Based on the Postel-Batista Text of 17 September 1998
Articles of Incorporation and the By-Laws of the
Internet Corporation for Assigned Names and Numbers (ICANN)
BACKGROUND OF THE BOSTON REVIEW
Participants were:
Scribe: Diane Cabell, intellectual property attorney with Fausett, Gaeta & Lund, Boston
Host: Jorge Contreras, corporate attorney with Hale & Dorr of Boston, originally trained in Electrical Engineering at Rice University and now specializing in corporate and computer law
The review began at the offices of Hale & Dorr on 19 September 1998 with a discussion of expectations for the new entity, including prevention of capture by special interests, stabile transition to the new authority, fair access and utilization of the root assets, flexibility for growth and user protection.
The group identified the new entity's core responsibilities as the rights to (a) edit the root files, (b) assign the address space, and (c) control the operation, assignment and management of protocol parameters such as port numbers and enterprise numbers. This committee was unanimous in its belief that the beneficiary of ICANN operations should be the end user and not any intermediary or trade group. The common points of consensus arising from the IFWP fora are incorporated in the final review to the best of the participants' understanding of such points.
The committee suggests the following changes to the documents presented by Jon Postel and Gabe Batista at http://www.iana.org/articles-coop.html and http://www.iana.org/bylaws-coop.html (both visited on 19 Sept. 1998) which are hereafter called the "PB text."
For convenience we have merged the changes into the base documents:
1.1 PREAMBLE and STATEMENT OF PRINCIPLES
Add the following text at the beginning of the Articles of Incorporation and renumber succeeding Articles:
"1. PREAMBLE and STATEMENT OF PURPOSE
The Internet has grown to be a worldwide system with significant effects on people, schools, organizations, businesses, and governments everywhere. It is no longer reasonable for the operation of the Internet to be performed through informal arrangements. These Articles of Incorporation and any By-Laws adopted hereunder are intended to establish an open, accountable, responsive, and transparent entity to assume certain limited managerial yet critical roles with respect to the Internet. Necessarily the Corporation hereunder must be initially composed of a relatively small number of participants. However it is a fundamental principal that this Corporation move with rapidity to be more broadly based."
The purpose of these Articles and supporting By-laws is to create an entity consistent with the requirements and aspirations expressed in the document commonly referred to as the "White Paper" issued by the United States Department of Commerce's National Telecommunications and Information Administration on the "Management of Internet Names and Addresses", Docket Number: 980212036-8146-02 and to guarantee that such entity shall perform its functions so as to foster a fair, open, transparent and competitive environment for the Internet, assuring equal access to essential resources.
Comment: A Preamble and Statement of Purpose better identifies the mission of the organization.
1.2 Existing Article 3, Renumbered Article 4: Replace the last sentence with the following text.
"In furtherance of the foregoing purposes, the Corporation shall, except as limited by Article 4 hereof, pursue the charitable and public purposes of fostering an open, competitive, global and fair environment in all areas of Internet responsibility, assuring fair and equal access to the resources of the Internet, providing cost-effective services and providing for the operational stability of the Internet infrastructure by (i) coordinating the assignment of Internet technical parameters as needed to maintain universal connectivity on the Internet; (ii) performing and overseeing functions related to the coordination of the Internet Protocol ("IP") address space; (iii) performing and overseeing functions related to the coordination of the Internet domain name system ("DNS"), including the development of policies for determining the circumstances under which new top-level domains are added to the DNS root system; (iv) overseeing operation of the authoritative Internet DNS root server system; and (v) engaging in any other related lawful activity in furtherance of items (i) through (iv)."
Comment: The existing text identifies the purpose of the corporation solely as "lessening the burdens of government" in the relevant areas of authority. This is an insufficient guideline for the new entity.
