ICANN - Improving Inst Confidence

8/8/2019 ICANN - Improving Inst Confidence

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DRAFT

ImplementationPlanforImproving

InstitutionalConfidence

26February2009

STATUS:DRAFTFORPUBLICCONSULTATION


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TableofContents

TableofContents ........................................................................................................ 2

1 INTRODUCTION ..................................................................................................... 3

2 RECOMMENDATIONS ............................................................................................ 5

3 BACKGROUND ..................................................................................................... 10

4 PROCESS .............................................................................................................. 14

5 FINDINGSANDRECOMMENDATIONS .................................................................. 161. SafeguardingAgainstCapture..................................................................................................................19

2. AccountabilitytotheMultiStakeholderCommunity .......................................................................23

3. MeetingtheNeedsoftheGlobalInternetCommunityoftheFuture(Internationalization)

284. FinancialandOperationalSecurity.........................................................................................................30

5. SecurityandStabilityoftheInternetsUniqueIdentifiers..............................................................32

6. TheRoleofGovernments ............................................................................................................................33

APPENDIX1 PUBLICINPUTONIMPROVINGINSTITUTIONALCONFIDENCE.............. 351stpubliccommentsperiod:16June31July2008 ....................................................................................35

2ndpubliccommentsperiod:19September20October2008BOX&SHRINK ..............................36

APPENDIX2 INTERNATIONALIZATIONOFICANNMEETINGTHENEEDSOFTHE

GLOBALINTERNETCOMMUNITYOFTHEFUTURE...................................................... 37InputpaperconsideredbythePSCincomingtoitsrecommendations..............................................37

EXECUTIVESUMMARY.................................................................................................. i

STAFFRECOMMENDATION.......................................................................................... ii

DETAILEDANALYSIS..................................................................................................... iiDemonstrationsoftheCurrentIssuesandLimitationsonICANNsOperations. ................................. iii

USSanctionsLaws....................................................................................................................................................iii

ImmigrationandEmployment/HumanResourceChallenges ................................... ........................... iv

LackofRecognitionofUS-BasedNot-for-ProfitOrganizationstoFunctionasTruly

InternationalOrganizations..................................................................................................................................v

ImpedimentstoICANNsContractingAbilities. ..................................... ........................................ .............. vi

SummaryofPSCsProcesstoDate ..................................................................................................................... vii

ReviewofICANNsCurrentFunctions.............................................................................................................vii Summaryoflegalresearchpresented ................................... ........................................ ....................................x

SummaryofPotentialOrganizationalandLegalHurdlesRequiringResearchPriorto

CreatingAdditionalEntity..................................................................................................................................xiii

ProposedPSCRecommendations ...............................................................................xv


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1 INTRODUCTION

ThePresidentsStrategyCommittee(PSC)presentsthisdraftImplementationPlanforImproving

InstitutionalConfidencetotheglobalInternetcommunityforinformationanddiscussion.The

PSCsroleistogiveadvicetothePresidentandtheBoardonstrategicissuesfacingICANN.Since

2006,thePSCsfocushasbeenonICANNslegalstatusandidentity,aswellasitsregional

presence.Followingextensiveresearch,analysis,deliberationandconsultationwiththeglobal

Internetcommunityoverthepastthreeyears,thePSChasproducedaproposedsetoftwenty

fourdetailedrecommendations.

ThegoaloftheserecommendationsistomaintainandstrengthenICANNastheparticipatory,

multistakeholderbodyresponsibleforcoordinatingtheglobalInternetssystemsofunique

identifiersandensuringthestableandsecureoperationoftheInternetsuniqueidentifier

systems.Therecommendationsaddressseveralkeyareas:

I. ICANNhastobesafeguardedagainstcapture.

II. ICANNhastobeaccountableandresponsivetoitsmultistakeholdercommunities.

III. ICANNhastomeettheneedsoftheglobalInternetcommunityofthefuture.

IV. ICANNhastobeafinanciallyandoperationallysecureorganization.

V. ICANNhastomaintainitsfocusonensuringsafeandstableoperationsrelatingto

theuniqueidentifiersoftheInternet.

TheInternetcommunityrespondedclearlyandcomprehensivelytorecentlypublisheddraft

recommendations.ManyprovidingcommentsonpreviousPSCdocuments(theTransition

ActionPlanandImprovingInstitutionalConfidence)askedformoreinformationaboutthekey

issuesofaccountabilityandinternationalization,andpreciselyhowthePSCrecommendsthose

issuesbeaddressed.ThePSCthanksallwhorespondedfortheirconsideredandhelpful

comments.

Wehopethisdocumentwilladdressmanyconcernsandquestions,andsetoutaclearsetof

tasksthatmustbeaccomplishedforICANNtomaintainandstrengthenitsuniquemulti

stakeholdergovernancestructure.Moredetailedinformationaboutaproposedimplementation

timelinefortheserecommendationswillbepublishedinduecourse.ThisdraftImplementation

PlanisfollowedbyanappendixwithlegalanalysisthatwasusedbythePSCinitsdeliberations.

Weinviteyoutoconsiderourrecommendationsandtheresearchandanalysistheyarebased


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on,provideyourinputpublicly,andcontinuetoengageinconstructivediscussionswiththerest

oftheglobalInternetcommunity.

Themostuptodatedocumentsandinformationaboutthisprocesswillcontinuetobe

publishedathttp://www.icann.org/en/jpa/iic/index.htm .


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2 RECOMMENDATIONSThePresidentsStrategyCommitteerecommendationsalignwithfivethematicconcernsraised

duringvariouspublicconsultations.Thissectionsummarizesthebasicrecommendations.For

contextandexplanation,pleaserefertoSection4ofthisdocument, Findingsand

Recommendations.

Pleasenotethatthenumberingofrecommendationsbelowcorrespondstoparagraph

numberinginsection4ofthisdocument,sorecommendationnumbersarenotallcontiguous.

I ICANNhastobesafeguardedagainstcapture.

RECOMMENDATION1.1:Safeguardsmustaddressalltypesofcapture.

RECOMMENDATION1.6:StrengthenparticipationintheGovernmentalAdvisoryCommitteeto

avoidcapture.

1.6.1 ProvidesimultaneousinterpretationinofficialUNlanguagesasneededforGACmeetings

1.6.2 HoldascheduledmeetingorworkshopoftheBoardatleastonceayearinacitywhereallormostgovernmentshaverepresentation,e.g.NewYorkorGeneva.

1.6.3 ProvideatravelsupportprogrammeforaGACrepresentativefromeachoftheUnitedNationslistof50LeastDevelopedCountries(LDCs).

1

RECOMMENDATION1.10:Maintainpresencesinjurisdictionswithstrongantitrustand

competitionlaw.

1.10.3 RetainICANNsheadquartersintheUnitedStatestoensurecertaintyaboutICANNs

registry,registrarandIANAcontractsandotherstakeholderagreementsand

frameworks.

RECOMMENDATION1.13:Maintainandstrengthentransparencyintheconstituentpartsof

ICANN.

1.13.1 RequirestatementsonconflictofinterestfromallmembersoftheAdvisory

Committees,SupportingOrganizationsandNominatingCommittee.

1.13.2 DevelopclearguidanceforSupportingOrganizations,AdvisoryCommitteesand

1UNOfficeoftheHighRepresentativeforLeastDevelopedCountries,LandlockedDevelopingCountriesandSmall

IslandDevelopingStates:ListofLeastDevelopedCountries:http://www.un.org/specialrep/ohrlls/ldc/list.htm


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theNominatingCommitteeondisclosingandhandlingconflicts.

1.13.3 EnhanceexistingconflictandotherrulesfortheNominatingCommitteeinorder

toensuretheappointmentofindependentdirectors.

1.13.4 CreateaframeworkwhichallowscrossparticipationinSupporting

Organizations,AdvisoryCommitteesand/orconstituencies,butwhichprohibits

andconsiderssanctionsforvotingbythesameindividualororganizationin

morethanoneICANNentity.

RECOMMENDATION1.14:Safeguardagainstcapturebyinappropriateorinadequatestaff

conduct.

1.14.1 Reviewandenhancetheprofessionalcodeofconductforthestafftohighlight

theirobligationsofindependence,impartialityandsupportforthecommunity.

II ICANNhastobeaccountableandresponsivetoitsmultistakeholder

communities.

RECOMMENDATION2.2:EnsuredueconsiderationofGACsadviceonmattersofpublicpolicy.

2.2.1 ICANNandtheGACshallsetupajointmechanismtoreviewperformanceofthe

ICANNBoardsAffirmationofResponsibilities,paragraph7,AnnexAtotheJoint

Project Agreement with the US Dept. of Commerce: Role of Governments:

ICANNshallworkwiththeGovernmentAdvisoryCommitteeMemberstoreview

theGACs rolewithin ICANN soas to facilitate effectiveconsiderationofGAC

adviceonthepublicpolicyaspectsofthetechnicalcoordinationoftheInternet.

RECOMMENDATION2.4

2.4.1 ICANNshallenhanceitspublicconsultationprocess,includingstrengtheningthestepsof

providingdetailedanalysisofallcommentsreceived,acknowledging,synthesizing,and

implementingthemindecisionmakingasappropriate,andexplainingthedecision.

2.4.2 Formally declared advice or statements of principles by the GAC shall be formally

respondedtoandmadepubliclyavailable.

2.4.3 TheGACshouldworkthroughaprocesstodeterminewhatconstitutesformaladviceto


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theBoardofDirectors(asreferencedinArticle11,section2,paragraph1(j)oftheICANN

Bylaws: The Governmental Advisory Committee may put issues to the Board directly,

eitherbywayofcommentorprioradvice,orbywayofspecificallyrecommendingaction

ornewpolicydevelopmentorrevisiontoexistingpolicies.1).

RECOMMENDATION2.5:Makeconsultationdocumentseasilyaccessibleandunderstandable.

2.5.1 Executivesummariesshallbeattachedtoallsubstantivedocuments.

2.5.2 Standardized formatting and timelines shall be used for dealing with all

publisheddocuments.

RECOMMENDATION2.7:Seekadvicefromacommitteeofindependentexpertsonthe

restructuringofthereviewmechanismstoprovideasetofmechanismsthatwillprovidefor

improvedaccountabilityinrelationtoindividualrightsandhavingregardtothetwoproposed

furthermechanismsinRECOMMENDATIONS2.8and2.9 immediatelybelow.

RECOMMENDATION2.8:Establishanadditionalmechanismforthecommunitytorequirethe

BoardtoreexamineaBoarddecision,invokedbyatwothirdsmajorityvoteoftwothirdsofthe

CouncilsofalltheSupportingOrganizationsandtwothirdsofmembersofalltheAdvisory

Committees.FortheGovernmentalAdvisoryCommittee,aconsensusstatementfromallthe

memberspresentataphysicalmeetingshallsuffice.

RECOMMENDATION2.9:Establishanextraordinarymechanismforthecommunitytoremove

andreplacetheBoardinspecialcircumstances.

III ICANNhastomeettheneedsoftheglobalInternetcommunityofthefuture.

RECOMMENDATION3.3:Produceareviewoftranslationandinterpretationpoliciesand

expendituretoassesstheneedforfurtherimprovements.

