: cwg-stewardship-bounces@icann.org [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Jordan Carter Sent: Friday, January 23, 2015 5:56 AM To: Guru Acharya Cc: cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions

Interesting thread.

My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law).

Thus it's difficult to see how the AUDA proposal is internally coherent.

Either

A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes,

Or

B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance.

In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear.

Decent advice on this would need to be urgently procured if the CWG intends to pursue it.

Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so.

But that point of view is well known and one on which Chris and I do not see eye to eye. :-)

Best Jordan

On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com> wrote: As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the “author of the trust”; The person who accepts the confidence is called the “trustee”; the person for whose benefit the confidence is accepted is called the “beneficiary”.

<I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote>

In the AUDA proposal and from the discussions on this thread, I identify the following entities:

1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA

Please correct me if I'm wrong.

Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust?

Thanks.

On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com> wrote: Thanks, and safe travels.

Greg

Gregory S. Shatan Partner | Abelman Frayne & Schwab 666 Third Avenue | New York, NY 10017-5621 Direct 212-885-9253 | Main 212-949-9022 Fax 212-949-9190 | Cell 917-816-6428 gsshatan@lawabel.com ICANN-related: gregshatanipc@gmail.com www.lawabel.com

On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au> wrote: But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder.

Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote: Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”).

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF.

The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

Greg

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote: Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W:www.auda.org.au

auDA – Australia’s Domain Name Administrator

Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org https://mm.icann.org/mailman/listinfo/cwg-stewardship

_______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org https://mm.icann.org/mailman/listinfo/cwg-stewardship

-- Jordan Carter Chief Executive, InternetNZ +64-21-442-649 | jordan@internetnz.net.nz

Sent on the run, apologies for brevity

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Thanks Chris, and hi all, I note Holly's reply to this too. The point I was, in non-lawyer language, trying to get to was that the trust owns the property. Your model requires definition of what that "property" is. That's more precise than what I said earlier about legal personality. In your proposal, the trust would presumably own the rights to the IANA functions. The beneficiaries are well described. The trustee would be - ICANN? The Guardians? To me, if the answer is the former, it's an internal solution. If the answer is the latter, it's an external solution v similar to the Contract Co model. Either of course raises accountability questions, as does the Contract Co model, and Strickling's comments yesterday indicate some that the models will have to meet. I will have more to write on the proposal once I get some advice on it myself. Thanks for the reply. We are all busy. Slow replies are all part of it! go well, Jordan On 29 January 2015 at 15:02, Chris Disspain <ceo@auda.org.au> wrote:

Hi Jordan,

Apologies for taking so long to respond to you on this.

Acknowledging that trusts are not necessarily familiar to all and that any proposal re the transition will be subjected to legal advice, in simple terms, you are incorrect and thus neither your A) nor B) below hold true.

but it does always involve the creation of a legal personality,

No it does not. A trustee must be a legal entity. A TRUST itself is not a legal entity.

Whilst I do not hold wikipedia out as a necessarily reliable source, check out http://wiki.auda.local/index.php.

And whilst the below is a quotation from lawyers in the Australia system ( http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf), the principle regarding trusts holds good in any system based on common law (such as the USA) unless amended by statute which is, of course, why legal advice is required on this and other proposed models.

"A *trust* is not a separate *legal entity*. Rather, a *trust* is a relationship where a person or company (the trustee) is under a *legal* obligation to deal with property owned by the *trust* (*trust* property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)."

Cheers,

Chris

On 23 Jan 2015, at 21:56 , Jordan Carter <jordan@internetnz.net.nz> wrote:

Interesting thread.

My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law).

Thus it's difficult to see how the AUDA proposal is internally coherent.

Either

A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes,

Or

B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance.

In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear.

Decent advice on this would need to be urgently procured if the CWG intends to pursue it.

Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so.

But that point of view is well known and one on which Chris and I do not see eye to eye. :-)

Best Jordan

On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com> wrote:

...

As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the "author of the trust"; The person who accepts the confidence is called the "trustee"; the person for whose benefit the confidence is accepted is called the "beneficiary".

<I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote>

In the AUDA proposal and from the discussions on this thread, I identify the following entities:

1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA

Please correct me if I'm wrong.

Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust?

Thanks.

On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com> wrote:

...

Thanks, and safe travels.

Greg

*Gregory S. Shatan * Partner | *Abelman Frayne & Schwab*

*666 Third Avenue **|** New York, NY 10017-5621* *Direct* 212-885-9253 *| **Main* 212-949-9022 *Fax* 212-949-9190 *|* *Cell *917-816-6428 *gsshatan@lawabel.com* *ICANN-related: gregshatanipc@gmail.com * *www.lawabel.com <http://www.lawabel.com/>*

On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au> wrote:

...

But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder.

Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote:

...

Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having 'shareholders'. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out.

...

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It's not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not "ICANN". ICANN is performing the IANA naming functions, for the benefit of the "customers" of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create "Contract Co.").

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

...

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

...

The Trust can be "settled" by the NTIA passing on the "right to perform the IANA naming functions" to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the "customers" of the IANA naming functions - as described in the ICG RF.

The guardian is the "protector" of the beneficiaries. It can't be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

...

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

*Greg*

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote:

...

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co' proposal and auDA's original 'golden by-law' proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

...

2. Isn't creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co' is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

...

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would

...

control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently 'internal to ICANN' approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

...

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN' approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first 'golden by-law' proposal) achieve and that's what differentiates them from the 'contract co' proposal.

I know I don't need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I'll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

...

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

*Important Notice* *- *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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-- Jordan Carter Chief Executive, InternetNZ