1.3 Existing Article 8, Renumbered Article 9: Delete the entire PB text and substitute the following:
"The Board shall move to a membership structure with all deliberate speed. Until a membership structure has been established, these Articles can be amended only by the affirmative vote of at least three-quarters of the Directors. Once the Corporation has a membership structure, these Articles may be amended only by the affirmative vote of at least three-quarters of the votes cast by members."
Comment: It is our belief that certain protections, like Constitutional rights, should be established in the Articles. Such protections cannot be altered except by consensus of a large majority of the beneficiaries of the public purpose of the entity. Coupled with our definition of membership below, we believe this protection is necessary to avoid capture of the entity by special interests. We have serious concerns about allowing this entity, upon which so many individuals around the world depend, to be controlled by such a small number of individuals.
1.4 Add the following to the Articles of Incorporation as Section 10:
Section 10. The Corporation is expected to enter into an agreement with the United States through which the United States will convey to the Corporation certain rights and privileges, many of which are in the form of intangible goodwill. These include the ability to edit and publish the set of files comprising the root zone of the Domain Name System (DNS), designate the set of official root DNS servers, allocate the IP address space in whole or in part, and assign protocol parameters. These rights and privileges shall be collectively known as the "fundamental assets". The Corporation may neither alienate, encumber, nor use as security any of the fundamental assets, in whole or in part, except that the Corporation may enter into contracts, not to exceed five (5) years in duration, under which use of these fundamental assets, in whole or in part, may be licensed to a third party for purposes consistent with these Articles.
Comment: The existing draft does not identify the basic subject matter over which the corporation is to exercise its authority. In this change we make that identification and we limit the corporation's ability to transfer control to third parties.
2.1 ARTICLE II MEMBERSHIP
Delete the entire PB text and substitute the following:
(This Section is reserved to establish the membership objectives of Article 9 of the Articles of Incorporation.)
We expect the Board to proceed with all due rapidity to establish a Membership organization which shall be the beneficiaries and the ultimate source of authority for Board activities.
2.2 ARTICLE III TRANSPARENCY AND PROCEDURES
2.2.1 Section 2 ACCESS TO INFORMATION
2.2.1.1 Remove parenthetical text at end of first sentence.
Comment: Recent disclosures concerning high salaries, benefits, and liberal expense reimbursements are a cause of great concern. We feel that public disclosure of expenses will serve as a partial impediment to any such development in the corporation.
2.2.1.2 Insert following the second sentence:
"Minutes shall be approved and published no later than 30 days after voted upon by Directors."
Comment: Transparency requires the prompt publication of minutes.
2.2.1.3 Remove the words “or contract” in the penultimate sentence.
Comment: The existing language permits the corporation to enter into a contrived contract which would, as one of its provisions, prohibit disclosure of matters that otherwise would have to be published. We suggest that Board have regard for the principles of Open Meeting requirements of, for example, the State of California.
2.2.2 Section 3 NOTICE AND COMMENT PROVISIONS
Subsection (b)(iii): Remove the word "adopted."
Comment: We feel that the board should publish the actual reasons an action is taken rather than one which is "adopted".
2.2.3 Section 4. BOARD RECONSIDERATION
Substitute for the first sentence:
"The Board shall adopt policies and procedures through which a party affected by an action of the Corporation can seek reconsideration of that action by the Board."
Comment: We felt that the existing language was too narrow, that it did not permit review of one who was affected by an action by a corporate officer, employee, or agent.
2.2.4 New Section 5. VOTING ON RECORD
Add the following new Section 5 to Article III to the By-Laws
Section 5. Every matter before the board shall be decided using a roll-call in which the vote cast by each director shall be recorded in the minutes.
Comment: Transparency and accountability require that the membership know exactly how the corporation is run. To that end, we feel that it is necessary that all votes be on the record and that each Director's position on each issue voted upon be known.
2.3 ARTICLE IV: POWERS
2.3.1 Section 1. GENERAL POWERS
2.3.1.1 In Subsection (b) delete the entire PB text and substitute the following:
"The Corporation shall not act as a Domain Name System Registry or Registrar or IP Address Registry or create or alter protocol parameters [as defined in Article VI Section 3 (a)(iii) below] in competition with entities affected by the policies of the Corporation.