RECOMMENDATION3.4:Continuetoimproveparticipationbyextendingoutreachsothatall

relevantstakeholdersaroundtheworldareabletointeractwithICANN,includingby

establishingICANNspresenceinadditionaljurisdictions.Priorityshouldbegivento

presence/officeestablishmentinsouth,centralandnorthernAsiaandinAfrica.

RECOMMENDATION3.6:MaintainICANNscurrentheadquartersandoperationalpresencein

California,regardlessofanychangeinitscorporateorganizationalstructure.


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RECOMMENDATION3.9:Forthepurposesofinformationgathering,ICANNshallholdinitial

discussionswithauthoritiesinselectedjurisdictionsthatrecognizeinternationalnotforprofit

organizationstatustodeterminewhethersuchjurisdictionswouldofferastatusthatwould

confertheadvantagesdescribedbelow( Section4:FindingsandRecommendations,paragraph

3.8).OnlyaftersuchfactgatheringwascompletedshouldICANNconsiderestablishingan

additionalsubsidiarylegalpresenceasaninternationalnongovernmentalentitywhose

corporateheadquartersremainintheUnitedStates.Anyproposalwouldbesubjecttofull

publicconsultation.

IV ICANNhastobeafinanciallyandoperationallysecureorganization.

RECOMMENDATION4.3:Maintainandenhancedetailed,resultsbasedandtransparent

planningandreportingprocesses.

4.3.1 Continuetoimplementbestfinancialpractices,includingoffinancialdisclosure

tothecommunity.

4.3.2 Ensurefinancialmaterialsaredisclosedinatimelywayandwithsufficient

explanationtopermitfullcomprehension.

RECOMMENDATION4.6:GiveconsiderationtohowtomanageICANNsfuturerevenuegrowth

inlinewithICANNsnotforprofitstatusanditscoremissionandmandate.

4.6.1 Includeapublicdiscussionandcommentperiodonanysurplusaspartofthe

FY10draftOperatingPlanandBudgetconsultations.

4.6.2 ICANNshouldconsultthecommunityonsourcesofrevenue,recognising

ICANNscoremission,sothatitisnottooreliantononesectorofthe

community.

V ICANNhastomaintainitsfocusonensuringsafeandstableoperationsrelating

totheuniqueidentifiersoftheInternet

RECOMMENDATION5.3:ICANNshouldbeadiscussionleaderandraiseawarenessofissues

linkedtostabilityandsecurityoftheInternet.

5.3.1 ICANNshouldfurtherdefineandstrengthenitsroleinrelationtosecurityand

stabilityoftheuniqueidentifiersandtheirimpactontheInternet.


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5.3.2 ICANNsstrategicandoperationalplanningshouldinvolvetheorganizationin

interactionwithkeyorganizationsresponsibleforsecurityrelatedprotocolsand

standards.

RECOMMENDATION5.7:ICANNshallpursueoperationalefficiencymeasuresundertheIANA

procurementagreementwiththeUnitedStatesDepartmentofCommerce.


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3 BACKGROUND

ThePresidentsStrategyCommittee(PSC)wasformedinDecember2005,followingaresolution

bytheBoard:

Whereas,ICANNsmissionistocoordinate,attheoveralllevel,theglobalInternets

systemsofuniqueidentifiers,andinparticulartoensurethestableandsecureoperation

oftheInternetsuniqueidentifiersystems.

Whereas,thePresidentandBoardarecommittedtothebottomupstrategicand

operationalplanningdrawingontheinputsofthesupportingorganizations,advisory

committees,andmembersoftheICANNcommunity.

Whereas,theICANNcommunitycouldalsobenefitfromtheadviceofagroup

responsibleformakingobservationsandrecommendationsconcerningstrategicissues

facingICANN;theseobservationsandrecommendationswillcontributetoICANNs

strategicplanningprocess.

Resolved,thePresidentisdirectedtoappoint,by28February2006,aPresidents

StrategyCommittee,toberesponsibleforgivingadvicetothePresidentandtheBoard

onstrategyissues.2

Followingdiscussion,theBoardadoptedtheresolution150.

ThePSCcurrentlycomprisesthefollowingmembers:

PeterDengateThrush(cochair),ChairmanoftheICANNBoardofDirectors PaulTwomey(cochair),President/CEOofICANN RaimundoBeca,partneratImaginaccin,aChileanconsultingcompany,formerlyCROof

TelefnicaCTCChile

MarilynCade,CEOatICTStrategies,mCADEllc,Chair,GPPCatInformationTechnologyAssociationofAmerica,SG3rapporteuronIPTelephonyatInternational

TelecommunicationsUnion,formerlyVicePresident,InternetandInternetGovernance,

AT&T

PierreDandjinou,Benin,PolicyAdvisor,ICTD,UnitedNationsDevelopmentProgramme

YrjLnsipuro,ICTandInformationSocietyPolicyCoordinatorandGACrepresentativeoftheMinistryforForeignAffairsofFinland

JeanJacquesSubrenat,currentlyChairmanoftheAdvisoryBoardofInstitutPierreWernerinLuxembourg,andformerlyAmbassadorintheFrenchdiplomaticservice.

ThePSCsmembershavepreviouslyincluded:

2http://www.icann.org/en/minutes/minutes04dec05.htm#psc


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Dr.VintCerf,VicePresidentandChiefInternetEvangelist,Google SteveGoldstein,formerlyoftheNationalScienceFoundation,UnitedStates AmbassadorJanisKarklins,Latvia

AdamaSamasskou,PresidentoftheAfricanAcademyofLanguages,formerlyMinisterofEducation,Maliandgovernmentspokesman,Mali.

ArtCoviello,ExecutiveVicePresident,EMCCorporationandPresident,RSA CarlBildt,formerlyPrimeMinisterofSweden,currentlyMinisterofForeignAffairs,Sweden ThomasNiles,PresidentoftheUnitedStatesCouncilforInternationalBusinessThePSCsroleistogiveadvicetothePresidentandtheBoardonstrategicissuesfacingICANN.

Since2006,thePSCsfocushasbeenonICANNslegalstatusandidentity,andregional

presence.Ithaspreparedreportsandrecommendationsthathavebeenpresentedtothewider

communityatICANNsinternationalpublicmeetings.

Sinceitsinceptionin2006,thePSChasplayedanimportantroleinICANNsstrategicplanning

process.ThePSChasnowbeencarryingoutresearchandanalysis,consultingthecommunity

anddevelopingrecommendationsonthecentralissuesofthecurrentdocumentforthreeyears.

ThePSChasmetfrequentlyandpreparednumerousreportsandrecommendationswhichwere

presentedtothewidercommunityatICANNsinternationalpublicmeetings.ThePSChasalso

heldseveralonlineconsultationsfocusingon:

ICANNslegalstatusandidentity Theorganizationsregionalpresenceandinternationalization Rootzonemanagementandtransparency Contingencyplanning Contributiontocapacitydevelopment ParticipationandtheroleofstakeholdersInearly2006,thePSCconsideredandpublishedanalysisonthequestionofinternationalprivate

organizations3,developedbyUnderSecretaryGeneralforLegalAffairsandaformerLegal

CounseloftheUnitedNations,AmbassadorHansCorell.DuringtheICANNmeetingin

3EducationalMaterialtoAssistICANNinDecidingWhatStatusTheCorporation

ShouldAimforasAPrivateInternationalEntityinItsHostCountry,http://www.icann.org/en/psc/corell

24aug06.html


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MarrakechinJune2006,thePSCbeganpublicconsultationsonquestionsincludinghowthe

ICANNmodelcouldbestrengthenedinthecontextoftheevolutionandgrowthoftheInternet.4

DuringtheICANNmeetinginSoPaulo,December2006,thePSCpresenteditsDraftReport5

andrecommendationstothecommunityforconsiderationanddiscussion.

6

ThePSCpresenteditsFinalReport7inMarch2007.Thereportincludedrecommendationson

ICANNsstatusandcontinuedimprovedresponsivenesstoanevolvingglobalenvironment,

capacitydevelopmentandparticipationandroleofstakeholders.TheFinalReportwas

discussedatapublicworkshop8duringICANNsLisbonmeetinginMarch2007.Priortothe

workshop,anonlineconsultation9washeld.ThePSCpresenteditsFinalReporttotheBoard,

whichacceptedthereportandaskedthePSCto providefurtherdetailonaspectsarisingfrom

therecommendationsandconductinconsultationwiththecommunityanevaluationand

analysisoftheirimplementationandrelatedimplications.10

ThePSCpublisheditsUpdatetotheFinalReport11aheadoftheICANNmeetinginLosAngeles,

November2007.TheupdatedreportwassummarizedbyPaulTwomeyduringthePublicForum

atthatmeeting.12

InICANNssubmissiontotheMidtermReviewbytheNationalTelecommunicationsand

InformationAdministrationinFebruary2008oftheJointProjectAgreementbetweenICANN

andtheUnitedStatesgovernment,ICANNschairman,PeterDengateThrush,identifiedthePSC

asthegrouptofacilitatediscussionswiththecommunityaboutissuesraisedregardingICANNs

transitiontotheprivatesector.ThePSCwasaskedtooutlineaplanfordevelopingsucha

transitionframework.

4JuneJuly2006consultationdocumentsanddetails,andfulltranscriptandaudiorecordingspublishedat

http://www.icann.org/en/announcements/pscconsultationen.htm5DraftReportofthePresidentsStrategyCommittee,http://www.icann.org/psc/pscdraft29nov06.pdf

6Fulltranscriptof4December2006publicdiscussions:http://www.icann.org/meetings/saopaulo/captioning

icannpublicforumpt104dec06.htm

7FinalReportofthePresidentsStrategyCommittee:http://www.icann.org/psc/pscreportfinal25mar07.pdf

8March2007workshoptranscript:http://www.icann.org/psc/psctranscript19mar07.html,audiorecording:

http://media1.icann.org/ramgen/2007/psc/pscmeeting031907.rm 9Onlineconsultation,commentsreceivedfromJuly2006toMarch2007:http://forum.icann.org/lists/psc/

1030March2007,adoptedresolutionsoftheICANNBoardofDirectors:

http://www.icann.org/en/minutes/resolutions30mar07.htm#_Toc36876527 11UpdatetotheFinalReportofthePresidentsStrategyCommittee,http://www.icann.org/psc/report2007.pdf

12Publicforumtranscript,November2007:http://losangeles2007.icann.org/files/losangeles/LAPublicForum2

1NOV07.txt


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ThisdocumentrepresentstheoutcomeofthePSCsworkthrough2008.ItisthePSCsproposed

frameworkforthecontinuationofICANNsworkfollowingtheconclusionoftheJointProject

Agreement.


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4 PROCESSThePSChasundertakenresearchonvariousoptions,conductedcommunityconsultations,

publishedperiodicreports,andtakenspecialistadviceonthestepsnecessaryforICANNto

continuetofulfillitsmandateattheexpiryoftheJPA.

PriortotheJune2008ICANNmeetinginParis,thePSCproducedthreedocumentsfor

discussionaspartofapublicconsultationtitledImprovingInstitutionalConfidenceinICANN:

ImprovingInstitutionalConfidence(settingouttherequirementsofapostJPAICANN) TransitionActionPlan(stepsneededtoconsultthecommunityandthenimplementthe

plan)

FrequentlyAskedQuestions13Thesedocumentsaskedforpublicinputonfivekeyobjectives:







TheseobjectiveswereidentifiedbythePSCfollowinganalysisofthemainareasofinterestor

concernraisedbythoserespondingtotheNationalTelecommunicationsandInformation

AdministrationsmidtermreviewoftheJointProjectAgreementinFebruary200814.Inputon

theroleofgovernmentsandICANN(i.e.theroleoftheGovernmentalAdvisoryCommittee)was

alsosoughtintheImprovingInstitutionalConfidenceconsultations.