+64-21-442-649 | jordan@internetnz.net.nz

Sent on the run, apologies for brevity

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Chris I think Jordan made a valid point, but phrased it badly. You're still not off the hook. (Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.) You and Holly are saying that a trust does not necessarily create another entity. Your reasoning is based on this definition: "A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legal obligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." But this is only true when there is an individual - someone with agency - who holds property. This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who "owns" the IANA functions and is able to award them as "trust property" to ICANN or to someone else as the trustee? If you tell me it is a committee similar to the MRT, which is independent of ICANN then you have created another entity that must be capable of creating a "LEGAL OBLIGATION to deal with the...trust property for the benefit of the beneficiaries. If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you've created a recursive hall of mirrors in which ICANN is accountable to no one but itself. If you tell me the MRT that owns the trust property is a part of ICANN, again we have ICANN deisngating itself as the trustee; it is unclear how such an entity can create a legal obligation on ICANN without being independent of ICANN. From: cwg-stewardship-bounces@icann.org [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Chris Disspain Sent: Wednesday, January 28, 2015 9:02 PM To: Jordan Carter Cc: cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions Hi Jordan, Apologies for taking so long to respond to you on this. Acknowledging that trusts are not necessarily familiar to all and that any proposal re the transition will be subjected to legal advice, in simple terms, you are incorrect and thus neither your A) nor B) below hold true. but it does always involve the creation of a legal personality, No it does not. A trustee must be a legal entity. A TRUST itself is not a legal entity. Whilst I do not hold wikipedia out as a necessarily reliable source, check out http://wiki.auda.local/index.php. And whilst the below is a quotation from lawyers in the Australia system (http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf), the principle regarding trusts holds good in any system based on common law (such as the USA) unless amended by statute which is, of course, why legal advice is required on this and other proposed models. "A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legal obligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." Cheers, Chris On 23 Jan 2015, at 21:56 , Jordan Carter <jordan@internetnz.net.nz<mailto:jordan@internetnz.net.nz>> wrote: Interesting thread. My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law). Thus it's difficult to see how the AUDA proposal is internally coherent. Either A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes, Or B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance. In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear. Decent advice on this would need to be urgently procured if the CWG intends to pursue it. Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so. But that point of view is well known and one on which Chris and I do not see eye to eye. :-) Best Jordan On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com<mailto:gurcharya@gmail.com>> wrote: As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the "author of the trust"; The person who accepts the confidence is called the "trustee"; the person for whose benefit the confidence is accepted is called the "beneficiary". <I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote> In the AUDA proposal and from the discussions on this thread, I identify the following entities: 1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA Please correct me if I'm wrong. Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust? Thanks. On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com<javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote: Thanks, and safe travels. Greg Gregory S. Shatan Partner | Abelman Frayne & Schwab 666 Third Avenue * New York, NY 10017-5621 Direct 212-885-9253 | Main 212-949-9022 Fax 212-949-9190 | Cell 917-816-6428 gsshatan@lawabel.com<javascript:_e(%7B%7D,'cvml','gsshatan@lawabel.com');> ICANN-related: gregshatanipc@gmail.com<javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');> www.lawabel.com<http://www.lawabel.com/> On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au<javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote: But really quickly - Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder. Cheers, Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');> | W: www.auda.org.au<http://www.auda.org.au/> auDA - Australia's Domain Name Administrator On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com<javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote: Chris, Please see below. Greg On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au<javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote: Hi Greg, Thanks for your comments. My apologies for mischaracterising contract co as having 'shareholders'. To your other comments and generally: Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") A trust is not a legal entity. A trustee is a legal entity. Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov<http://www.usa.gov/>), describing trusts: Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. http://www.usa.gov/topics/money/personal-finance/trusts.shtml Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? It's not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like. I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not "ICANN". ICANN is performing the IANA naming functions, for the benefit of the "customers" of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create "Contract Co."). Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves). What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this. The Trust can be "settled" by the NTIA passing on the "right to perform the IANA naming functions" to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee. Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above. The beneficiaries of the trust would be the "customers" of the IANA naming functions - as described in the ICG RF. The guardian is the "protector" of the beneficiaries. It can't be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries. All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law. Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work. Greg Cheers, Chris On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com<javascript:_e(%7B%7D,'cvml','gregshatanipc@gmail.com');>> wrote: Chris, A few quick comments, inline below: Greg On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au<javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');>> wrote: Greetings All, Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached). I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG. 1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co' proposal and auDA's original 'golden by-law' proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals. 2. Isn't creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co' is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders. Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently 'internal to ICANN' approach. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? 3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN' approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first 'golden by-law' proposal) achieve and that's what differentiates them from the 'contract co' proposal. I know I don't need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors I will not be on the RFP3B call Friday as I'll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised. I hope this is helpful. Cheers, Thanks, Greg Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<javascript:_e(%7B%7D,'cvml','ceo@auda.org.au');> | W: www.auda.org.au<http://www.auda.org.au/> auDA - Australia's Domain Name Administrator Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email. _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<javascript:_e(%7B%7D,'cvml','CWG-Stewardship@icann.org');> https://mm.icann.org/mailman/listinfo/cwg-stewardship _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<javascript:_e(%7B%7D,'cvml','CWG-Stewardship@icann.org');> https://mm.icann.org/mailman/listinfo/cwg-stewardship -- Jordan Carter Chief Executive, InternetNZ +64-21-442-649 | jordan@internetnz.net.nz<mailto:jordan@internetnz.net.nz> Sent on the run, apologies for brevity _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship

Both of the following statements are wrong (at least under US law): (1) A trust is always a legal entity. (2) A trust is never a legal entity. Under US law, there are certain types of trusts (e.g., business trusts) that are legal entities, and other types of trusts that are not, and yet others that may or may not be depending on context and circumstance. A brief look into Australian law seems to indicate a one-sided approach, where trusts are never legal entities; but that's Australian law. While the US, Australia and UK are all "common law" countries, there are massive areas of divergence that have accrued over the last couple of hundred years, so conclusions cannot be jumped to based on knowledge of one country's laws. We have shelves and shelves (digital or actual) of statutes and restatements and cases that have added to, changed, modified, and swept away the "black letter" law of 18th Century England (you may remember that we fought a war over this and a few other points). I also have to take issue with the following exchange: JC: Your model requires definition of what that "property" is. CD: Yes. As does contract co and in fact any model where ICANN could be obliged to transfer something to someone else under certain circumstances. At a very simplistic level, a fundamental aspect of a "trust" is that it is a method of holding property (a/k/a the "corpus" or the "res"), while a fundamental aspect of a contract, like the IANA Functions Contract, any outsourcing agreement, license, etc., is that it is a method for one party to grant rights to another. Under the Contract Co. model, Contract Co. has the ability to grant a third party (initially, ICANN) the right to act as the IANA Functions Operator and perform the IANA Functions. At no point would ICANN be obliged to transfer anything to anyone -- instead it would lose the rights granted to it by Contract Co., and Contract Co. would then be free to grant those same rights to a different party. There is no property central to the Contract Co. model; just a "bundle of rights." Finally, as far as I can tell the concept of a "trust protector" (as the "Guardian" role seems to be described in the US) is "nascent" in US law and practice. Perhaps this is another point of differentiation between US and Australian law and practice. This doesn't necessarily mean that one model or approach is "better" than another -- I just wanted to provide a counterpoint and corrective to several fairly "black and white" statements that have been made recently in this thread. However, we can too easily be bogged down in details. In this case, the devil may not be in the details. Instead, I think the issue is at a higher level -- oversight, control and accountability -- and at an even higher level -- trust (not "trusts"...). I think concerns about the trust model arise less from the details and more from a great deal of concern about ICANN being the "rightsholder" in relation to being the IANA Functions Operator, rather than being granted that right by a third-party rightsholder (now, NTIA; potentially in future, Contract Co.) who can "pull" those rights per the contract. These concerns may not abate merely because these rights are being held "in trust" for the beneficiaries (the "community" or some variation). These fundamental concerns relate to both ICANN as the IANA Functions Operator and ICANN generally, What we need to resolve, if an internal-to-ICANN solution is to fly, is whether there are methods of oversight, accountability and separability that ICANN can and will adopt that will sufficiently alleviate these deeply held concerns. If not, then we need the best available solution where the right to act as IANA Functions Operator is held outside ICANN, Best, Greg *Gregory S. Shatan **ï* *Abelman Frayne & Schwab* *Partner** | IP | Technology | Media | Internet* *666 Third Avenue | New York, NY 10017-5621* *Direct* 212-885-9253 *| **Main* 212-949-9022 *Fax* 212-949-9190 *|* *Cell *917-816-6428 *gsshatan@lawabel.com <gsshatan@lawabel.com>* *ICANN-related: gregshatanipc@gmail.com <gregshatanipc@gmail.com> * *www.lawabel.com <http://www.lawabel.com/> * On Wed, Jan 28, 2015 at 11:35 PM, Chris Disspain <ceo@auda.org.au> wrote:

Hi Milton,

(Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.)

My apologies. There seems to have been an issue.

The links are:

http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf

and http://en.wikipedia.org/wiki/Trust_law.

This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who “owns” the IANA functions and is able to award them as “trust property” to ICANN or to someone else as the trustee?

There are 2 possibilities re the Settlor (the ‘declarer’) of the trust . One is NTIA who could pass the function to ICANN as Trustee. The other is that ICANN self-declares that it holds on trust. Either is feasible and can be legally done. Note that it doesn’t need to be an individual who declares the trust it needs as to be a legal entity of which an individual is but now type.