Comment: This change removes an inconsistency in the existing draft.
2.3.1.2 In Subsection (d) remove the words "between the United States of America and Network Solutions Inc. and between the United States of America and the University of Southern California and"
Comment: The new entity should not be bound by pre-existing agreements to which it was not a party. While the need for continuity of existing arrangements is understood, this clause is overbroad and does not afford the Board of Directors any opportunity to review and reject or ratify prior agreements. We do not recommend the wholesale exercise of this ratification/rejection authority during the transition period but after a specified period of time (e.g., two years), the Board should have the freedom to act in the best interests of the public.We anticipate that there will be a period of negotiotions between the United States, the Corporation, IANA, NSI, and other parties in which documents, files, software, assets, and other rights and privileges will be transfered. It is in these agreements that any special arrangements with NSI and USC should be made. The Board may then, applying normal standards of duty to the Corporation, chose to accept and thus become a party to these contracts.
2.3.1.3 Subsection (e)
Comment: We are concerned that this section is too vague, that the vagueness and subjectiveness of terms will lead to frivolous litigation or other abuse of the system.
2.3.2 Section 2. FEES AND CHARGES
Replace the second sentence with the following:
"Each Supporting Organization shall propose a structure of fees and charges that will be remitted to the Corporation with respect to matters within its scope (as defined by the Board in its recognition of such Supporting Organization), but all such fees and charges shall be set by the Board, with the goals of fully recovering the reasonable costs of the operation of the Corporation in accordance with the agreed annual business plan and establishing reasonable reserves for future expenses and contingencies reasonably related to the legitimate activities of the Corporation."
Comment: We strongly feel that the corporation must adopt an open annual business planning process.
2.4 ARTICLE V: STRUCTURE OF THE BOARD OF DIRECTORS
2.4.1 Generally - Remove the power of the Supporting Organizations to appoint members of the Board.
Comment: The role of the Supporting Organizations (SO) should be to limited to the provision of policy advice. This was the consensus position from the IFWP fora. See IFWP Consensus Summary by the Berkman Center for Internet & Society, Harvard Law School, http://cyber.law.harvard.edu/ifwp/consensuslist.asp (visited on 20 Sept. 1998).
There is also potential for conflict of interest between advisory and rule making roles. Therefore we strongly advise against making SO’s members of the Board. We envision the SO’s as permanent standing committees. We have retained the language of Article VI, Section 1(c), thus giving significant strength to SO's policy recommendations.
Conforming changes should be made throughout the By-Laws.
2.4.2 Section 1. INITIAL BOARD
2.4.2.1 Delete the entire PB text and substitute the following text:
"The initial Board of Directors of the Corporation ("Initial Board") shall consist of nine At Large members. Members of the Initial Board shall serve until September 30, 1999, unless by a two-thirds (2/3) vote of all the members of the Board that term is extended for some or all of the members of the Initial Board for an additional period, to expire no later than September 30, 2000. The members of the Initial Board shall serve the terms specified in Section 9(d) of this Article. No member of the Initial Board shall be eligible for additional service on the Board until two years have elapsed following the end of his or her term on the Initial Board. "
Comment: The process for selecting the initial 9 directors is unclear in the PB documents. We recommend that the selection be made by the persons who participated in any way in the IFWP process. It is suggested that such voting be conducted under a Single Transferable Vote procedure.
2.4.2.2 Eliminate the President from the Board.
Comment: An officer should serve at the will of Board, not as a part of Board.
Conforming changes should be made throughout the By-Laws.
2.4.2 Section 2. INITIAL BOARD MEMBERS SELECTED BY THE SUPPORTING ORGANIZATIONS
Delete this Section entirely.
Comment: As discussed previously, the SO's should be limited to serving as advisors, not Board Members.