ThePSCthensetaboutadefinedprocessofconsultationonthesedocuments.Thishasalready

includedtwoonlineconsultationsandaseriesoffacetofaceconsultativemeetingsaroundthe

world,fromJunetoDecember2008.

13http://www.icann.org/en/jpa/iic/parissummary.htm

14http://www.ntia.doc.gov/ntiahome/domainname/jpamidtermreview.html


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PublicConsultationMeetingsonImprovingInstitutionalConfidence

ICANNmeeting,Paris,June2008

Uruguay,LACNICmeeting,August2008

Christchurch,NewZealand,APNIC

meeting,August2008

Geneva,IGFpreparatorymeeting,

September2008

Paris,HighLevelGrouponInternet

Governance(EuropeanCommissionand

memberstates),September2008

WashingtonD.C.ICANNconsultation

meeting,NationalPressCenter,1st

October2008

ICANNmeeting,Cairo,November2008

LeagueofArabStates,Cairo,November

2008

Hyderabad,India,IGFmeeting,

December2008

OnlineConsultationsonImprovingInstitutionalConfidence

Firstpubliccommentperiod:16June31July2008

15

22responseswerereceivedfromarangeofindividualsandorganizations.

Summaryandanalysisofcommentsavailablehere:http://www.icann.org/en/jpa/iic/first

commentperiodsummary.htm

Secondpubliccommentsperiod:19September20October200816.

14responseswerereceivedfromarangeofindividualsandorganizations.

Summaryandanalysisofcommentsavailablehere:

http://www.icann.org/en/jpa/iic/secondcommentperiodsummary.htm

SeeAppendix1forfulllistsofcommenters.

15Summaryandanalysisofcommentsavailablehere:http://www.icann.org/en/jpa/iic/firstcommentperiod

summary.htm16Summaryandanalysisofcommentsavailablehere:http://comment.icann.org/.ee7bca7;

http://comment.icann.org/.ee7bace;http://comment.icann.org/.ee7bbd1;and

http://comment.icann.org/?14@@.ee7bbd2/1.


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5 FINDINGSANDRECOMMENDATIONS0.1 Tenyearsafteritsfounding,ICANNiswidelyrecognizedasfulfillingitsoriginalmission

tocoordinate,attheoveralllevel,theglobalInternetssystemsofuniqueidentifiers.ICANNhas

reachedthispositionthankstothecontinuousparticipationofthestakeholdercommunities

thathaveconsistentlysupportedICANNinachievingthedevelopmentgoalssetoutinvarious

versionsofaMemorandumofUnderstanding(MoU)17withtheUSGovernmentfrom1998until

2006,andintheJointProjectAgreement(JPA)sincethen.

0.2 ThePSCwasformedinDecember2005,followingaresolution18bytheBoardatICANNs

internationalpublicmeetinginVancouver.TheICANNcommunity,itwasnoted,couldbenefit

fromtheadviceofagroupresponsibleformakingobservationsandrecommendations

concerningstrategicissuesfacingICANN19.

0.3 TheJPAMidTermreviewprocess20inFebruary2008furtherdemonstratedthat,byand

large,theInternetcommunityrecognizesthatthegoalsoftheMoUsandtheJPAhadbeen

largelymet,andsupportsICANNasthemultistakeholder,privatesectorled21organization

responsiblefortheglobalcoordinationoftheInternetsuniqueidentifiersystems.TheJPAMid

TermreviewprocessalsoidentifiedtheremainingstepsnecessarytobeinitiatedbyICANN,

beforetheJPAexpiresinSeptember2009.

0.4 DuringtheJPAMidtermReview,thePSCwasidentified

22

byICANNschairmanasthegrouptofacilitatediscussionswiththecommunityaboutissuesraisedwithrespecttoICANN

completingtheorganizationalstepsnecessaryforconcludingtheJPA.ThePSCwasaskedto

outlineaplanfordevelopingsuchatransitionframework.

17SeeacompletelistofallversionsoftheMoUandtheJPAundertheheadingMemorandumof

Understanding/JointProjectAgreementwithU.S.DepartmentofCommerceat

http://www.icann.org/en/general/agreements.htm18http://www.icann.org/en/minutes/minutes04dec05.htm#psc

19Beforeits2008/2009workfocusedonImprovingInstitutionalConfidence,thePSChadproducedthreedocuments:

aDraftReportduringICANNsSoPaulomeeting(Dec06)http://www.icann.org/psc/pscdraft29nov06.pdf,aFinal

ReportandrecommendationsvotedonbyBoardatICANNsLisbonmeeting(Mar07)http://www.icann.org/psc/psc

reportfinal25mar07.pdf,andanUpdateonFinalReportreleasedattheLosAngelesmeeting(Nov07)

http://www.icann.org/psc/report2007.pdf.20Summaryofreviewprocess,see:http://www.icann.org/jpa/index.htm#submission

21SincetheinceptionofICANN,privatesectorled,asdistinctfrompublicsectorled,meansthatICANNisnotled

bygovernmentsortheirpublicauthorities,norbyaninternationaltreatyorganization22AddressbyICANNChairmantoPublicMeetingontheMidtermReviewoftheJPA:

http://www.icann.org/en/jpa/chairmanaddress.html


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0.5 FromearlierconsultationsbythePSCandtheresponsestothemidtermreviewofthe

JointProjectAgreement(JPA)betweentheUnitedStatesDepartmentofCommerce(National

TelecommunicationsandInformationAdministration)andICANN23,thePSCidentifiedthekey

areasofconcernraisedintheglobalInternetcommunity.Whilesuggestingpossiblemeasuresto

addresstheseareas,thePSChasalsoaskedmembersoftheglobalInternetcommunityfortheir

adviceduringaseriesofconsultations,bothonlineandatmeetingsinvariouspartsofthe

world.ThePSCisverygratefulfortheglobalcommunityinputuponwhichithasbeenableto

draw.

0.6 ThispaperoutlinesthekeyareasandrecommendstotheICANNBoardaplanto

addressthem.ThispaperhasbeenpreparedonthebasisofpreviousversionsoftheTransition

ActionPlanandImprovingInstitutionalConfidencedocuments24,andusingthepubliccomments

received.

0.7 ICANNshallcontinuetobethesecure,globalcoordinatoroftheInternetsunique

identifiersystem.Itshallcontinuetooperateasamultistakeholderorganization,inwhichthe

privatesector25playsaleadershiprole,withinformedparticipationbyawideanddiverse

stakeholdercommunityincludinggovernmentsprovidingsupportandadvice.Thiswillallowthe

Internettoexpanditsreachandscope,ultimatelytoserveallthepeopleoftheworld.

0.8 OftheconcernsraisedbyrespondentsintheMidtermReviewprocessconductedbythe

NationalTelecommunicationsandInformationAdministration,andduringICANNs

consultationsonImprovingInstitutionalConfidence,thefollowingprinciplesaredirectlyrelated

totheprospectofICANNstransition:







23NoticeofInquirypublishedathttp://www.ntia.doc.gov/ntiahome/domainname/jpamidtermreview.html

24http://www.icann.org/en/jpa/iic/

25SincetheinceptionofICANN,privatesectorled,asdistinctfrompublicsectorledmeansthatICANNisnotled

bygovernmentsortheirpublicauthorities,norbyaninternationaltreatyorganization.


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0.9 ThepublicresponsessuggestedICANNcontinuetomakeprogressinseveraloperational

areas,includingincreasingaccountabilityandtransparency,strengtheningcontractual

compliance,encouragingcompetitionandstreamliningpolicyprocesses.

0.10 ThePSCalsorecognizestheveryclearmessagethatICANNneedstostrengthenitsrelationshipswithallcommunitiesandconstituenciesthattenyearsagowerestillgrowingin

theirdependenceontheInternet.Thisappliesespeciallytothebusinesscommunitywithits

growingrelianceontheInternetasanoperatingsystemandaneconomicdriver,butalsoto

noncommercialInternetusersatlarge .

0.11 Theseissuescanbeimprovedimmediatelythroughbetteroutreach,bothatICANN

meetingsandoutsidethem.AlongtermsolutioncanbefoundintheimprovementofICANNs

participationmechanismsasawholesothatallstakeholders,includingbusinessentitieswithout

acontractualrelationshipwithICANN,mayengagefullyinICANNpolicyprocesses.


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DetailedProposalstoAddresstheKeyAreas

1. SafeguardingAgainstCapture

Capturebyanyparty,whetheragovernment,aninternationalorganization,abusinessorany

otherentity,mustbediscouragedand,ifattempted,prevented.Safeguardsagainstcaptureby

anyentityshouldpreventbothexternalandinternalcapture,andapplytoICANNasan

organizationandtoitsprocesses.ThePSCnotesICANNsexistingAccountabilityFrameworks

andManagementOperatingPrinciples26andconsiderstheseastrongprotectionagainst

capture.

RECOMMENDATION1.1

Safeguardsmustaddressalltypesofcapture.

1.1 Broadparticipationandengagementonissuesreducestheriskofcapture.Public

outreachbyallICANNstructuresshouldensurethatvoicesofallstakeholderseventhosenot

directlyengagedinICANNareheard.Itisessentialtomaintainthefullymultistakeholder

natureofICANNsprocessesinordertoachievetrueconsensusandtoengagethewhole

communityinthepursuitofthecommoninterestofallusersoftheInternet.Theindepth

interactionbetweenthecomponentpartsofICANNmustbeencouragedasearlyaspossible

andthroughouttheICANNprocessesinordertocreatebetterawarenessandunderstandingof

underlyingissuersanddrivers.

1.2 DeepeningandstrengtheningparticipationandappropriatesupportofallSupporting

OrganizationsandAdvisoryCommitteeswillstrengthenthesafeguardsagainstcapture.

1.3 TheGovernmentalAdvisoryCommittee(GAC),underICANNsbylawsandtheGACs

operatingprinciples,isaneffectivemechanismforforestallingoravertingcapturebyany

governmentorgroupofgovernments.ThepresentGACworkingmethodsensurethatnosingle

governmentdominatestheGAC.ThebylawprovisionsforcommunicationsfromtheGACtothe

Board,andforspecialconsiderationofGACinput,provideastrongvoiceforgovernments

withinICANN,whilenotleavingtheICANNdecisionmakingprocessvulnerabletofinalcapture

bygovernments.

26http://www.icann.org/en/transparency/


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1.4 ActiveparticipationbygovernmentsasGACmembersprovidesafurtherprotection

againstcapture.TheGAC,initsinputtotheconsultationonImprovingInstitutionalConfidence,

saidtheGACshouldengageinfurtherdiscussionwiththeBoardandotherconstituencieswitha

viewtowardsits(theGACs)evolutionintoamoreefficient,responsiveandwellequipped

organization,capabletoadvisetheBoardonthepublicpolicyaspectsoftheissuesfallingwithin

ICANNsmissionandtomorefullyinteractandworktogetherwithotherconstituencieswithin

ICANN.27

1.5 TheBylawsprovideabalancedrolefortheGAC,underwhichtheGACcannotcapture

ICANN.ThefollowingspecificrecommendationsareproposedtostrengthentheGACandmake

itmoredifficulttocapture.FurtherrecommendationsregardingtheGACarealsolistedbelowin

recommendations1.13,2.3and2.4.3.

