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Back off – it is ILLEGAL to make us accountable, claim ICANN lawyers

(Depending on how you read the relevant part of California corporate law)

A row has blown up at global domain-name overseer ICANN, after the group looking into improving the corporation's accountability was told many of its ideas were illegal.

At issue is the power of the board versus the power of ICANN's members – should the board always have the power to overrule its membership?

It's proposed that the community should be able to step in and push through action or changes if there is a consensus, but that idea has met resistance.

Being able to hold ICANN's board to account or keep it honest is vitally important to the United States government and the broader internet, because ICANN is expected to be handed full control of IANA – a technical body that determines how the 'net works and keeps it glued together at the very highest level.

A memo [PDF] prepared by ICANN's long-term lawyers Jones Day dug into the range of measures being considered by an internet community working group on the future of IANA and ICANN – and argued that allowing community control of ICANN in special circumstances is simply not possible under California law. (ICANN is based in Los Angeles, CA.)

It comes down to section 5210 of the corporate code, which states:

Subject to the provisions of this part and any limitations in the articles or bylaws relating to action required to be approved by the members, or by a majority of all members, the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.

ICANN's lawyers are focused on the bit that reads "all corporate powers shall be exercised by or under the direction of the board," whereas those calling for greater community oversight are keen on the part immediately before that.

At a session in Singapore, where ICANN is meeting, the lawyer behind the memo Kevin Espinola was asked by Robin Gross, executive director of IP Justice, how he came to his conclusion.

In his response, Espinola appeared to undermine the assertion repeatedly made in the legal memo that the ICANN board always had to be the ultimate decider of any issues. In fact, Espinola acknowledged that, yes, it was possible for the ICANN community to be given a deciding vote on a specific matter.

"My understanding of that, how I read that is… the old underlying code of law or rule is that the activities of the corporation are under the purview of the Board of Directors unless the code provides that the members have a right to vote on something. And then the board's decision isn't the ultimate determination of that particular matter because the members have the right to vote on that matter as well to approve it," Espinola answered.

In other words, ICANN right now can tweak its bylaws to give the community the very powers they are asking for: things like budget approval, bylaw changes, overturning board decisions, and dismissing board members.

However, the legal memo – pushed by ICANN and taking up a significant part of the working group's meeting earlier today – argues the opposite, saying that the board "may delegate the management of the activities of ICANN" but all activities and affairs still have to be "exercised under the ultimate direction of the board."

That position is stated most bluntly where the memo reads: "California law does not provide for a mechanism that would empower the community, regardless of whether ICANN has members or not, to force the board to take action on a community proposal."

The key part here is "does not provide a mechanism." It could be argued that the law does not itself provide the mechanism since it is not included specifically in the code. However, such a mechanism is likely very possible once it is "provided" by others and approved and added to the corporation's bylaws.

Sorry, I'm just here for the GIFs. Why should I care?

The reason this legalistic and seemingly semantic discussion is so important is due to the fact that ICANN is likely to be given greater control of the critical IANA functions in the next year. IANA oversees the global DNS system, allocates IP addresses, and tries to keep the world's networked software talking in a standardized way. It's crucial behind-the-scenes stuff.

The US Congress passed a resolution last week [PDF] highlighting the importance of making ICANN more accountable before that takeover happened. And the US official in charge of the transition, Assistant Commerce Secretary Larry Strickling, has also highlighted the fact that he will not allow the move to happen until new accountability measures are put in place.

For more than a decade, ICANN has been repeatedly criticized for its failure to be properly accountable for its decisions. But despite no less than seven reviews into that accountability and repeated recommendations that the organization's staff and board be subject to more oversight, the organization has so far resisted efforts to make much more than cosmetic changes.

Last chance

The IANA transition process is seen by many as the last good chance to force the organization to make itself properly accountable for its decisions.

In recognition of that, the working group looking into making changes has created a separate sub-group focused solely on getting independent, external legal advice on what is and is not possible under California law. It expects to have selected the law firm by the end of the month and have responses to its questions sometime in March.

However, in the circular world that ICANN continues to inhabit, the ICANN board would have to go against its own lawyers' advice in order to approve measures that would reduce its own power. That is an approach that not a single board member has spoken in favor of so far, and which the chairman and CEO have actively dismissed. ®

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