As for what is the trust property, as I have responded to Jordan, that is a question that needs to be answered for any model where ICANN could be obliged to transfer something to someone else under certain circumstances or where that something is transferred to contract co by NTIA. Work will need to be done come what may on this. Clearly what comprises the ‘IANA function' is sufficiently well defined in the current NTIA contract to satisfy the USG lawyers that a) they have ‘property’ which could be given to someone else to run and b) they have sufficient legal weight to compel ICANN to transfer it to that someone else.

If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you’ve created a recursive hall of mirrors in which ICANN is accountable to no one but itself.

Yes, ICANN could self-designate itself as Trustee. Self-declared trusts are very common. Once it does that it changes the ownership structure so that instead of ‘owning’ the asset, it declares that it owns the ‘asset’ on trust for ‘the community’ and in the declaration of trust the terms of that trust are set out. If that were all then, yes, one could argue the point about recursive halls of mirrors BUT that is not all. As part of the declaration of trust a Guardian (Protector) is created (again, not an unusual event in trusts) and the terms of the trust declare what the powers of the Guardian are.

So for example:

1. NTIA transitions the IANA function (the property - to be defined) to ICANN by being the Settlor of a Trust under which ICANN holds the function on trust for the community (to be defined). ICANN is the Trustee and NTIA steps out of the picture.

2. The Deed of Trust under which NTIA settles the IANA function upon ICANN as Trustee contains all of the provisions under which the Trust will operate. Included in those provisions is that the Trust has a Guardian which is a committee of people nominated by the community (along the lines of the MRT perhaps).

3. The powers of the guardian include that changes to the Trust have to be approved by it, that it can commence a process for a new Trustee to be appointed in the place of ICANN, that it can commence a process for a new Functions Manager to be appointed in the place of ICANN and so on.

Hope this helps. As I’ve said, I think we are now at the stage where we need legal advice for the models we have on the table.

Cheers,

Chris

On 29 Jan 2015, at 14:46 , Milton L Mueller <mueller@syr.edu> wrote:

Chris I think Jordan made a valid point, but phrased it badly. You’re still not off the hook. (Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.)

You and Holly are saying that a trust does not necessarily create another entity. Your reasoning is based on this definition: "A *trust* is not a separate *legal entity*. Rather, a *trust* is a relationship where a person or company (the trustee) is under a *legal* obligation to deal with property owned by the *trust* (*trust* property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." But this is only true when there is an individual – someone with agency – who holds property. This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who “owns” the IANA functions and is able to award them as “trust property” to ICANN or to someone else as the trustee?

If you tell me it is a committee similar to the MRT, which is independent of ICANN then you have created another entity that must be capable of creating a “LEGAL OBLIGATION to deal with the…trust property for the benefit of the beneficiaries.

If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you’ve created a recursive hall of mirrors in which ICANN is accountable to no one but itself.

If you tell me the MRT that owns the trust property is a part of ICANN, again we have ICANN deisngating itself as the trustee; it is unclear how such an entity can create a legal obligation on ICANN without being independent of ICANN.

*From:* cwg-stewardship-bounces@icann.org [ mailto:cwg-stewardship-bounces@icann.org <cwg-stewardship-bounces@icann.org>] *On Behalf Of *Chris Disspain *Sent:* Wednesday, January 28, 2015 9:02 PM *To:* Jordan Carter *Cc:* cwg-stewardship@icann.org *Subject:* Re: [CWG-Stewardship] Another alternative proposal - addressing some questions

Hi Jordan,

Apologies for taking so long to respond to you on this.

Acknowledging that trusts are not necessarily familiar to all and that any proposal re the transition will be subjected to legal advice, in simple terms, you are incorrect and thus neither your A) nor B) below hold true.

but it does always involve the creation of a legal personality,

No it does not. A trustee must be a legal entity. A TRUST itself is not a legal entity.

Whilst I do not hold wikipedia out as a necessarily reliable source, check out http://wiki.auda.local/index.php.

And whilst the below is a quotation from lawyers in the Australia system ( http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf), the principle regarding trusts holds good in any system based on common law (such as the USA) unless amended by statute which is, of course, why legal advice is required on this and other proposed models.

"A *trust* is not a separate *legal entity*. Rather, a *trust* is a relationship where a person or company (the trustee) is under a *legal*obligation to deal with property owned by the *trust* (*trust* property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)."

Cheers,

Chris

On 23 Jan 2015, at 21:56 , Jordan Carter <jordan@internetnz.net.nz> wrote:

Interesting thread.

My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law).

Thus it's difficult to see how the AUDA proposal is internally coherent.

Either

A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes,

Or

B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance.

In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear.

Decent advice on this would need to be urgently procured if the CWG intends to pursue it.

Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so.

But that point of view is well known and one on which Chris and I do not see eye to eye. :-)

Best Jordan

On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com> wrote:

As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the “author of the trust”; The person who accepts the confidence is called the “trustee”; the person for whose benefit the confidence is accepted is called the “beneficiary”.

<I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote>

In the AUDA proposal and from the discussions on this thread, I identify the following entities:

1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA

Please correct me if I'm wrong.

Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust?

Thanks.

On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com> wrote:

Thanks, and safe travels.

Greg

*Gregory S. Shatan* Partner* | **Abelman Frayne & Schwab* *666 Third Avenue **|** New York, NY 10017-5621* *Direct* 212-885-9253 *| **Main* 212-949-9022 *Fax* 212-949-9190 *|* *Cell *917-816-6428 *gsshatan@lawabel.com <gsshatan@lawabel.com>* *ICANN-related: **gregshatanipc@gmail.com <gregshatanipc@gmail.com>* *www.lawabel.com* <http://www.lawabel.com/>

On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au> wrote:

But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder. Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote:

Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”).

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF.

The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work. Greg

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

*Greg*

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote:

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

*Important Notice - *This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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-- Jordan Carter Chief Executive, InternetNZ

+64-21-442-649 | jordan@internetnz.net.nz

Sent on the run, apologies for brevity

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It would still be very useful, even at what seems to be quite a late point, for those advocating an internal solution to set out the counter-case…

Jordan, auDA is an advocate of an internal solution. Paul Szyndler will happily provide you (ASAP) with details of our views and why we hold them as well as an explanation of why our proposed alternative models provide a high level of comfort about ‘pulling’ the rights. May I ask you to explain in detail Internet NZ’s position please? I have seen a number of emails from you suggesting that you believe in an external to ICANN model ‘as a matter of principle’ but (and I acknowledge that I may have missed them) have seen nothing that explains why you believe that or that addresses how you think such a model contributes to the security, stability and resilience of the DNS. Further, as you have admirably demonstrated with some of your comments on our proposed alternative models (and I have always acknowledged) the devil is in the details so perhaps you could also address how you would envisage contract co being set up, who the shareholder/members would be, what checks and balances would be in place to ensure that it could not act outside the will of the IANA customers or be used for ‘political’ purposes by holding the ICANN community to ransom over some issue that has nothing whatsoever to do with IANA? Cheers, Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au auDA – Australia’s Domain Name Administrator Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email. On 30 Jan 2015, at 09:06 , Jordan Carter <jordan@internetnz.net.nz> wrote:

Hi all,

On 29 January 2015 at 18:57, Greg Shatan <gregshatanipc@gmail.com> wrote:

<snip>

However, we can too easily be bogged down in details. In this case, the devil may not be in the details. Instead, I think the issue is at a higher level -- oversight, control and accountability -- and at an even higher level -- trust (not "trusts"...). I think concerns about the trust model arise less from the details and more from a great deal of concern about ICANN being the "rightsholder" in relation to being the IANA Functions Operator, rather than being granted that right by a third-party rightsholder (now, NTIA; potentially in future, Contract Co.) who can "pull" those rights per the contract. These concerns may not abate merely because these rights are being held "in trust" for the beneficiaries (the "community" or some variation). These fundamental concerns relate to both ICANN as the IANA Functions Operator and ICANN generally,

What we need to resolve, if an internal-to-ICANN solution is to fly, is whether there are methods of oversight, accountability and separability that ICANN can and will adopt that will sufficiently alleviate these deeply held concerns. If not, then we need the best available solution where the right to act as IANA Functions Operator is held outside ICANN,

I think this is the most eloquent statement yet of the nature of the concerns I have about any internal solution.