RECOMMENDATION1.6

StrengthenparticipationintheGovernmentalAdvisoryCommitteetoavoidcapture:

1.6.1 ProvidesimultaneousinterpretationinofficialUNlanguagesasneededforGACmeetings

1.6.2 HoldascheduledmeetingorworkshopoftheBoardatleastonceayearinacitywhereallormostgovernmentshaverepresentation,e.g.NewYorkorGeneva.

1.6.3 ProvideatravelsupportprogrammeforaGACrepresentativefromeachoftheUnitedNationslistof50LeastDevelopedCountries(LDCs).

1

1.7 TheWhitePaper28,ICANNsBylawsandotherbasicdocumentsalreadycontain

proceduresandstructuralsafeguardstoensureICANNsfairnessanditsprotectionagainst

capturebygroupswithnarrowrepresentationorasinglestakeholdergrouping.These

safeguardsareveryeffectiveinprotectingagainstcaptureandhavebeenprovenovertenyears

ofICANNsoperation.

1.8 Consensusorsupermajorityrequirementswillcontinuetobethemaindeviceto

protectagainstcapturebyaselfinterestedgroup.ICANNalsoneedstoavoidapathetic

capture,ascenarioinwhichparticipationbycertaingroupsmaydecline,leavingmorepower

27LetterfromGovernmentAdvisoryCommitteeChairman,AmbassadorJanisKarklins,toPeterDengateThrush,

ChairmanofICANNBoardofDirectors,22December,2008:

http://comment.icann.org/?233@@.ee7bca7/11!enclosure=.ee7bf80 28http://www.icann.org/en/general/whitepaper05jun98.htm


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withintheorganizationtonarrowinterests.Topreventthis,largeanddiverseinterestgroups

needtobemaintainedwithintheSupportingOrganizationandAdvisoryCommitteestructures.

1.9 ICANNscurrentfundingishighlydependentonregistriesandregistrars.Thissituation

comprisesapotentialriskasasinglesourceoffunding.1.10 Antitrustandcompetitionlawsareafundamentalprotectionagainstcapture.

ICANNneedstoremaininjurisdictionsthathavestrongantitrustlawssothatthereisrecourse

tocontinuedandcomprehensivelegaloverviewofdecisionsmade,toensuretheyarenot

biasedorpreferentialtoanyparticulargroupororganization.

1.11 ICANNmanagesitsrelationshipswiththeregistries,registrarsandotherstakeholdersin

theuniqueidentifiersystembyagreements.Itisveryimportanttomaintaincertaintyaboutthe

contractualandagreementframeworks.

RECOMMENDATION1.11

Maintainpresencesinjurisdictionswithstrongantitrustandcompetitionlaw.

1.11.1 RetainICANNsheadquartersintheUnitedStatestoensurecertaintyaboutICANNs

registry,registrarandIANAcontractsandotherstakeholderagreementsand

frameworks.

1.12 Votingrightsandrepresentationalparticipationintheconstituenciesareamainareafor

influenceandapossibleopportunityforcapture.However,manyparticipantshaveinterestsand

experienceinmorethanonesupportingorganizationoradvisorycommittee;thisdiversityof

experienceshouldbepreservedbyallowingparticipation,butnotvoting,inmorethanone

componentpartofICANN.

1.13 ICANNneedstomaintainandstrengthentransparencyabouttheparticipantsinterests

intheAdvisoryCommitteesandSupportingOrganizations.Rulesforcrossparticipationin

Councilsandconstituenciesbysingleorrelatedentitiesshouldbeclarified.Statementstoclearlyidentifypotentialconflictsofinterestshouldberequiredfromparticipantsaccordingto

guidelines.


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RECOMMENDATION1.13

MaintainandstrengthentransparencyintheconstituentpartsofICANN

1.13.1 RequirestatementsonconflictofinterestfromallmembersoftheNominatingCommittee,AdvisoryCommitteesandSupportingorganizations.

1.13.2 DevelopclearguidanceforNominatingCommittee,SupportingOrganizationsand

AdvisoryCommitteesondisclosingandhandlingconflicts.

1.13.3 EnhanceexistingconflictandotherrulesfortheNominatingCommitteeinorderto

ensuretheappointmentofindependentdirectors.

1.13.4 Createaframeworkwhichallowscrossparticipationinsupportingorganizations,

advisorygroupsand/orconstituencies,butwhichprohibitsandconsiderssanctions

forvotingbythesameindividualororganizationinmorethanoneICANNentity.

1.14 Whilenotbeingcriticalofactualstaffperformance,theCommitteenotesthatanother

possibilityforcaptureisbyinappropriateorinadequatestaffconduct.ThePSCnotesICANNs

existingAccountabilityFrameworksandManagementOperatingPrinciples29andconsidersthese

aprotectionagainstcapture.ICANNstaffshouldcontinuetoprovide,intheinterestsofthe

organizationanditsmissionandvalues;frank,honest,comprehensive,accurateandtimely

advicetoICANNdecisionmakers,anddeliverservicetothecomponentpartsofICANN,fairly,

effectively,impartiallyandcourteously.

RECOMMENDATION1.14

Safeguardagainstcapturebyinappropriateorinadequatestaffconduct.

1.14.1 Reviewandenhancetheprofessionalcodeofconductforthestafftohighlighttheir

obligationsofindependence,impartialityandsupportforthecommunity.

1.15 ICANNsprinciplesandpracticesonTransparencyandAccountability30arethemselvesa

protectionagainstcapture.Inadditiontocontinuingthiswork,adherencetobestcorporate

practiceisafurthersafeguard.

29http://www.icann.org/en/transparency/

30Finalizedandimplemented,January2008:http://www.icann.org/transparency/accttransframeworksprinciples

10jan08.pdf


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2. AccountabilitytotheMultiStakeholderCommunity

2.1WhiletheBoardhasfinaldecisionmakingresponsibility,itslegitimacydirectlyderivesfrom

thedegreetowhichitsdecisionsreflectconsensusarticulatedbythecommunity,aswellas

fromtheperceivedcertaintyofdecisionmakingprocessesandthebalanceoftheiroutcomes.

Respectfordueprocessateverystageofpolicydevelopmentprocesses ,includingdue

considerationofGACsadviceonmattersofpublicpolicy,liesattheverycoreofICANNs

legitimacyasamultistakeholderorganization.Itistheprimarybasisforinstitutionalconfidence

andthestrongestguaranteeofICANNsindependence.

2.2 ThemechanismsbywhichtheBoardreceivespublicpolicyadvicefromtheGAC,and

otherinteractionswiththeGAC,shouldbemademoreeffectiveinaccordancewithICANNs

obligationtoworkwiththeGovernmentAdvisoryCommitteeMemberstoreviewtheGACs

rolewithinICANNsoastofacilitateeffectiveconsiderationofGACadviceonthepublicpolicy

aspectsofthetechnicalcoordinationoftheInternet31.

2.3 ThePSCrecognizestheinterestoftheGACtoengageindiscussionswiththeBoardand

otherpartsofICANNtohelpitevolveintoamoreefficient,responsiveandwellequipped



ICANN.

RECOMMENDATION2.3

ICANNandtheGACshallsetupajointmechanismtoreviewperformanceoftheICANN

BoardsAffirmation,annexA,paragraph7oftheJPA:RoleofGovernments:ICANNshall

workwiththeGovernmentAdvisoryCommitteeMemberstoreviewtheGACsrolewithin

ICANNsoastofacilitateeffectiveconsiderationofGACadviceonthepublicpolicyaspectsof

thetechnicalcoordinationoftheInternet.

2.4 PublicinputonICANNspolicyproposalsanddecisionsneedstobecarefullyconsidered

andacomprehensiveanalysisandsynthesisprovided.Thisanalysisiscrucialtothecommunitys

understandingofhowcommentswereconsideredandhowtheyhadanimpactonshaping

decisions.Inconductingconsultations,itshouldbemadeclearateverystagehowpublic

commentsaretobeconsideredandtakenintoaccountinthedevelopmentofthenextversion

31JPA,AnnexA,AffirmationofResponsibilitiesforICANNsPrivateSectorManagement,

http://www.icann.org/general/JPA29sep06.pdf


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ofthedocument.Reasonsshouldbegivenwhencertainstakeholderviewshavenotbeen

accepted.

RECOMMENDATION2.4

2.4.1 ICANN shall enhance its public consultation process, including strengthening thesteps of providing detailed analysis of all comments received, acknowledging,

synthesizing, and implementing them in decisionmaking as appropriate, and

explainingthedecision.

2.4.2 Formallydeclaredadvice orstatements of principlesby theGAC shallbe formally

respondedtoandmadepubliclyavailable.

2.4.3 The GAC should work through a process to determine what constitutes formal

advicetotheBoardofDirectors(asreferencedinArticle11,section2,paragraph1(j)

oftheICANNBylaws:TheGovernmentalAdvisoryCommitteemayputissuestothe

Boarddirectly,eitherbywayofcommentorprioradvice,orbywayofspecifically

recommendingactionornewpolicydevelopmentorrevisiontoexistingpolicies.1).

2.5. Accountabilitybuildsontransparency,whichhasclearlyimprovedinrecentyears.

However,thereisstillroomforimprovementontransparency,particularlyinthedocumentation

ofdecisionmakingprocesses.Effortstoincreasetransparencyshouldnotleadtoinformation

overload,frustratingtheeffortsofthecommunitytofollowandeffectivelycontributeto

processes.Documentsneedtobeeasilyunderstoodevenbythosenotcloselyinvolved,and

shouldbereleasedintimebeforethemeetingssothatparticipantscanexaminethemandcarry

outinternalconsultationsasappropriate.

RECOMMENDATION2.5

Makeconsultationdocumentseasilyaccessibleandunderstandable.

2.5.1 Executivesummariesshallbeattachedtoallsubstantivedocuments.

2.5.2 Standardizedformatting and timelines shallbeusedfor dealingwithallpublished

documents.

2.6 In2007,ICANNsBoardapprovedasetofFrameworksandPrinciplesonAccountability

andTransparencythatoutlinetheorganizationsexistinglegalandcorporateresponsibilities.An

independentreviewofICANNsaccountabilityandtransparencybytheOneWorldTrust

organizationintheUnitedKingdomconcludedthat:Togethertheyofferarobustapproachto

complaintshandling,providinginternaloversightofBoarddecisionsandstaffactionsandthus


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reducingthelikelihoodoflitigation.ThereviewsofallICANNstructuresandofthethree

aforementionedfunctionsshouldcontinue.ICANNshouldkeeptheTransparencyand

AccountabilityFrameworkskeptuptodate,abidebytheprinciplesandberegularlyreviewed

againstthembyanindependentparty.

2.7 ICANNhasathreepartdisputeresolutionprocessthatincludestheBoard

ReconsiderationCommittee,theIndependentReviewPanel,andtheOmbudsman.


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RECOMMENDATION2.7

Seekadvicefromacommitteeofindependentexpertsontherestructuringofthereviewmechanismstoprovideasetofmechanismsthatwillprovideforimprovedaccountabilityin

relationtoindividualrightsandhavingregardtothetwoproposedfurthermechanisms

below.