2.4.3 Section 3(b) NUMBER OF DIRECTORS AND ELECTION OF CHAIR
Delete “not including the President.”
2.4.4 Section 4 QUALIFICATION OF DIRECTORS AFTER THE INITIAL BOARD
2.4.4.1 Subsection (a) Delete the entire PB text and substitute the following:
Each Board after the Initial Board shall be comprised of at least Nine At Large Directors selected by a majority of all votes cast by Members pursuant to an election process to be established by the Initial Board.
2.4.4.2 Subsection (b) Delete the phrase "the time that the directors selected by the Supporting Organizations have been seated, or before June 1, 1999, whichever is sooner." Replace it with the words "June 1, 1999."
2.4.5 Section 6. INTERNATIONAL REPRESENTATION
Delete from the first sentence: "and no more than two (2) of the Directors nominated by each Supporting Organization shall be residents of any one Geographic Region". Replace it with "and it is desirable to have each at least one Director from each Geographic Region."
2.4.6 Section 7. CONFLICT OF INTEREST
2.4.6.1 After the third sentence, add "Such disclosures should, to the extent reasonable in consideration of proprietary concerns and individual privacy, be a matter of public record."
Comment: We found the existing draft to be inadequate by not mandating that there be public disclosure of conflicts. We believe that it is necessary for the membership to know how a director's opinions may be affected by extrinsic matters. Yet, we do recognize that there are reasonable concerns for privacy.We also believe that Officers should be put under similar obligations to disclose conflicts.
2.4.7 Section 9. ELECTION AND TERM
2.4.7.1 Subsection (a) Delete the entire PB text and substitute the following:
"Directors shall be elected at each annual meeting of the Board to hold office until the end of their terms pursuant to the procedures described in this Section. If an annual meeting is not held or the Directors are not elected at the annual meeting, they may be elected at any special meeting of the Board held for that purpose. Each Director, including a member of the Initial Board and a Director elected to fill a vacancy or elected at a special meeting, shall hold office until expiration of the term for which elected and until a successor has been elected and qualified."
Comment: As discussed previously, we do not believe that the President should be a member of the Board of Directors. As such we have removed such language from this section.
2.4.7.2 Delete Subsection (b) entirely.
2.4.7.3 Delete Subsection (c) entirely and substitute the following:
"(c) At Large Board members other than those serving on the Initial Board shall be elected by a majority vote of all members in a process to be established by the Initial Board and which shall include solicitation of input from all interested parties and consideration of all such suggestions. At a minimum, such a process shall consist of nominations from Internet users, industry participants, and organizations, and should give consideration to such nominees. Any process for election by members shall provide an initial means for determining adequate support for any nominee and establish qualifications for submission to the membership."
Comment: As we strongly believe that the corporation should, without question, quickly become one with a membership, we have amended this subsection to eliminate the ability of the Board to evade its responsibility to establish a membership plan.
2.4.7.4 Section 11. REMOVAL OF A DIRECTOR
Add the words "for cause" after the word "removed" where it first occurs in the first sentence
2.4.7.5 Section 12. VACANCIES
Remove from the first sentence the phrase "if a Supporting Organization shall fail to nominate its Directors (other than Directors on the Initial Board) in accordance with Section 9 of this Article,"
2.4.7.6 Section 24. RULES OF PROCEDURE
Remove the words "and Supporting Organizations" .
2.4.8 Section 25 ANNUAL BUSINESS PLAN
Add the following text to Article V:
"Section 25 ANNUAL BUSINESS PLAN
"The Board shall prepare an annual business plan which shall include a financial plan identifying funding sources and levels, a strategic plan and delegated financial authorities. The plan shall be a matter of public record and published at the Annual Meeting preceding the fiscal year to which the business plan pertains."
2.4.9 Section 26 HEARINGS AND APPEALS
Add the following text to Article V:
"Section 26 HEARINGS AND APPEALS
There shall be established a process for hearings and appeals of substantive adjudications made by the Corporation. Such process shall be in accord with established principles of fairness and due process."