It would still be very useful, even at what seems to be quite a late point, for those advocating an internal solution to set out the counter-case...

cheers Jordan

-- Jordan Carter

Chief Executive InternetNZ

04 495 2118 (office) | +64 21 442 649 (mob) jordan@internetnz.net.nz Skype: jordancarter

To promote the Internet's benefits and uses, and protect its potential.

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I agree with what I see as Greg’s most important point: the IANA functions are not property. They are services or activities that one party contracts another party to do. I don’t quite understand how anyone could define them as property. One might define the DNS root zone as an asset of some kind, but the IANA functions only manage the contents of the root zone file, they do not constitute the root nameserver itself. The AuDA model does not do away with a new entity (it needs guardians. The guardian starts to look suspiciously like MRT. Under Chris’s model the Guardian/MRT needs to be able to legally require ICANN to give up the IANA functions, or, as he put it in his own words, it has the authority to approve changes to the trust, “it can commence a process for a new Trustee to be appointed in the place of ICANN, that it can commence a process for a new Functions Manager to be appointed in the place of ICANN and so on.” That sounds a lot like a contract. Congratulations, Chris – you’ve reinvented Contract Co. From: Greg Shatan [mailto:gregshatanipc@gmail.com] Sent: Thursday, January 29, 2015 12:57 AM To: Chris Disspain Cc: Milton L Mueller; cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions Both of the following statements are wrong (at least under US law): (1) A trust is always a legal entity. (2) A trust is never a legal entity. Under US law, there are certain types of trusts (e.g., business trusts) that are legal entities, and other types of trusts that are not, and yet others that may or may not be depending on context and circumstance. A brief look into Australian law seems to indicate a one-sided approach, where trusts are never legal entities; but that's Australian law. While the US, Australia and UK are all "common law" countries, there are massive areas of divergence that have accrued over the last couple of hundred years, so conclusions cannot be jumped to based on knowledge of one country's laws. We have shelves and shelves (digital or actual) of statutes and restatements and cases that have added to, changed, modified, and swept away the "black letter" law of 18th Century England (you may remember that we fought a war over this and a few other points). I also have to take issue with the following exchange: JC: Your model requires definition of what that "property" is. CD: Yes. As does contract co and in fact any model where ICANN could be obliged to transfer something to someone else under certain circumstances. At a very simplistic level, a fundamental aspect of a "trust" is that it is a method of holding property (a/k/a the "corpus" or the "res"), while a fundamental aspect of a contract, like the IANA Functions Contract, any outsourcing agreement, license, etc., is that it is a method for one party to grant rights to another. Under the Contract Co. model, Contract Co. has the ability to grant a third party (initially, ICANN) the right to act as the IANA Functions Operator and perform the IANA Functions. At no point would ICANN be obliged to transfer anything to anyone -- instead it would lose the rights granted to it by Contract Co., and Contract Co. would then be free to grant those same rights to a different party. There is no property central to the Contract Co. model; just a "bundle of rights." Finally, as far as I can tell the concept of a "trust protector" (as the "Guardian" role seems to be described in the US) is "nascent" in US law and practice. Perhaps this is another point of differentiation between US and Australian law and practice. This doesn't necessarily mean that one model or approach is "better" than another -- I just wanted to provide a counterpoint and corrective to several fairly "black and white" statements that have been made recently in this thread. However, we can too easily be bogged down in details. In this case, the devil may not be in the details. Instead, I think the issue is at a higher level -- oversight, control and accountability -- and at an even higher level -- trust (not "trusts"...). I think concerns about the trust model arise less from the details and more from a great deal of concern about ICANN being the "rightsholder" in relation to being the IANA Functions Operator, rather than being granted that right by a third-party rightsholder (now, NTIA; potentially in future, Contract Co.) who can "pull" those rights per the contract. These concerns may not abate merely because these rights are being held "in trust" for the beneficiaries (the "community" or some variation). These fundamental concerns relate to both ICANN as the IANA Functions Operator and ICANN generally, What we need to resolve, if an internal-to-ICANN solution is to fly, is whether there are methods of oversight, accountability and separability that ICANN can and will adopt that will sufficiently alleviate these deeply held concerns. If not, then we need the best available solution where the right to act as IANA Functions Operator is held outside ICANN, Best, Greg Gregory S. Shatan • Abelman Frayne & Schwab Partner | IP | Technology | Media | Internet 666 Third Avenue | New York, NY 10017-5621 Direct 212-885-9253 | Main 212-949-9022 Fax 212-949-9190 | Cell 917-816-6428 gsshatan@lawabel.com<mailto:gsshatan@lawabel.com> ICANN-related: gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com> www.lawabel.com<http://www.lawabel.com/> On Wed, Jan 28, 2015 at 11:35 PM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: Hi Milton, (Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.) My apologies. There seems to have been an issue. The links are: http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf and http://en.wikipedia.org/wiki/Trust_law. This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who “owns” the IANA functions and is able to award them as “trust property” to ICANN or to someone else as the trustee? There are 2 possibilities re the Settlor (the ‘declarer’) of the trust . One is NTIA who could pass the function to ICANN as Trustee. The other is that ICANN self-declares that it holds on trust. Either is feasible and can be legally done. Note that it doesn’t need to be an individual who declares the trust it needs as to be a legal entity of which an individual is but now type. As for what is the trust property, as I have responded to Jordan, that is a question that needs to be answered for any model where ICANN could be obliged to transfer something to someone else under certain circumstances or where that something is transferred to contract co by NTIA. Work will need to be done come what may on this. Clearly what comprises the ‘IANA function' is sufficiently well defined in the current NTIA contract to satisfy the USG lawyers that a) they have ‘property’ which could be given to someone else to run and b) they have sufficient legal weight to compel ICANN to transfer it to that someone else. If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you’ve created a recursive hall of mirrors in which ICANN is accountable to no one but itself. Yes, ICANN could self-designate itself as Trustee. Self-declared trusts are very common. Once it does that it changes the ownership structure so that instead of ‘owning’ the asset, it declares that it owns the ‘asset’ on trust for ‘the community’ and in the declaration of trust the terms of that trust are set out. If that were all then, yes, one could argue the point about recursive halls of mirrors BUT that is not all. As part of the declaration of trust a Guardian (Protector) is created (again, not an unusual event in trusts) and the terms of the trust declare what the powers of the Guardian are. So for example: 1. NTIA transitions the IANA function (the property - to be defined) to ICANN by being the Settlor of a Trust under which ICANN holds the function on trust for the community (to be defined). ICANN is the Trustee and NTIA steps out of the picture. 2. The Deed of Trust under which NTIA settles the IANA function upon ICANN as Trustee contains all of the provisions under which the Trust will operate. Included in those provisions is that the Trust has a Guardian which is a committee of people nominated by the community (along the lines of the MRT perhaps). 3. The powers of the guardian include that changes to the Trust have to be approved by it, that it can commence a process for a new Trustee to be appointed in the place of ICANN, that it can commence a process for a new Functions Manager to be appointed in the place of ICANN and so on. Hope this helps. As I’ve said, I think we are now at the stage where we need legal advice for the models we have on the table. Cheers, Chris On 29 Jan 2015, at 14:46 , Milton L Mueller <mueller@syr.edu<mailto:mueller@syr.edu>> wrote: Chris I think Jordan made a valid point, but phrased it badly. You’re still not off the hook. (Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.) You and Holly are saying that a trust does not necessarily create another entity. Your reasoning is based on this definition: "A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legal obligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." But this is only true when there is an individual – someone with agency – who holds property. This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who “owns” the IANA functions and is able to award them as “trust property” to ICANN or to someone else as the trustee? If you tell me it is a committee similar to the MRT, which is independent of ICANN then you have created another entity that must be capable of creating a “LEGAL OBLIGATION to deal with the…trust property for the benefit of the beneficiaries. If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you’ve created a recursive hall of mirrors in which ICANN is accountable to no one but itself. If you tell me the MRT that owns the trust property is a part of ICANN, again we have ICANN deisngating itself as the trustee; it is unclear how such an entity can create a legal obligation on ICANN without being independent of ICANN. From: cwg-stewardship-bounces@icann.org<mailto:cwg-stewardship-bounces@icann.org> [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Chris Disspain Sent: Wednesday, January 28, 2015 9:02 PM To: Jordan Carter Cc: cwg-stewardship@icann.org<mailto:cwg-stewardship@icann.org> Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions Hi Jordan, Apologies for taking so long to respond to you on this. Acknowledging that trusts are not necessarily familiar to all and that any proposal re the transition will be subjected to legal advice, in simple terms, you are incorrect and thus neither your A) nor B) below hold true. but it does always involve the creation of a legal personality, No it does not. A trustee must be a legal entity. A TRUST itself is not a legal entity. Whilst I do not hold wikipedia out as a necessarily reliable source, check out http://wiki.auda.local/index.php. And whilst the below is a quotation from lawyers in the Australia system (http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf), the principle regarding trusts holds good in any system based on common law (such as the USA) unless amended by statute which is, of course, why legal advice is required on this and other proposed models. "A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legalobligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." Cheers, Chris On 23 Jan 2015, at 21:56 , Jordan Carter <jordan@internetnz.net.nz<mailto:jordan@internetnz.net.nz>> wrote: Interesting thread. My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law). Thus it's difficult to see how the AUDA proposal is internally coherent. Either A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes, Or B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance. In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear. Decent advice on this would need to be urgently procured if the CWG intends to pursue it. Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so. But that point of view is well known and one on which Chris and I do not see eye to eye. :-) Best Jordan On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com<mailto:gurcharya@gmail.com>> wrote: As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the “author of the trust”; The person who accepts the confidence is called the “trustee”; the person for whose benefit the confidence is accepted is called the “beneficiary”. <I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote> In the AUDA proposal and from the discussions on this thread, I identify the following entities: 1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA Please correct me if I'm wrong. Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust? Thanks. On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Thanks, and safe travels. Greg Gregory S. Shatan Partner | Abelman Frayne & Schwab 666 Third Avenue • New York, NY 10017-5621 Direct 212-885-9253<tel:212-885-9253> | Main 212-949-9022<tel:212-949-9022> Fax 212-949-9190<tel:212-949-9190> | Cell 917-816-6428<tel:917-816-6428> gsshatan@lawabel.com<mailto:gsshatan@lawabel.com> ICANN-related: gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com> www.lawabel.com<http://www.lawabel.com/> On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: But really quickly - Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder. Cheers, Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<mailto:ceo@auda.org.au> | W: www.auda.org.au<http://www.auda.org.au/> auDA - Australia's Domain Name Administrator On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Chris, Please see below. Greg On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: Hi Greg, Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally: Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") A trust is not a legal entity. A trustee is a legal entity. Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov<http://www.usa.gov/>), describing trusts: Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. http://www.usa.gov/topics/money/personal-finance/trusts.shtml Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like. I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”). Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves). What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this. The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee. Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above. The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF. The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries. All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law. Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work. Greg Cheers, Chris On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Chris, A few quick comments, inline below: Greg On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: Greetings All, Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached). I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG. 1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals. 2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders. Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? 3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal. I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised. I hope this is helpful. Cheers, Thanks, Greg Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<mailto:ceo@auda.org.au> | W: www.auda.org.au<http://www.auda.org.au/> auDA – Australia’s Domain Name Administrator Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email. _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship -- Jordan Carter Chief Executive, InternetNZ +64-21-442-649<tel:%2B64-21-442-649> | jordan@internetnz.net.nz<mailto:jordan@internetnz.net.nz> Sent on the run, apologies for brevity _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship

Hi, good to see that the conversation is moving from the high tips of the bizarre mountains into the (more exciting) valleys where we have the real flowing waters. We all know: a name is a name, but more important is what it stands for. A trust building MRT is a good name and it does fit into the existing (AoC) mechanisms and accepted language with various RTs. And at the same time it allows an additional stumbling step forward by creating something new without risking to create many new concerns. Wolfgang -----Ursprüngliche Nachricht----- Von: cwg-stewardship-bounces@icann.org im Auftrag von Chris Disspain Gesendet: Fr 30.01.2015 08:15 An: Milton L Mueller Cc: cwg-stewardship@icann.org Betreff: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions

Congratulations, Chris - you've reinvented Contract Co.

Thanks Milton. I'm delighted to see you getting on board with the trust concept. Let's start working on the details. Cheers, Chris On 30 Jan 2015, at 16:24 , Milton L Mueller <mueller@syr.edu> wrote:

I agree with what I see as Greg's most important point: the IANA functions are not property. They are services or activities that one party contracts another party to do. I don't quite understand how anyone could define them as property. One might define the DNS root zone as an asset of some kind, but the IANA functions only manage the contents of the root zone file, they do not constitute the root nameserver itself.

The AuDA model does not do away with a new entity (it needs guardians. The guardian starts to look suspiciously like MRT.

Under Chris's model the Guardian/MRT needs to be able to legally require ICANN to give up the IANA functions, or, as he put it in his own words, it has the authority to approve changes to the trust, "it can commence a process for a new Trustee to be appointed in the place of ICANN, that it can commence a process for a new Functions Manager to be appointed in the place of ICANN and so on." That sounds a lot like a contract.

Congratulations, Chris - you've reinvented Contract Co.

From: Greg Shatan [mailto:gregshatanipc@gmail.com] Sent: Thursday, January 29, 2015 12:57 AM To: Chris Disspain Cc: Milton L Mueller; cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions

Both of the following statements are wrong (at least under US law): (1) A trust is always a legal entity. (2) A trust is never a legal entity.

Under US law, there are certain types of trusts (e.g., business trusts) that are legal entities, and other types of trusts that are not, and yet others that may or may not be depending on context and circumstance.

A brief look into Australian law seems to indicate a one-sided approach, where trusts are never legal entities; but that's Australian law. While the US, Australia and UK are all "common law" countries, there are massive areas of divergence that have accrued over the last couple of hundred years, so conclusions cannot be jumped to based on knowledge of one country's laws. We have shelves and shelves (digital or actual) of statutes and restatements and cases that have added to, changed, modified, and swept away the "black letter" law of 18th Century England (you may remember that we fought a war over this and a few other points).

I also have to take issue with the following exchange:

JC: Your model requires definition of what that "property" is.

CD: Yes. As does contract co and in fact any model where ICANN could be obliged to transfer something to someone else under certain circumstances.

At a very simplistic level, a fundamental aspect of a "trust" is that it is a method of holding property (a/k/a the "corpus" or the "res"), while a fundamental aspect of a contract, like the IANA Functions Contract, any outsourcing agreement, license, etc., is that it is a method for one party to grant rights to another. Under the Contract Co. model, Contract Co. has the ability to grant a third party (initially, ICANN) the right to act as the IANA Functions Operator and perform the IANA Functions. At no point would ICANN be obliged to transfer anything to anyone -- instead it would lose the rights granted to it by Contract Co., and Contract Co. would then be free to grant those same rights to a different party. There is no property central to the Contract Co. model; just a "bundle of rights."