2.8 ThePSCbelievesthattwonewmechanismssetforthbelow,directedtoimproving

accountabilitytotheICANNcommunity,shouldbeadopted.

2.8.1 First,partiesmaybeindisputewithICANNbecausetheydisagreenotwiththeprocess

butwiththeoutcomeofanICANNdecisionprocess.Basedonfeedbackfromthecommunity,

theBoardcouldconsideramechanismwherebythecommunitycanrequiretheBoardtore

examineadecision.ThismechanismneedstobeconstructedwiththeawarenessthatDirectors

arelegallyaccountableforthebusinessdealingsoftheorganizationandhavefiduciary

obligationsincluding:

(a)dutyofcare;

(b)dutyofinquiry;

(c) dutyofloyalty;and

(d)dutyofprudentinvestment.

RECOMMENDATION2.8

EstablishanadditionalmechanismforthecommunitytorequiretheBoardtoreexaminea

Boarddecision,invokedbyatwothirdsmajorityvoteoftwothirdsoftheCouncilsofallthe

SupportingOrganizationsandtwothirdsofmembersofalltheAdvisoryCommittees.For

theGovernmentalAdvisoryCommittee,aconsensusstatementfromallthemembers

presentataphysicalmeetingshallsuffice.

2.8.2 ThecommunitycouldrequiretheBoardtoreexamineadecisionthroughatwothirds

majorityvoteoftwothirdsoftheCouncilsofSupportingOrganizationsandtwothirdsof

membersofAdvisoryCommittees.FortheGovernmentAdvisoryCommitteeitmaybesufficient

tohaveaconsensusstatementfromallthememberspresentataphysicalmeeting.Asfinal

accountabilityrestswiththeBoard,theBoardcannotbeforcedtochangeitsdecision,onlyto


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reexamineit.Therewouldneedtobeareasonabletimelimitonsuchavotetoensurethat

contractingpartiesorthirdpartiescanhavecertaintyinBoarddecisions.

2.9 Second,iftheBoarddoesnotchangeitsdecisionafterthereexaminationmechanism

hasbeeninvoked,theremaybecircumstanceswhereitisappropriatefortheICANNcommunitythroughitsSupportingOrganizationsandAdvisoryCommitteestomoveforchangestothe

compositionoftheBoard,bywayofanoconfidencevote.Thiswouldprovidean

accountabilitymechanismfortheboard,namelyamechanismfordissolutioncreatedby

adoptingbylawsthatwouldprovideforindividualDirectorspredesignatedresignations.Such

resignationswouldbeagreedbyeachindividualboardmemberintheeventofnoconfidence

votesfromasignificantportionofthedesignatedsupportingorganizationsandadvisory

committees.Thissuggestedmethodissimilartoboardaccountabilitymechanismsrecently

addedbycomparableorganizations.

RECOMMENDATION2.9

EstablishanextraordinarymechanismforthecommunitytoremoveandreplacetheBoard

inspecialcircumstances.

2.10. DissolvingtheBoardmightfurtherdestabilizeICANNinanalreadydifficultsituation.In

formulatingtheoperationofthismechanism,additionalprovisionswouldbeneededto

guaranteecontinuityofoperationsifthedissolutionprocedureisused.

2.11 Inaddition,itistobenotedthatasapublicbenefitnonprofitcorporationorganized

withintheStateofCalifornia,ICANNissubjecttoCalifornialawsandbusinesscodesrelatingto

theoperationofsuchentities32.Theselawsexplicitlypermitoversightofcriminalactionsbythe

CaliforniacourtsystemandtheCaliforniaAttorneyGeneral.InrecentyearsCaliforniasAttorney

Generalhasbeenveryactiveinnonprofitreformmeasures33.

32http://www.ss.ca.gov/business/corp/corp_artsnpinf.htm

33http://www.charitynavigator.org/index.cfm/bay/content.view/catid/38/cpid/191.htm


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3. MeetingtheNeedsoftheGlobalInternetCommunityoftheFuture

(Internationalization)

3.1. Today,theInternetreachesmorethan1.5billionusers34.Thenextbillionswillmostly

comefromthoseregionsoftheworldwheretheInternetpenetrationratesarestill

comparativelylow:Africa,LatinAmerica,AsiaandEasternEurope.

3.2. ICANNactsinaglobalroleasthetrustedstewardofthestableandsecureoperationof

theInternetssystemofuniqueidentifiers,givingtheopportunityforeffectiveparticipationto

allstakeholdersfromallcountriesinICANNsprocesses.

3.3. ICANNisalreadyaddressingsomeofthesechallenges.Itsbylawsestablishgeographical

diversityforthecompositionofitsboardandotherstructures.AsICANNhasexpandeditsstaff,

ithastakenstepstoensureandincreaseitsglobaldiversity.Translationandinterpretation

servicesarebeingexpanded.ICANNisalsoonthevergeofintroducinginternationalizeddomain

names.

RECOMMENDATION3.3

Produceareviewoftranslationandinterpretationpoliciesandexpendituretoassessthe

needforfurtherimprovements .

3.4 ICANNsofficesindifferentgeographicallocationsareanimportantcontributionto

outreachandcommunication.ICANNpresentlyhasitsheadofficeinMarinadelReyCalifornia,

anofficeWashingtonDC,andhuboffices,servicingtimezones,inBrussels,BelgiumandSydney,

Australia(thehubofficesareregisteredoverseasbusinessoffices).Further,ICANNhassmall

regionalrelationsmanagerpresencesintheMiddleEast,Africa,thePacificIslands,the

CaribbeanandLatinAmerica.Priorityshouldbegiventotheestablishmentofpresences,or

wherejustified,officesinregionsoftheworldwhereInternetpenetrationisgrowingrapidly,in

particularsouth,centralandnorthernAsiaandfurtherinAfrica.

RECOMMENDATION3.4

Continuetoimproveparticipationbyextendingoutreachsothatallrelevantstakeholders

aroundtheworldareabletointeractwithICANN,includingbyestablishingICANNs

presenceinadditionaljurisdictions.Priorityshouldbegiventopresence/office

34http://www.internetworldstats.com/stats.htm,lastchecked:21February,2009.


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establishmentinsouth,centralandnorthernAsiaandfurtherinAfrica.

3.5 ThePSChasinvestigatedanumberofareasinwhichanadditionalinternationalnon

profitlegalpresence,incontrasttoregisteredoverseasbusinessstatus,mightimproveICANNsefficiency.Thecomparativestructureevaluationhasbeenfocusedaroundreviewsofdifferent

nationallegalregimesrelatingtothefollowingareas:

(a)specificlegislationapplicabletoreorganization;

(b)parentsubsidiaryissues;

(c) labourcosts

(d)taxadvantages;

(e)bestpracticescorporategovernancerules;and

(f) nationallegislationallowingsomeprivileges,balancedagainstICANNremainingaccountable

toitscommunity(i.e.notimmunityfromlegalactions,butprivilegesinselectionof

personnelandtermsofengagementinsomecircumstances).

3.6 AkeyrecommendationisthatICANNwillcontinuetomaintainitscurrentheadquarters

andmaintainanoperationalpresenceinCalifornia,regardlessofanychangeinitscorporate

organizationalstructure.WhileICANNisalsolikelytomaintainorexpanditspresence,through

branchofficesorotherwise,elsewhereintheworld,legalresearchindicatedthatmaintaininga

UnitedStatesheadquarterswouldbepermittedinanumberofkeyjurisdictions,including

BelgiumandSwitzerland.Otherjurisdictionswereexcludedwheretheywouldnotpermitthis

relationshiptoexist.

RECOMMENDATION3.6

MaintainICANNscurrentheadquartersandoperationalpresenceinCalifornia,regardlessof

anychangeinitscorporateorganizationalstructure.

3.7 Inopeninganadditionallegalinternationalnotforprofitpresenceoverseas,

considerationneedstobegiventotherequirementsofmaintainingthecurrentUStaxstatus

enjoyedbyICANN.

3.8 Thebenefitsofestablishinganadditionallegalinternationalnotforprofitpresence

overseasinclude:


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3.8.1 ImprovedrecognitionofICANNsinternationalstatusintheperceptionsofsome

entities,governmentsandorganizations,includinginrelationtoformalizingagreementssuchas

internationalgovernmentalorganizationapplicationsfortopleveldomainsandsomepotential

IDNccTLDaccountabilityframeworks;

3.8.2 ImprovedaccessforsomemembersoftheinternationalICANNcommunity;

3.8.3 Workingvisaandimmigrationarrangementsforstafffromsomepartsoftheworld;and,

3.8.4 Improvedhealthcareandotherbenefitsforstafffromsomepartsoftheworld.

3.9 InordertofurtherstrengthenICANNsmultistakeholdermodelonaworldwidescale,

tounderlinetheelementofglobalpublictrustthatisakeyelementofitsmission,andtogain

universalacceptanceofitstechnicalcoordinationrole,ICANNshouldinvestigatetheissues

involvedintheestablishmentofanadditionallegalpresenceinajurisdictionwhereitwouldbe

grantedthestatusofaninternational,notforprofit,nongovernmentalorganization.Atthe

sametime,thecorporateheadquartersandoperationswouldremainintheUnitedStates.35

RECOMMENDATION3.9

Forthepurposesofinformationgathering,holdinitialdiscussionswithauthoritiesin

selectedjurisdictionsthatrecognizeinternationalnotforprofitorganizationstatusto

determinewhethersuchjurisdictionswouldofferastatusthatwouldconfertheadvantages

describedabove.OnlyaftersuchfactgatheringiscompletedshouldICANNconsider

establishinganadditionalsubsidiarylegalpresenceasaninternationalnongovernmental

entitywhosecorporateheadquartersremainintheUnitedStates.Anyproposalwouldbe

subjecttofullpublicconsultation.

4. FinancialandOperationalSecurity

4.1. ICANNmustcontinuetobefinanciallyandoperationallysecure.TheStrategic,

OperatingandBudgetplanningprocesses,includingmeasuressuchasthecurrentInvestment

Policy36,provideconfidencethatICANNisastableandwellfunctioningorganization.TheICANN

Boardhasrecentlycreatedanewcommitteefocusingonriskassessment,whichisafurther

mechanismtoenhancefinancialandoperationalsecurity.Inaddition,thePSCnotesthereis

35Formoredetailonthisissue,pleaseconsultAppendix2tothecurrentdocument:INTERNATIONALIZATIONOF

ICANNMEETINGTHENEEDSOFTHEGLOBALINTERNETCOMMUNITYOFTHEFUTURE.36ICANNsInvestmentPolicyispublishedhere:http://www.icann.org/en/financials/icanninvestmentpolicy

nov2007.htm


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continuedfocusonauditandspendingcontrols,performancemeasuringmetricsandnew

policiesoninvestmentandpropermanagementofforeignexchangerisk.Thecurrentdetailed,

resultsbasedandtransparentbudgetingprocessalsoprovidessecurity.

4.2. Theseprocessesshouldbemaintainedandenhanced.

4.3 Werecognizethatinstitutionalconfidenceisenhancedbydisclosureoffinancial

informationinatimelyandcomprehensiblemanner.Systematicdisclosureontheallocationand

spendingofresourcesshallbecontinuedandenhanced.

RECOMMENDATION4.3

Maintainandenhancedetailed,resultsbasedandtransparentplanningandreportingprocesses.

