[At-Large] CCWG Briefings - Presentation

Karl Auerbach karl at cavebear.com
Thu Feb 25 08:54:20 UTC 2016

Thanks for the effort putting those materials together.

I say however, with my California lawyer hat on, that I wonder whether 
this entire proposal might have a great deal of trouble fitting into the 
requirements that are imposed by the California Corporations Code and by 
the US Federal tax code.

Indeed, were I corporate counsel I'd be fighting this tooth and nail.  
I'd do so because I sense that these proposals could allow the 
corporation of ICANN to fail as a legal entity or to forfeit ICANN's tax 
exempt status.

This proposed structure not only appears as, but is actually being 
advocated as, a way to bypass the obligations that are imposed by law, 
such as the duties. responsibilities, and powers of a board of directors 
and a rather transparent attempt to evade the membership aspects of 
California public benefit, non-profit corporations.

As a California lawyer I am rather surprised that all of this machinery 
is being invented to avoid what are the perfectly reasonable, practical, 
and widely used membership provisions of the California Corporations Code.

These proposals essentially wrap ICANN in just another level of 
corporate-like structure without the word "corporation".   But that 
wrapping structure appears to lack the most basic characteristics that 
come via a legal form of organization (such as corporation, partnership, 
sole proprietorship).  These characteristics include clear authority for 
making decisions, clear standards of responsibility in the making of 
those decisions, full access to information needed to make those 
decisions, methods to resolve disputes, and clear responsibility for 
debts and harms.  The lack of these characteristics is an invitation to 
long and expensive litigation - in which the winner will not be the 
public but, rather, he who has the deepest pockets.

And were I still a director of ICANN I'd be fighting this tooth and nail 
because it would make me subject to two masters - and it has been 
written that no man can serve two masters.

One master would be the fiduciary obligations to protect the interests 
of the corporation (the measure of which for public-benefit corporations 
such as ICANN must incorporate an evaluation of the effect on the public 

The other master would be this new outer shell that has marionette-like 
strings that reach into and sometimes supersede the decisions of the 
board and its members.

Corporations crumble and are penetrated every day for failures to adhere 
to proper formalities regarding the making of decisions, responsibility 
for those decisions (or lack of decisions), ownership of property, and 

A lot of people resent US law or California law.  But California law is 
far from unique or special.  California law is similar to organizational 
laws found in many places.  And those laws are based on literally 
centuries of real-world experience dealing with the cauldrons of 
competing interests that are found in organizations everywhere.

These proposals seem to me to be amateur law making, lacking the 
practical experience that has gone into the actual laws of corporations, 
including the membership aspects that ICANN has long evaded and that 
these proposals attempt to re-invent, but do so inexpertly.

ICANN is badly in need of repair - and has been for a long time.  If you 
take a look at what we (the Boston Working Group) proposed back in 1998 
- http://cavebear.com/bwg/  - you will find many familiar ideas about 
how to better write ICANN's organic documents.  And I know, perhaps 
better than any other person, how much ICANN resists accountability and 

But that repair should be an actual repair, with hard, legally 
enforceable duties and responsibilities.  It should not be an ad hoc 
invention that resembles to this lawyer's eyes, a collection of utopian 
hopes that are not likely to withstand any serious encounter with the 
real-life practicalities of law, economics, or politics.


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