Finally, as far as I can tell the concept of a "trust protector" (as the "Guardian" role seems to be described in the US) is "nascent" in US law and practice. Perhaps this is another point of differentiation between US and Australian law and practice.

This doesn't necessarily mean that one model or approach is "better" than another -- I just wanted to provide a counterpoint and corrective to several fairly "black and white" statements that have been made recently in this thread.

However, we can too easily be bogged down in details. In this case, the devil may not be in the details. Instead, I think the issue is at a higher level -- oversight, control and accountability -- and at an even higher level -- trust (not "trusts"...). I think concerns about the trust model arise less from the details and more from a great deal of concern about ICANN being the "rightsholder" in relation to being the IANA Functions Operator, rather than being granted that right by a third-party rightsholder (now, NTIA; potentially in future, Contract Co.) who can "pull" those rights per the contract. These concerns may not abate merely because these rights are being held "in trust" for the beneficiaries (the "community" or some variation). These fundamental concerns relate to both ICANN as the IANA Functions Operator and ICANN generally,

What we need to resolve, if an internal-to-ICANN solution is to fly, is whether there are methods of oversight, accountability and separability that ICANN can and will adopt that will sufficiently alleviate these deeply held concerns. If not, then we need the best available solution where the right to act as IANA Functions Operator is held outside ICANN,

Best,

Greg

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On Wed, Jan 28, 2015 at 11:35 PM, Chris Disspain <ceo@auda.org.au> wrote: Hi Milton,

(Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.)

My apologies. There seems to have been an issue.

The links are:

http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf

and http://en.wikipedia.org/wiki/Trust_law.

This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who "owns" the IANA functions and is able to award them as "trust property" to ICANN or to someone else as the trustee?

There are 2 possibilities re the Settlor (the 'declarer') of the trust . One is NTIA who could pass the function to ICANN as Trustee. The other is that ICANN self-declares that it holds on trust. Either is feasible and can be legally done. Note that it doesn't need to be an individual who declares the trust it needs as to be a legal entity of which an individual is but now type.

As for what is the trust property, as I have responded to Jordan, that is a question that needs to be answered for any model where ICANN could be obliged to transfer something to someone else under certain circumstances or where that something is transferred to contract co by NTIA. Work will need to be done come what may on this. Clearly what comprises the 'IANA function' is sufficiently well defined in the current NTIA contract to satisfy the USG lawyers that a) they have 'property' which could be given to someone else to run and b) they have sufficient legal weight to compel ICANN to transfer it to that someone else.

If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you've created a recursive hall of mirrors in which ICANN is accountable to no one but itself.

Yes, ICANN could self-designate itself as Trustee. Self-declared trusts are very common. Once it does that it changes the ownership structure so that instead of 'owning' the asset, it declares that it owns the 'asset' on trust for 'the community' and in the declaration of trust the terms of that trust are set out. If that were all then, yes, one could argue the point about recursive halls of mirrors BUT that is not all. As part of the declaration of trust a Guardian (Protector) is created (again, not an unusual event in trusts) and the terms of the trust declare what the powers of the Guardian are.

So for example:

1. NTIA transitions the IANA function (the property - to be defined) to ICANN by being the Settlor of a Trust under which ICANN holds the function on trust for the community (to be defined). ICANN is the Trustee and NTIA steps out of the picture.

2. The Deed of Trust under which NTIA settles the IANA function upon ICANN as Trustee contains all of the provisions under which the Trust will operate. Included in those provisions is that the Trust has a Guardian which is a committee of people nominated by the community (along the lines of the MRT perhaps).

3. The powers of the guardian include that changes to the Trust have to be approved by it, that it can commence a process for a new Trustee to be appointed in the place of ICANN, that it can commence a process for a new Functions Manager to be appointed in the place of ICANN and so on.

Hope this helps. As I've said, I think we are now at the stage where we need legal advice for the models we have on the table.

Cheers,

Chris

On 29 Jan 2015, at 14:46 , Milton L Mueller <mueller@syr.edu> wrote:

Chris I think Jordan made a valid point, but phrased it badly. You're still not off the hook. (Let me also point out that neither of the links you provided actually points to anything, at least not from where I am accessing the internet.)

You and Holly are saying that a trust does not necessarily create another entity. Your reasoning is based on this definition: "A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legal obligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)." But this is only true when there is an individual - someone with agency - who holds property. This person designates a trustee to hold the trust property. Who is that individual and what is the property in this case? In other words, who "owns" the IANA functions and is able to award them as "trust property" to ICANN or to someone else as the trustee?

If you tell me it is a committee similar to the MRT, which is independent of ICANN then you have created another entity that must be capable of creating a "LEGAL OBLIGATION to deal with the.trust property for the benefit of the beneficiaries.

If you tell me it is ICANN who a) owns the property, and b) designates itself as the trustee then it looks to me as if you've created a recursive hall of mirrors in which ICANN is accountable to no one but itself.

If you tell me the MRT that owns the trust property is a part of ICANN, again we have ICANN deisngating itself as the trustee; it is unclear how such an entity can create a legal obligation on ICANN without being independent of ICANN.

From: cwg-stewardship-bounces@icann.org [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Chris Disspain Sent: Wednesday, January 28, 2015 9:02 PM To: Jordan Carter Cc: cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Another alternative proposal - addressing some questions

Hi Jordan,

Apologies for taking so long to respond to you on this.

Acknowledging that trusts are not necessarily familiar to all and that any proposal re the transition will be subjected to legal advice, in simple terms, you are incorrect and thus neither your A) nor B) below hold true.

but it does always involve the creation of a legal personality,

No it does not. A trustee must be a legal entity. A TRUST itself is not a legal entity.

Whilst I do not hold wikipedia out as a necessarily reliable source, check out http://wiki.auda.local/index.php.

And whilst the below is a quotation from lawyers in the Australia system (http://www.schweizer.com.au/articles/Trusts_(SK00125466).pdf), the principle regarding trusts holds good in any system based on common law (such as the USA) unless amended by statute which is, of course, why legal advice is required on this and other proposed models.

"A trust is not a separate legal entity. Rather, a trust is a relationship where a person or company (the trustee) is under a legalobligation to deal with property owned by the trust (trust property) for the benefit of some other person or persons (beneficiaries) or for some specific purpose or purposes (objects)."

Cheers,

Chris

On 23 Jan 2015, at 21:56 , Jordan Carter <jordan@internetnz.net.nz> wrote:

Interesting thread.

My knowledge of trust law is not extensive but it does always involve the creation of a legal personality, at least in my jurisdiction (Nz - Anglo common law).

Thus it's difficult to see how the AUDA proposal is internally coherent.

Either

A) the trust is a separate entity owning the right to the Iana functions, as it can then transfer these away from Icann if the guardian (the trustees?) trigger the applicable processes,

Or

B) the trust isn't an entity in which case it isn't a trust - it's just some sort of agreement to do something in a given circumstance.

In the former case many of the issues are the same as contract co. In the latter case, it isn't clear why this is better than a simpler internal solution involving ICANN's bylaws, which would at least be clear.

Decent advice on this would need to be urgently procured if the CWG intends to pursue it.

Either way, the ambition is to concentrate stewardship of the DNS in Icann, which I do not support - I don't believe we should be concentrating power over core Internet infrastructure compared with how this is managed today. I still haven't heard a reasoned argument as to why it's a good idea to do so.