4.3.1 Continuetoimplementbestfinancialpractices,includingoffinancialdisclosureto

thecommunity.

4.3.2 Ensurefinancialmaterialsaredisclosedinatimelywayandwithsufficient

explanationtopermitfullcomprehension.

4.4. InviewoftherapidwideningofICANNsrevenuebaseduetotheexpansionofthe

Internet,andnotwithstandingthepossibleeffectsofthepresenteconomicrecession,

considerationshouldbegiventothemanagementofICANNsfuturerevenuegrowthinlinewith

ICANNsnotforprofitstatusanditscoremissionandmandate.Broadcommunitydiscussionon

possibleusesofanysurplusisneeded.

4.5. Safeguardsmightbeneededtoensurethatthepolicymakingprocessdoesnotfavour

revenuegeneratingoptionsabovethosethatreflectthebroaderpublicinterestandcommunity

consensusonwhatisneededforICANNstechnicalcoordinationrole.

4.6. ICANNscurrentfundingishighlydependentonfeesderivedfromgTLDregistrants,

whichcomprisesapotentialrisk.

RECOMMENDATION4.6

ConsiderationhowtomanageICANNsfuturerevenuegrowthinlinewithICANNsnotfor

profitstatusanditscoremissionandmandate.

4.6.1 IncludeapublicdiscussionandcommentperiodonanysurplusaspartoftheFY10


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draftOperatingPlanandBudgetconsultations.

4.6.2 ICANNshouldconsultthecommunityonsourcesofrevenue,recognisingICANNs

coremission,sothatitisnottooreliantononesectorofthecommunity.

4.7. InviewofICANNssecurityandstabilityrole,itsoperationsshouldbebasedinstable

environmentswithastronghistoryoffreedomofexpressionandlegalstructuresthatfavour

competitionandprivatesectorleadership.

5. SecurityandStabilityoftheInternetsUniqueIdentifiers

5.1. ICANNshouldremainfocusedonitscoremissionwhichincludesthesecurityand

stabilityoftheInternetsuniqueidentifiersandwhichisfundamentalandcriticaltothesecure

andstableoperationoftheInternet.

5.2. ConcernabouttheInternetsvulnerabilityisgrowingworldwideduetotheincreaseof

incidentsandattackstargetingtheDNS,someofwhichexploitexistingflawsintheInternets

mainprotocols.Inaddition,therearesecurityconcernsinvolvingIPaddressesandautonomous

numbers.Consistentwithitscorevalues,ICANNshouldincreaseitsattentiontoissuesofthe

securityandstabilityofthenamingandaddressingsystemsthatfallwithinitsexistingmandate,

andemphasizethemfurtherinitsstrategicandoperationalplanning.

5.3 ICANNhasaresponsibilitytobeadiscussionleaderandtoraiseawarenessofissues

linkedtostabilityandsecurityoftheInternet.GreaterinteractionbetweenICANNandthemain

bodiesresponsibleforgeneratingsecurityrelatedstandardsandprotocolswouldbevaluablein

providingforamoreintegratedapproachatthegloballevel.

RECOMMENDATION5.3

ICANNshouldbeadiscussionleaderandraiseawarenessofissueslinkedtostabilityand

securityoftheInternet

5.3.1 ICANNshouldfurtherdefineandstrengthenitsroleinrelationtosecurityand

stabilityoftheuniqueidentifiersandtheirimpactontheInternet.5.3.2 ICANNsstrategicandoperationalplanningshouldinvolvetheorganizationin

interactionwithkeyorganizationsresponsibleforsecurityrelatedprotocolsand

standards.


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5.4 ThecurrentIANAfunctionsworkwell,butmanymembersofthecommunitybelieve

thattheycanbeimprovedandthatmoreeffectiveandefficientoperationoftheIANAfunction

isneededtomaintainconfidenceinacoordinated,notcontrolled,Internetaddressingsystem.

5.5 UndertheIANAcontract,ICANNwasrequiredtodevelopandimplementaprocessforconsultingwiththerelevantgovernmentsandccTLDmanagerstoencouragegreaterefficiency

andresponsivenesstotheseentitiesinprocessingccTLDrequests.Thatprocesssuggested

improvementstostreamlinetheIANAfunctionandispresentlysubjecttodiscussionbetween

ICANNandtheUnitedStatesDepartmentofCommerce.ThePSCwelcomestheNational

TelecommunicationsandInformationAdministrationscommentthatitisopentooperational

efficiencymeasuresthataddressgovernmentslegitimatepublicpolicyandsovereignty

concernswithrespecttothemanagementoftheirccTLDs37.

5.6 ThePSCencouragesthisdiscussionasitisfocusedontheautomationofprocesses

(sometimesreferredtoaseIANA),withICANNensuringmorevisibilitytotheexistingpublic

reportingofsuchchanges.Theautomationoftheseprocessesreducesthecapacityforhuman

errorandwillincreaseconfidenceintheprocessasobjectiveandefficient.

5.7 ThePSCunderstandsthatICANN,VeriSignandNTIAarealreadyengagedindiscussions

aboutautomationandthattheseareproceeding.

RECOMMENDATION5.7

ICANNshallpursueoperationalefficiencymeasuresundertheIANAprocurementagreement

withtheUnitedStatesDepartmentofCommerce.

6. TheRoleofGovernments

6.1 ThePSCwelcomesthereadinessoftheGACtoengageindiscussionswiththeBoardand

otherpartsofICANNtohelpitevolveintoamoreefficient,responsiveandwellequipped



ICANN.

37LetterfromMeredithA.Baker,ActingAssistantSecretaryforCommunicationsandInformation,UnitedStates

DepartmentofCommerceNationalTelecommunicationsandInformationAdministration,toPeterDengateThrush,

30July,2008,http://forum.icann.org/lists/iicconsultation/pdfcaAKNdcNVx.pdf


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PleaseseeRECOMMENDATIONS1.6,1.13,2.3and2.4.3aboveregardingtheGACandoverall

accountabilitytothemultistakeholdercommunity.


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APPENDIX1 PUBLICINPUTONIMPROVINGINSTITUTIONAL

CONFIDENCE

1stpubliccommentsperiod:16June31July2008

22responseswerereceivedfromarangeofindividualsandorganizations:

AMGlobalConsulting, AT&T BertranddelaChapelle,SpecialRepresentativetotheFrenchgovernment ChristopherMartin,UnitedStatesCouncilforInternationalBusiness(USCIB) EvanLeibovitch,NorthAmericaRegionalAtLargeOrganization(NARALO) ETNO:EuropeanTelecommunicationsNetworkOperatorsAssociation FernandoG.Guerrero,CEO,SolidQ.com FredericRiehl,DirectorofInternationalRelations,FederalDepartmentoftheEnvironment,

Transport,EnergyandCommunication,Switzerland

GeorgeKirikos GeorgeSadowsky InternationalChamberofCommerce InternetSociety JaserElmorsy,CEO,BluebridgeTechnologies JonathanZuck,President,AssociationofCompetitiveTechnology(ACT) MeredithA.Baker,ActingAssistantSecretaryforCommunicationsandInformation,UnitedStatesDepartmentofCommerce,NationalTelecommunicationsandInformation

Administration

MichaelKKirk,ExecutiveDirector,AmericanIntellectualPropertyLawAssociation(AIPLA) MikeSax MichaelSetton,CEO,Cyberfab MathieuWeill,GeneralManager,AFNIC RobertC.Hutchinson,InternetProductArchitect SteveDelbianco,NetChoiceCoalition SteveMetalitz,Counsel,CoalitionforOnlineAccountability(COA) VittorioBertola,ISOCItaly

Summaryandanalysisofcommentsavailablehere:http://www.icann.org/en/jpa/iic/first



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2ndpubliccommentsperiod:19September20October2008

13responseswerereceivedfromarangeofindividualsandorganizations:

AssociationforCompetitiveTechnology RonAndruff,RNAPartners,Inc. AT&T GovernmentAdvisoryCommittee(ICANN) GovernmentofCanada CommunicationandInformationTechnologyCommissionoftheKingdomofSaudiArabia EuropeanTelecommunicationsNetworkOperatorsAssociation InternationalChamberofCommerce InternationalTrademarkAssociation InternetSociety NetChoice Nominet CherylB.Preston,ProfessorofLaw,BrighamYoungUniversity U.S.CouncilforInternationalBusiness

Summaryandanalysisofcommentsavailablehere:http://www.icann.org/en/jpa/iic/second


Informationabout2009developmentsonImprovingInstitutionalConfidenceisavailablehere:

http://www.icann.org/en/jpa/iic/index.htm


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37

APPENDIX2 INTERNATIONALIZATIONOFICANNMEETING

THENEEDSOFTHEGLOBALINTERNETCOMMUNITYOFTHE

FUTURE

InputpaperconsideredbythePSCincomingtoitsrecommendations

MemorandumtothePresidentsStrategyCommittee

Date:25February2009

From:JohnO.Jeffrey

GeneralCounselandSecretary

ICANN


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EXECUTIVESUMMARY

ICANNrecentlypasseditstenthanniversaryinservingaglobalcommunitywhilesetup

solelyasaCaliforniabasednonprofitcorporation.ThroughoutICANNshistory

questionshavebeenraisedabouthowICANNcouldbeimprovedandcouldfurtherits

internationalpresence.Overrecentyears,ICANNhasaddedaffiliatedcorporateoffices

inBelgiumandAustraliaandestablishedaglobalpartnershipsfunctionwith

representativesinmanyotherregionsoftheworld.Inanefforttofurtherimprove

ICANNseffectivenessthePresidentsStrategyCommittee(PSC)hasreviewedICANN

andsoughttoconsideradditionalwaystointernationalizeICANNandfurtherimprove

itsmechanismsforglobal,multistakeholderbottomupcoordinationoftheInternets

systemofuniqueidentifiers.Followingonfromthisreview,PSCaskedICANNGeneral

Counselsofficetoresearchthepotentialbenefitsofestablishinganadditionallegal

presenceinajurisdictionwhereICANNcanberecognizedfrommorethanone

jurisdiction,asaninternational,notforprofit,nongovernmentalorganization.Partof

thisworkincludedmappingouttheprimaryfunctionsofICANNandhowthose

functionsmaybeimpactedorimprovedbyexpandingICANNsjurisdictionalpresence.

InitialresearchindicatesthatalthoughnotrequiredforICANNtocontinuetoperformits

corerole,ICANNsfunctionsmightbefurtherenhancedthroughanexpanded

internationalpresence.Afteranextensivereview,asoutlinedinthismemorandum,

SwitzerlandandBelgiumwerebothidentifiedasofferingformsofinternationalnotfor

profitorganizationalstructuresthatmayenhanceICANNsneeds.Althoughfurther

researchisrequiredpriortostaffpreparingafinalrecommendationonhowtoproceed,PSCshouldconsiderrecommendingtotheBoardadditionalconsiderationofthis

matter.


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DraftImplementationPlanforImprovingInstitutionalConfidenceInICANN

ii 25February2009

STAFFRECOMMENDATION

TheStaffrecommendationrelatingtothisreviewisthatthePSCconsider

recommendingthattheICANNBoardauthorizestafftoproceedwithfurtherresearch

andintoandconsultationon(1)thebenefitsandpotentialliabilitiestoenhancing

ICANNsglobalpresenceandefficacythroughformingasubsidiaryorganizationineither

SwitzerlandorBelgiumand(2)ICANNsabilitytoformasubsidiaryorganizationineither

jurisdiction.