2.5 Article VI SUPPORTING ORGANIZATIONS
2.5.1 Section 1. POWERS
2.5.1.1 Delete Subsection 1(b) entirely.
2.5.1.2 Subsection 1(c)
Comment: We strongly approve of this role for Supporting Organizations. However, our approval is contingent upon SOs being standing committees of the Corporation without power to appoint Directors.
Further we strongly believe that the Supporting Organizations must be an integral part of the corporation and consequently bound to the same constraints as the Corporation. Otherwise were the SO's to be separate entities they could become a vehicle to avoid the responsibilities established by the Articles and By-Laws.
2.5.2 Section 3 DESCRIPTION AND QUALIFICATIONS
In Subsections (a)(i), (ii) and (iii), add “and individuals” in each subsection after the phrase "any entities"
Comment: Subsections (i), (ii), and (iii) present a risk of capture by special interests or by existing dominant players. We advise opening membership to all entities and individuals having a legitimate interest in the subject matter of the SO.
2.6 ARTICLE VII: SUPPORTING ORGANIZATIONS AND COMMITTEES
Comment: The Supporting Organizations should be regarded as primary Advisory Committees subject to the provisions, among others, of Sections 1 and 3 of Article VII.
2.7 ARTICLE VIII OFFICERS
2.7.1 Section 1 OFFICERS
Comment: There are too many officers for such a small organization. Consider using the minimum number of statutorily required officers, with the power to increase this number as the need arises.
2.7.2 Section 2. ELECTION OF OFFICERS
Comment: This Article confuses staff with officers. In the usual business organization model, the Board is expected to have interest only in certain key appointments, not in the general staff. It should remain optional for the President to make staff recommendations.
2.7.3 Section 4 PRESIDENT
2.7.3.1 Delete from the second sentence the words "shall serve as a member of the Board, and"
2.7.3.2 Add the phrase "and annual business plan" to the third sentence after the words "annual budget".
2.7.3.3 Add a new section imposing on officers the same requirements for disclosure of conflicts of interest as are applied to members of the Board of Directors under Article V, Section 7.
Comment: Officers often make significant decisions. It is important that both the Board and the membership know of any conflicted officers.
2.8 ARTICLE IX: INDEMNIFICATION OF DIRECTORS, OFFICERS EMPLOYEES AND OTHER AGENTS
Add the phrase “advisory committee members,” to the second sentence after each occurrence of the word "employee":
2.9 ARTICLE XII. AMENDMENTS
Delete the PB text entirely and substitute the following:
"Except as otherwise provided in the Articles of Incorporation and until a membership structure is established under Article II, the Bylaws of the Corporation may be altered, amended, or repealed and new Bylaws adopted, but only upon action by two-thirds (2/3) majority vote of all members of the
Board, except that these Bylaws shall not be amended until the earlier of (i) June 1, 1999, and further provided that any provision requiring a vote of more than two-thirds (2/3) of all members of the Board shall be changed only by such larger vote. These Bylaws will be reviewed at least annually, or more often if deemed necessary."Comment: Many of the provisions in the By-Laws should instead by placed in the Articles of Incorporation. The By-laws should be concerned primarily with routine business operations of the Corporation. Amendments to more substantive matters should require a vote of the Membership as provided in Paragraph 1.4 of this Review document.
3.1 Throughout the Articles of Incorporation and the By-Laws substitute the word "Clause" for the existing word "Section" and then substitute the word "Section" for the word "Article" (except when used to refer to the Articles of Incorporation.) All references in this Review document, however, shall continue to use the original PB title methodology.
Comment: We found it confusing to refer to "article XX of the Articles". It is much clearer to adopt the term "Section" in lieu of the existing word "Article" and adopt the term "Clause" in lieu of the existing word "Section". Thus what is currently Article III Section 86 of the Articles becomes Section III Clause 86 of the Articles.