But that point of view is well known and one on which Chris and I do not see eye to eye. :-)

Best Jordan

On Friday, 23 January 2015, Guru Acharya <gurcharya@gmail.com> wrote: As I understand, trusts are generally established between three legal entities: the author, trustee and the beneficiary. Under trust law in my jurisdiction, the person who reposes or declares the confidence is called the "author of the trust"; The person who accepts the confidence is called the "trustee"; the person for whose benefit the confidence is accepted is called the "beneficiary".

<I quote Greg from a previous exchange on the list> Under US law, trusts operate essentially the same way as you describe. The "author" is typically called the "Settlor" or the "Grantor," but the role is the same. Typically, a trust is used for the holding of money or other assets. The Settlor typically donates the assets to the Trust, and the Beneficiary ultimately gets the benefit of these assets. The Trustee (sometimes also called the Administrator) manages the Trust, and has a "fiduciary responsibility" to both the Settler and the Beneficiary (but typically, no responsibility to anyone else). Sometimes, the Trustee legally named in the document will hire a professional "Administrator" to run the trust (this often happens where a family member is the Trustee). </quote>

In the AUDA proposal and from the discussions on this thread, I identify the following entities:

1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA

Please correct me if I'm wrong.

Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust?

Thanks.

On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com> wrote: Thanks, and safe travels.

Greg

Gregory S. Shatan Partner | Abelman Frayne & Schwab 666 Third Avenue | New York, NY 10017-5621 Direct 212-885-9253 | Main 212-949-9022 Fax 212-949-9190 | Cell 917-816-6428 gsshatan@lawabel.com ICANN-related: gregshatanipc@gmail.com www.lawabel.com

On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au> wrote: But really quickly -

Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder.

Cheers,

Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111 | F: +61 3 8341 4112 E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

Please see below.

Greg

On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au> wrote: Hi Greg,

Thanks for your comments. My apologies for mischaracterising contract co as having 'shareholders'. To your other comments and generally:

Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

A trust is not a legal entity. A trustee is a legal entity.

Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov), describing trusts:

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary.

http://www.usa.gov/topics/money/personal-finance/trusts.shtml

Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

It's not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like.

I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not "ICANN". ICANN is performing the IANA naming functions, for the benefit of the "customers" of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create "Contract Co.").

Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below).

The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves).

What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this.

The Trust can be "settled" by the NTIA passing on the "right to perform the IANA naming functions" to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee.

Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above.

The beneficiaries of the trust would be the "customers" of the IANA naming functions - as described in the ICG RF.

The guardian is the "protector" of the beneficiaries. It can't be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries.

All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law.

Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work.

Greg

Cheers,

Chris

On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com> wrote:

Chris,

A few quick comments, inline below:

Greg

On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote: Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co' proposal and auDA's original 'golden by-law' proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn't creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co' is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders.

Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.")

With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community.

It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust?

And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently 'internal to ICANN' approach.

I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US?

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN' approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first 'golden by-law' proposal) achieve and that's what differentiates them from the 'contract co' proposal.

I know I don't need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I'll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Thanks,

Greg

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA - Australia's Domain Name Administrator

Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email.

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From: cwg-stewardship-bounces@icann.org [mailto:cwg-stewardship-bounces@icann.org] On Behalf Of Guru Acharya In the AUDA proposal and from the discussions on this thread, I identify the following entities: 1) Trustee - IANA Functions Operator (IFO) - Presently ICANN 2) Author/settlor/grantor - Guardian - Community - Respresented through a CCWG 3) Beneficiary - Community/customers of IANA Please correct me if I'm wrong. Im curious to know: 1) Will the Guardian be a legal entity?; if not, how is it represented in the trust? 2) Will the Beneficiary also be a legal entity?; if not, how is it represented in the trust? A good contribution, GA. I would add two observations. 1) It would be possible to switch roles 2 and 3; i.e., the customers who populate the registries could be considered the author/settlor/grantor and the “internet community” could be considered the beneficiary. 2) Under the so-called “internal” solution, it seems that ICANN has to be both #1 and #2, which raises doubts in my mind about the compaibility of an internal solution with a trustee model. In other words, “keeping it internal” means that ICANN is basically designating itself as the trustee. Milton L Mueller Laura J. and L. Douglas Meredith Professor Syracuse University School of Information Studies http://faculty.ischool.syr.edu/mueller/ Internet Governance Project http://internetgovernance.org<http://internetgovernance.org/> Thanks. On Fri, Jan 23, 2015 at 11:55 AM, Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Thanks, and safe travels. Greg Gregory S. Shatan Partner | Abelman Frayne & Schwab 666 Third Avenue • New York, NY 10017-5621 Direct 212-885-9253 | Main 212-949-9022 Fax 212-949-9190 | Cell 917-816-6428 gsshatan@lawabel.com<mailto:gsshatan@lawabel.com> ICANN-related: gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com> www.lawabel.com<http://www.lawabel.com/> On Fri, Jan 23, 2015 at 1:24 AM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: But really quickly - Just to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). Not necessarily. That is a matter for the community to discuss and come to consensus on. Certainly the proposal envisages that the Guardian would be multistakeholder. Cheers, Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<mailto:ceo@auda.org.au> | W: www.auda.org.au<http://www.auda.org.au> auDA - Australia's Domain Name Administrator On 23 Jan 2015, at 16:53, Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Chris, Please see below. Greg On Thu, Jan 22, 2015 at 11:52 PM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: Hi Greg, Thanks for your comments. My apologies for mischaracterising contract co as having ‘shareholders’. To your other comments and generally: Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") A trust is not a legal entity. A trustee is a legal entity. Chris: I think there are nuances here that are beyond both of us (hence the need for targeted legal expertise). Here is an excerpt from the US government website (www.usa.gov<http://www.usa.gov>), describing trusts: Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. http://www.usa.gov/topics/money/personal-finance/trusts.shtml Further research reveals apparently contradictory statements regarding the legal and juristic standing of trusts, as well as instances in which trusts are legal entities for certain purposes (e.g., tax) and not others (e.g., standing to sue). I can only conclude that some real expertise in trust law is needed to sort this out. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? Because the trust is not a legal entity, the trustee holds the property for the benefit of the beneficiaries. The asset is the right to run the IANA function and that is what is held by the trustee. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? It’s not an Australina concept however the word may be different. It is used synonymously with protector, appointor, supervisor and the like. I believe this proposal simplifies the contract co proposal, by removing the creating of Contract Co. - the Contract Co. here is not “ICANN”. ICANN is performing the IANA naming functions, for the benefit of the “customers” of the IANA naming functions (who are the stated beneficiaries of the trust, replacing the need to create “Contract Co.”). Justin to confirm, the registries (and not the larger multistakeholder community) are the beneficiaries of the trust. This has some downstream consequences (see below). The Trustee also has higher fiduciary obligations, which require them to always act in the best interests of the beneficiaries (not just for themselves). What if the interests of the beneficiaries (i.e., the registries) diverge from the interests of the multistakeholder community generally or the public interest? Wouldn't that require the Trustee (i.e., ICANN) to act in the registries' interest, even if it is to the detriment of other stakeholders? That seems at odds with the idea of accountability to stakeholders, generally. We would need to find a way to deal with this. The Trust can be “settled” by the NTIA passing on the “right to perform the IANA naming functions” to ICANN as the trustee. So, two parties: NTIA as settlor; ICANN as trustee. Trustee can always unilaterally declare a trust - but this would be a redundant question now in light of explanation above. The beneficiaries of the trust would be the “customers” of the IANA naming functions - as described in the ICG RF. The guardian is the “protector” of the beneficiaries. It can’t be the entire pool of beneficiaries, but it can be someone, or some group of people, who represents the beneficiaries. All of the above is subject to confirmation by the relevant legal experts that this is workable under Californian law. Thanks for the further explanation. It is an interesting proposal, with some issues (as others have as well). I look forward to working through it, getting the necessary legal advice, and seeing if this will work. Greg Cheers, Chris On 23 Jan 2015, at 08:00 , Greg Shatan <gregshatanipc@gmail.com<mailto:gregshatanipc@gmail.com>> wrote: Chris, A few quick comments, inline below: Greg On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au<mailto:ceo@auda.org.au>> wrote: Greetings All, Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached). I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG. 1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals. 2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders. Chris: This is not correct. The proposal was that Contract Co would be a not-for-profit corporation, which don't have shareholders (or any kind of owner). Also, trusts are separate legal entities, so it is similar to Contract Co in that regard (and thus prey to many of the same "complexities.") With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community. It's my understanding that trusts are created to hold property. Shouldn't the Trust (and not the Trustee) own the IANA function? If the Trust doesn't hold the IANA Functions, what assets are held by the Trust? And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach. I'm not familiar with this "guardian" concept (unless it was created uniquely for this proposal). Is this an Australian law concept? Do you know if this is similar to the "trust protector" concept in the US? 3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal. I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised. I hope this is helpful. Cheers, Thanks, Greg Chris Disspain | Chief Executive Officer .au Domain Administration Ltd T: +61 3 8341 4111<tel:%2B61%203%208341%204111> | F: +61 3 8341 4112<tel:%2B61%203%208341%204112> E: ceo@auda.org.au<mailto:ceo@auda.org.au> | W: www.auda.org.au<http://www.auda.org.au/> auDA – Australia’s Domain Name Administrator Important Notice - This email may contain information which is confidential and/or subject to legal privilege, and is intended for the use of the named addressee only. If you are not the intended recipient, you must not use, disclose or copy any part of this email. If you have received this email by mistake, please notify the sender and delete this message immediately. Please consider the environment before printing this email. _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship _______________________________________________ CWG-Stewardship mailing list CWG-Stewardship@icann.org<mailto:CWG-Stewardship@icann.org> https://mm.icann.org/mailman/listinfo/cwg-stewardship