DETAILEDANALYSIS

IntroductionandBackground

InitialresearchindicatesthatalthoughnotrequiredforICANNtocontinuetoperformits

corerole,ICANNsfunctionsmightbefurtherenhancedthroughanexpanded

internationalpresence.AfterthedetailedreviewofICANNsfunctionsitisbelievedthat

anadditionalpresencebeyondtheparententityintheUnitedStatesmightprovide

additionaloperational,perceptual,andpoliticalbenefitstowardthefulfilmentofits

globalmandate.

Foundationally,anybusinessentitymustoperateunderthelawsofthejurisdiction

underwhichitisincorporated.Therefore,anyreviewofthepotentialtoenhance

ICANNsglobalpresenceandcreateefficienciesinICANNsinternaladministrative

functionsmustaccountnotonlyforthebenefits(ordetractors)toICANNformoving

thosesingularoperationalfunctions,inwholeorinpart,outsideoftheUnitedStates,

butalsomustcarefullyexaminethepotentiallimitationsimposedunderthelawsofthe

targetjurisdiction.

SomeofthemainchallengesICANNcurrentlyfacesunderitscurrentform,whichmight

beenhancedbyaninternationalpresencebyICANNare:

TheperceptuallackofrecognitionbysomeofaUSbasednotforprofitorganizationstofunctionasatrulyinternationalorganization,andhence;


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iii 24February2009

potentialresistancefromvariousrelevantgovernments,IGOsandNGOs

toformdirectrelationshipswithICANN;

PerceptionsbysomepartiesoutsideoftheUSandresultinghesitancetoparticipateinICANNspolicysettingandcoordinationfunctionsforfear

ofbecomingsubjectedtoCalifornialawandjurisdiction,andbecoming

subjecttoCalifornianorUSfederallitigation;

ImpedimentanddelayofcontractingnegotiationswithsomepartiesfearingenteringintocontractualarrangementswithaCaliforniapublic

benefitnonprofitcorporationandtheconcernsthatsuchcontracting

partywouldneedtoavailthemselvesofCalifornialaworbefacedwith

theapplicationoflawonthemforenteringintoanagreementwitha

Californiabasedentity;

ThedifficultiesposedtoInternetorganizationsinvariouscountrieswishingtoenterintoagreementsandparticipationwithICANNwhere

theirhomecountrypoliticalsituationreflectstensionsorpotentialtensionswiththeUnitedStates;and

TheapplicationofUSsanctionsandimmigrationlaws.Manyofthechallengesareinterconnected,anditisbelievedthatthecreationofa

relatedpartyentityoutsideoftheUSmightassistICANNinachievingamorerecognized

internationalstatus.Whiletheachievementofamoreinternationalstatusisnotlikely

tosignificantlyreducesomeofthechallenges,itmightmovethediscussionawayfrom

ICANNsUSpresenceasanexplanationformorecomplicatedissues.

DemonstrationsoftheCurrentIssuesandLimitationsonICANNs

Operations.

USSanctionsLaws

IntheoperationoftheIANAfunction,ICANNhastoconformwithUSsanctionslawsas

theyapplytocountries,institutionsandindividuals.Whileallcountrieshavesanctions

laws(atminimumtoimplementparticulardecisionsoftheUNSecurityCouncil),theUS,

withitsuniqueroleintheinternationalsystem,hasamoreextensiverangeofsanctions

inapplicationthanmanycountries.


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iv 25February2009

ImmigrationandEmployment/HumanResourceChallenges

ICANNmusthavetheabilitytorecruitadiverserangeofemployeesandtobeableto

organizevisaswithmultipleentrycapacitytoassureaccesstoICANNoffices.ICANNhasnotundertakenadetailedstudyoftheseimpactsbutthereisevidencethatthishashad

animpactonICANNsoperations.Whileeverycountryposesimmigrationrules,inthe

wakeofSeptember11,2001,theUShasmadeentryandexitrequirementsstricter,and

hasparticularlystringentrequirementsforcitizensofsomedevelopingcountries.

Recruitingstafffromothercountrieshasresultedinsignificantdelays,oftenbecauseof

thelimitednumberofH1B1visasissuedbytheUnitesStateseachyear.Indeed,ICANN

haslikelylosttheopportunitytohirecandidatesbecauseoftheperceivedandactual

difficultiesofobtainingvisasforentryintotheUS.ICANNhasalsospentsignificantlegal

feesandhaslostproductivestaffinghours,onanadministrativeandfunctions

standpoint,whiledealingwiththeseissuesduringICANNsexistence.

WhileICANNwillmaintainitscorporateandoperationalheadquartersintheUS,

establishingasignificantpresenceinaseparatejurisdictioncouldassistICANNinthe

facilitationofdiversifiedhiringbyallowingICANNtoavailitselfofthevisaand

immigrationrequirementsofthetargetjurisdiction.Thiscouldcreateenhanced

opportunitiesforhiringofthosethatwecurrentlyhaveissuesbringingintotheUS,and

allowthemtheabilitytoworkatanICANNofficeasrequired.

HavingasignificantpresenceinaseparatejurisdictionwillalsoassistICANNin

maintainingemployeeswithinorclosertotheregionswheretheywork,which

increasesthepublicperceptionofICANNasaninternationalorganization.Thiscould

alsoassistinrecruiting.

Otherimmigrationconcerns.

TheUSimmigration/visaissuealsoimpactstheabilityofmembersoftheICANN

communitytovisitICANNsofficesandattendeventsintheUnitedStates.Overthelast


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v 24February2009

6years,ICANNmanagementhasreceivedanumberofcomplaintsfrompeople

regardingdifficultiesorinabilitytoobtainvisastovisittheUSformeetingswithICANN

staff.SomehavereportedthattheysimplydontbotherapplyingforUSvisas.

Infulfillingitsglobalmandate,ICANNwillneverbeabletofullyavoidvisa/entryissues

foreveryfutureICANNofficeormeetinglocation,buthastheopportunitytoselecta

targetjurisdictionwithdifferentandpotentiallylessstringentlawsthanthoseintheUS.

LackofRecognitionofUSBasedNotforProfitOrganizationstoFunctionasTruly

InternationalOrganizations.

ThereexistsadistinctioninworldviewsregardingtheabilityofaUSnonprofit

organizationtoberecognizedasatrulyinternationalorganization.Incountries

followingthecommonlaw,ICANNsworktocreateagloballyfocusedandaccountable

servantoftheInternetcommunityallowsICANNtogaineasyacceptanceasan

internationalnonprofitorganization.Thesecountrieslookbeyondtheplaceof

organizationtoinsteaddefinetheinternationalfocusofanorganizationonthebreadth

ofitsactivities.

OthercountriesdonotaffordcorelegitimacytotheinternationalreachofICANNor

otherUSnonprofitssolelybasedontheinternationalbreadthofactivities.Particularly

incountrieswithaCivilCodesystem,suchascountriesinCentralEurope,Eastern

Europe,andLatinAmerica,thereisabeliefthatthescopeandthelegitimacyofan

organizationisdefinednarrowlybythefoundinglegalinstrument,normallytheheadof

statepowerorlawunderwhichtheinstitutionwasfounded.Somecivilsocietyand

governmentalrepresentativesinthosecountries(andothers)donotacceptthe

propositionthatICANNisaninternationalnonprofitorganization,butinsteadseeitasa

Californiancorporation.Tothatend,ICANNsexecutivesandthePresidentsStrategy

Committeehavebeencounselledbysomerespondentstofindawaytoincludethe

wordinternationalintothesupportinglegalstructureofICANN.


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vi 25February2009

ThisquestionofinternationallegitimacyarisingfromICANNsstatusasaCalifornia

basednonprofitalsoimpactsICANNsabilitytoenterintodiscussionsandformdirect

relationshipswithIGOs,NGOsandotherInternationalOrganizationsthatanswerto

constituencieswiththeselegitimacyconcerns.ICANNcontinuestolearnofthis

resistancethroughpubliccommentsanddiscussionsatotherfora,includingdiscussion

surrounding,andfollowing,theWorldSummitontheInformationSociety(WSIS).

ImpedimentstoICANNsContractingAbilities.

ApartfromthedoubtsinsomequartersaboutICANNslegitimacyincallingitself

internationalasaresultofitsfoundationallegalframeworkissues,ICANNscurrentUS

corporatestatusimpedesICANNsabilitytoenterintoarrangementswithsome

stakeholdersoutsideoftheUS.Inanumberofsignificantcontracts,includingcontracts

forregistryservices,ICANNhasenteredintodiscussionsthathavebeensignificantly

delayedbytheotherpartysfearofenteringintocontractualarrangementswitha

Californiapublicbenefitnonprofitcorporationandtheconcernsthatsuchcontracting

partywouldneedtoavailthemselvesofCalifornialaworbefacedwiththeapplication

ofCalifornia/USlawonthemforenteringintoanagreementwithaCaliforniabased

entity.38

InadditiontothefearofbeingsubjectedtotheAmericanlegalsystem,thechallenges

tocontractingalsoarisefromthecorelegitimacyissueaddressedatSection0above.

Somestakeholdersarehesitanttoenterintoarrangementsandagreementswithan

entityfoundedundertheCaliforniaCorporationsCodeforfunctionsthatthe

stakeholdershomecommunitybelievesshouldrestinaninternationallyfounded

organization.

38ICANNtypicallyrequirescontractingpartiestoagreetosubmitanycontractualdisputestoacourtin

CaliforniaandhavethosedisputesdeterminedunderCalifornialaw.ICANNhasalsometwithresistance

evenwhenofferinginternationalarbitrationasameansofdisputeresolutionperhapsindicatingthatthe

issuesrunbeyondthespecificallystatedconcernsorrationaleinsomeinstances.


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ThefearofbeingsubjectedtotheAmericanlegalsystemalsochillsparticipationin

ICANNspolicysettingandcoordinationfunctions,evenforthoseStakeholdersfor

whomnocontractoragreementisnecessary.Asanexample,duringdiscussionsrelated

totheformationofICANNsccNSOandduringotherdiscussionssurroundingICANNs

AtLargeAdvisoryCommittee(ALAC),ithasbeencitedthatsomepartiesareconcerned

aboutbeinginvolvedwithICANNforfearofbecomingsubjectedtoCalifornialawand

jurisdiction.

SummaryofPSCsProcesstoDate

ThePSCaskedICANNStafftoperformresearchonhowICANNmayaddresstheseissues

andimprovetheefficienciesinperformingICANNsfunctions.Thefollowingitemsof

researchweredelivered:

Afunctionschartmappingtheprimaryfunctionsperformedbytheorganizationandsupportingdocumentsidentifyingthefunctionsmost

impactedorimprovedbychangestotheorganizationalstructure;

Aninitialreviewoftheemergingareaofinternationalnonprofitlawandanevaluationofjurisdictionsthatmaysupporttheformationofan

internationalorganization;and

Aninitialchartingofthepotentialorganizationalandlegalhurdlesrequiringfurtherresearchandevaluationpriortothecreationofanadditionalentity.

ReviewofICANNsCurrentFunctions

ToassistinareviewofhowICANNsorganizationcouldberestructuredtoallowfor

increasedefficienciesinfulfillingICANNsfunctions,ICANNStaffprepared

documentationclassifyingICANNsfunctionsintothreecategories:(1)functionsthat

mustremainintheUS;(2)functionsthatcouldbefacilitatedbytransferringsomeresponsibilitytoasubsidiaryentityoutsideoftheUS;and(3)functionsthatcouldeasily

betransitionedtoasubsidiaryentity.39Summariesofthosecategoriesareasfollows:

39AppendixA,alistoffunctionsormanagementroles,wasincludedinthematerialsforthePSCmeeting

on5February2009.Amorethoroughdiscussioncanbefoundthere.


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viii 25February2009

FunctionsthatmustremainintheUS

Thefollowingfunctionsrepresentativeofthosethatshouldremainundertheoperation

andcontrolofICANNandshouldnotbetransitionedtoorperformedbysubsidiaryor

relatedentity:

CorporateLegalComplianceIssuessuchas:Taxation,USNonProfitTaxationCompliance,USbasedpayrollandhumanresourcetaxation,US

corporatefilings,USlitigationdefenseandmanagement,reviewof

competitionissues,USbasedcontractualcompliance,anddocument

preservationrequirements;

Websitemaintenance; Securityandstabilitycoordination; BoardofDirectorsactivities,including:meetings,workshops,trainings,

implementationofconflictofinterestpolicies,committeegovernance

anddecisionprocesssupport;

Policystructureorganizationandsupportforsupportingorganizationsandadvisorycommittees,stakeholderparticipation,etc.;

OrganizationaladministrationofICANN; HumanresourcesforUSbasedemployeesofICANN; Certaincontracts,suchas:DNSstructurerelationships,legacygTLDsand

sTLDs,andRegistrarissues(includingsecondarymarketplaceissues,

registrantprotectionandcontractualcompliance); IANAfunctions; OperationoftheLRoot; RootServerrelationships;and ManagementofrelationshipwithUSGovernment,includingtheJoint

ProjectAgreement.

Functionsthatmightbeenhancedthroughasubsidiaryorarelatedentity

Thefollowingarefunctionsthatpotentiallycouldbeevaluatedforsharingbetween

ICANNandarelatedsubsidiaryentity,afterassuringpropercoordination:

FacilitationofpayrollandhumanresourcecompliancefornonUSbasedemployees,particularlyifsharedemploymentispossible;


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CoordinationofdefenceofnonUSlitigation,assuringthatnocompetingpositionsorconflictsarisebetweenthenewentityandUSICANN;

EnforcementofnonUScontractsandresorttononUSarbitralforums; FacilitationofpublicparticipationandmaintenanceofICANNs

transparentprocess; OrganizationofPublicandRegionalMeetings; Communicationsfunctionsassistance,toenhancerelationswithnonUS

businesses/entitiesandoperationsandnonUSstakeholderrelations;

PolicydevelopmentandsupportofadvisoryandsponsoringorganizationssuchasccNSO,GAC,andALAC,iflegalresearchdeterminesthatpolicy

developmentcanbecoordinatedwithUSICANNpolicyprocessand

supportmechanisms;

Policyimplementation; OversightofnonUShumanresourceneeds,suchashealthcare,

pensions,etc;

Recruiting; Coordinationofcertaincontracts,suchas:registryagreements

(particularlyfornewgTLDs),independentandthirdpartycontractors,

managementandemployeecontracts,andtechnologyandlicensing

contracts;

ccTLDsandIDNccTLDs;

Registrarissues,suchas:oversightofexistingregistrarrelations,registrarapplicationprocessingandpossiblyenteringintoregistraragreements;

and

GACoperation.

FunctionsthatmightbeperformedbysubsidiaryorrelatedentityoutsideofICANN

Thefollowingfunctionscouldbeevaluatedtobetransferredtoanoutsideentityand

mightbeperformedmoreefficientlyinarelatedinternationalentityratherthanunder

ICANNscurrentUSform:

Globalrelationshipsandregionalliaisoncoordination,solongasthisworkcontinuesinafashionconsistentwithUSICANNscorevalues;

Interpretationandtranslationservices; TLDswithnonUSgovernmentsandIGOs;


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x 25February2009

AccountabilityFrameworksandExchangeofLettersforccTLDs; AdvocatingtoandprovidingadvicetointerestedGovernments;and EnteringintoGlobalPartnershiparrangementswithGovernments.

ForeachofthefunctionsthatcouldbeenhancedbytheeffortsofanonUSentityor

couldbetransitionedtoanonUSentity,researchstillneedstobedonetodeterminea

varietyoflegalissues,suchaswhetherthetransitionoffunctionswillcompromiseUS

ICANNsresponsibilities,whetherlocallawsassistintheperpetuationofthefunctions,

andalsohowtooperationallyassurethatallactionsaretakenconsistentwithICANNs

corevaluesandmission.Moreoftheseissuesareidentified0below.

Summaryoflegalresearchpresented

TheresearchtowardsfindinganinternationalsolutionforICANNstartedwithtwobasic

assumptions:(1)ICANNwillbebenefitedbyaglobalizedapproach;and(2)ICANNwill

maintainanoperationalheadquartersintheUS,aswellasexpandandmaintainits

presence,throughbranchofficesorotherwise,aroundtheworld.40

ICANNscorporateformintheUS

TheGeneralCounselsOfficereviewedICANNscurrentstatusasaUSBasednonprofit

organizationunderUSFederalTaxCodeSection501(c)(3),whichinpartoriginatedfrom

thegroundsthatICANNlessen[s]theburdensofgovernmentbyperforminga

functionpreviouslyundertakenbytheUnitedStatesgovernment.TheUnitedStates

InternalRevenueServicehasstatedthatinorderforanorganizationtosatisfythe

requirementsofthelesseningtheburdensofgovernmentbasisfor501(c)(3)status,it

mustlessentheburdensofthefederalgovernmentforUnitedStatestaxpayers.Itwas

40Thelegalstructuresresearch,SchematicOverviewofPossibleLegalStructuresandJurisdictionsfor

ICANN,wasincludedinthematerialsprovidedtothePSCforthe6February2009meeting.Itisa115

pagedocument,thereforeonlythemostrelevantportionsaresummarizedhere.


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xi 24February2009

determinedthatotheroptionsfororganizationwithintheUnitedStateswere

insufficienttomeetICANNsneedsatthistime,butitshouldbereviewedinthefuture.

UnderICANNscurrentstructure,ICANNmaybeabletoobtainstatusasapublic

internationalorganization.Underthisstatutorilyrecognizedorganizationalstatus,for

example,anentitylikeICANNcouldbebothaCalifornianonprofitpublicbenefit

corporationandadesignatedpublicinternationalorganizationeligibleforlegal

privileges,exemptionsandimmunitiesbestowedbythePresidentoftheUnitedStates.

Thisisuniqueasitistheonlystructuralformthatisnotmutuallyexclusive;forexample,

anentitycannotsimultaneouslybeincorporatedunderthelawsofCaliforniaand

Belgium.Thoughanevaluationofthelikelihoodofsuccessofachievingthepublic

internationalstatusisoutsideofthescopeofthispaper,itwasdeterminedthatitis

extraordinarytoobtainsuchastatus,andtheprocessissufficientlyburdensomeasto

beunlikelytobesuccessful.

BelgiumandSwitzerlandoffercorporateformswarrantingfurtherresearch.

BothSwitzerlandandBelgiumhaveinternationalnonprofittypeorganizationsthat

couldbeformedasrelatedentitiestotheU.S.parentcorporationandcarryoutICANNs

functions,andseemtobethebestfitbasedupontheassumptionsthatwentintothe

research.41Preliminarily,theSwissFoundationappearstobethebestpossibleavailable

option,butdetailedresearchandconsultationisrequiredpriortofinalizingthe

recommendation.

41Ofthe13nationallawregimeslocatedinvariousregimesthroughouttheworldthatwereevaluated,

mostoftheseregimeshadissueswhichrequiredcounselandthePSCtoeliminatethemfrom

considerationbasedonconsiderationofseveralfactors,ascertainoptionsinparticularjurisdictionswere

notoptimalforICANNtocontinuingpursuing.Suchdisqualifyingfactorsinclude,butarenotlimitedto,

thefactthatthestructureand/orjurisdictionwould:(i)requireamembershipstructure;(ii)notprovide

fortaxexemptstatus;(iii)requirestockissuanceanddevelopmentofashareholdermodel;(iv)not

permitcontinuedpresenceorheadquartersintheUS;(v)besubjecttogovernmentaloversightand

authority;(vi)requireasignificantnumberofBoardmemberstoresideinthejurisdictionandbeoflocal

nationality;(vii)requiretheorganizationtooperatesolelyondonations;(viii)onlysupportatemporary

presence;and/or(ix)havelimitedabilitytorecruitandhireforeignemployees.


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xii 25February2009

SummaryofBelgianOptions

Belgiumhasthreerelevantpotentialstructures,withthebestpossibleoptionasthe

PrivateFoundation,likelythemostsimilartoICANNscurrentstructure.42APrivate

Foundationmustbenotforprofitanddedicatedtoachieveadisinterestedpurpose.A

PrivateFoundationdoesnothavemembers,andisrunbyaBoardofDirectors.While

allthreeBelgianstructuresallowthemaintenanceofanentityasasubsidiaryofa

UnitedStatescorporation,thePrivateFoundationisuniqueinthatitistheonlyBelgian

structureallowingforachangeinitspurposeclauseorchangeinactivitiestomeetits

purposewithoutRoyalDecree.

Inthepast,Belgiumhasenteredintoagreementsgrantingprivilegestointernational

organizations.Whilethisbenefitisgenerallyofferedtotreatybasedorganizations,

BelgiumaffordedthisstatustotheInternationalCommitteeoftheRedCross,aprivate

organization.ICANNmayqualifyforthisprivilegesstatus,subjecttoagovernmental

reviewofitsmission,structure,andcompetencetoperformitsmission.TheBelgian

MinistryofForeignAffairsandBelgianParliamentwouldmakethisdecision.Infurther

assessingtheBelgianPrivateFoundation,ICANNmaybenefitbylocatingandretaining

consultantsorexpertswhocanfurtherassessthehurdlestoobtainingaprivileges

agreementandprovideanopiniononICANNsabilitytodosoasaprivateorganization.

ReviewofSwissOptions

SwitzerlandhasacorporatestructurecalledaFoundation,anentityrunbyaBoardof

Directorsandwithoutmembers.TheFoundationmustbededicatedtoachieveapublic

orprivatebenefitspecifiedinitsArticlesofAssociation.IfaSwissFoundationisnon

profitandactingforthepublicbenefit,itsactivitiesaretaxexempt;however,those

activitiesmustatleastpartiallybeintheinterestofSwitzerland.Furthermore,

amendmentstoFoundationsarticlesandbylawsaresubjecttoapprovalbySwiss

supervisingauthorities.TheSwissSupervisoryBoardofFoundationsrecommends

42TheothertwoBelgianformsoforganizationalstructurearetheInternationalNonProfitOrganization

andtheFoundationforthePublicBenefit.


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xiii 24February2009

certainaccountingandgovernanceprinciplestobeusedbyFoundations,andseveral

Foundationshavevoluntarilyembracedacorporategovernancecodefornonprofit

organizations.

TheFoundationcannotbedirectlyheldasasubsidiaryofaUnitedStatescorporation;

however,ifaU.S.corporationwerethefounderofaF

ICANN - Improving Inst Confidence

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