A question for clarification. I'm no lawyer but at one of these bespoke business schools the fella told me one thing that sticks. Trusts are created to hold and conserve property he says. I'm assuming the general meaning of trusts is shared by Massachusetts as California. So now, what is the property that is held? Would that be the [or a] contract? -Carlton ============================== Carlton A Samuels Mobile: 876-818-1799 *Strategy, Planning, Governance, Assessment & Turnaround* ============================= On Thu, Jan 22, 2015 at 3:13 PM, Chris Disspain <ceo@auda.org.au> wrote:

Greetings All,

Earlier today Paul Szyndler from auDA sent to RFP3 another alternative proposal (attached).

I have received a number of questions off list from some ccTLD colleagues and others and thought it might be helpful to address them all in this email to the CWG.

1. Are there legal issues with the Trust solution? I am not an expert in Californian law but as a lawyer I do know a fair bit about trusts and their structure. The proposal is workable in general terms but there may be nuances of Californian law generally, or specifically as it applies to Californian corporations like ICANN, which would make the proposed structure overly complicated or problematic. Like the 'contract co’ proposal and auDA’s original ‘golden by-law’ proposal I expect this to be put to independent legal experts who can advise on the merits of each of the proposals.

2. Isn’t creating a trust just creating 'contract co' by another name? No. My understanding of 'contract co’ is that it would be a separate legal entity owned by some, yet to be identified, group of shareholders. With the trust, ICANN would own the IANA function but declare in a legally binding document that it did so on trust for the relevant stakeholder community. And the Guardian of the Trust (see the proposal for details) would control the process by which ICANN could be replaced as trustee in a defined set of circumstances. This is thus an inherently ‘internal to ICANN’ approach.

3. Why would ICANN be the trustee? In simple terms because auDA believes in an 'internal to ICANN’ approach. We believe that ICANN should run IANA but that there should be the ability to move the IANA function away in certain defined circumstances. That is what this proposal (and our first ‘golden by-law' proposal) achieve and that’s what differentiates them from the ‘contract co’ proposal.

I know I don’t need to say this but for the avoidance of doubt, this is an auDA proposal. I have not discussed it with my fellow ICANN directors

I will not be on the RFP3B call Friday as I’ll be somewhere mid-air between Dubai and Melbourne. However, Paul Szyndler will be on the call and will happily enter into any discussion on the proposal and answer (or undertake to get answers to) any questions that may be raised.

I hope this is helpful.

Cheers,

Chris Disspain | Chief Executive Officer

.au Domain Administration Ltd

T: +61 3 8341 4111 | F: +61 3 8341 4112

E: ceo@auda.org.au | W: www.auda.org.au

auDA – Australia’s Domain Name Administrator

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Sounds good to me Greg. Thanks. Chuck From: Greg Shatan [mailto:gregshatanipc@gmail.com] Sent: Wednesday, January 21, 2015 11:55 AM To: Gomes, Chuck Cc: cwg-stewardship@icann.org Subject: Re: [CWG-Stewardship] Revised Scoping Document for Legal Advice Chuck: Good points. Fresh(er) eyes are always useful. The first item is trying to say: "Currently, ICANN's duties and obligations as the IANA Functions Operator are set forth in the IANA Functions Contract. If there is no Contract, where will these duties and obligations be documented?" This should also deal with the fact that the NTIA's rights and obligations are also in the Contract, and these rights and obligations will also need to be documented somewhere. I'll try to clean this up so it is not so cryptic. The second item is somewhat more nuanced. If we need advice in a totally new area (e.g., libel and defamation), a new "request" would be appropriate. But this document is just meant to set the stage for counsel -- it's not a closed-end set of questions, and I don't want to give the impression that we would need an additional request to ask additional questions in this field. These are not "written interrogatories" -- where we send them 30 questions and they respond with 30 answers; that's not how getting legal advice works (and I'm sure you already know that). I expect that our advice on corporate governance, corporate structuring and not-for-profit corporations law will evolve -- not into uncharted waters, but as a result of the process of discussing our legal needs with outside counsel. It's rare that a client comes to a lawyer with all the right questions -- it's a somewhat iterative process to hone in on the issues that really matter. As a result, we will need an appropriate amount of latitude to get the advice and deliverables we need to complete our work. I'll see if anything needs to be said to clarify these points (but I hate to make this longer than it already is). Greg On Wed, Jan 21, 2015 at 10:20 AM, Gomes, Chuck <cgomes@verisign.com<mailto:cgomes@verisign.com>> wrote: I personally think this is good enough to finalize as is but do have two questions: 1. At the bottom of page 2, what does this mean: “How to maintain documentation of ICANN’s obligations as the IANA Functions Operator?” 2. Should we add a statement that says that additional requests for advice may be added as needed or is this not necessary? Chuck From: cwg-stewardship-bounces@icann.org<mailto:cwg-stewardship-bounces@icann.org> [mailto:cwg-stewardship-bounces@icann.org<mailto:cwg-stewardship-bounces@icann.org>] On Behalf Of Greg Shatan Sent: Wednesday, January 21, 2015 3:36 AM To: cwg-stewardship@icann.org<mailto:cwg-stewardship@icann.org> Subject: [CWG-Stewardship] Revised Scoping Document for Legal Advice All: Attached is a revised "scoping document" for the request for legal advice. We need to finalize this document no later than Thursday's call of the CWG. While we could spend more time working on the document, it is more important to get access to legal counsel than to wordsmith this document. I have also uploaded this as a new Google Doc: https://docs.google.com/document/d/1EUtXShskfHF6DRyVwTnAMG3eQ0DcFMca4Eovrwkc... Please make any suggested changes in the new Google Doc. Greg