Annex 01 - Recmmendatin #1 Annex 01 Recmmendatin #1: Establishing an Empwered Cmmunity fr Enfrcing Cmmunity Pwer 1. Summary Under Califrnia law and the current Bylaws f the Internet Crpratin fr Assigned Names and Numbers (ICANN), the ICANN Bard has the final respnsibility fr the activities and affairs f ICANN. With remval f the U.S. Natinal Telecmmunicatins and Infrmatin Administratin (NTIA) as a perceived enfrcement bdy ver ICANN, the CCWG-Accuntability requires a methd t ensure that decisins prduced by cmmunity accuntability mechanisms can be enfrced, including in situatins where the Bard may bject t the results. The CCWG-Accuntability recmmends creating a new entity that will act at the directin f the cmmunity t exercise and enfrce Cmmunity Pwers.. The entity will take the frm f a Califrnia unincrprated assciatin and be given the rle f sle designatr f ICANN s Directrs and will have the ability t enfrce directly r indirectly the Cmmunity Pwers. The entity will be referred t as the Empwered Cmmunity. As permitted under Califrnia law, the Empwered Cmmunity will have the statutry pwer t appint and remve ICANN Bard Directrs (whether an individual Directr r the entire Bard). Other pwers, such as the pwer t apprve r reject amendments t the Articles f Incrpratin and Bylaws may be prvided t the Empwered Cmmunity. The CCWG-Accuntability accepts that its statutry pwer will be limited as described abve and that this is sufficient given: The creatin f Fundamental Bylaws that can nly be mdified jintly by the ICANN Bard and Empwered Cmmunity. All recmmended Wrk Stream 1 accuntability mechanisms are cnstituted as Fundamental Bylaws. The right f inspectin is granted t Decisinal Participants in the Empwered Cmmunity. The right f investigatin is granted t the Decisinal Participants in the Empwered Cmmunity. The prcess fr the Empwered Cmmunity t use a Cmmunity Pwer is utlined in Recmmendatin #2: Empwering the Cmmunity thrugh Cnsensus: Engagement, Escalatin, Enfrcement. 26 January 2016 1
Annex 01 - Recmmendatin #1 2. CCWG-Accuntability Recmmendatins 1 The CCWG-Accuntability recmmends creating an entity that will act at the directin f the cmmunity t exercise and enfrce Cmmunity Pwers: This entity will take the frm f a Califrnia unincrprated assciatin and be given the rle f sle designatr f ICANN s Directrs and will have the ability t enfrce directly r indirectly the Cmmunity Pwers. This entity will be referred t as the Empwered Cmmunity. The Empwered Cmmunity will act as directed by participating Supprting Organizatins (SOs) and Advisry Cmmittees (ACs), which will be referred t as the Decisinal Participants in the Empwered Cmmunity. The Empwered Cmmunity, and the rules by which it is gverned, will be cnstituted in ICANN s Fundamental Bylaws alng with prvisins t ensure the Empwered Cmmunity cannt be changed r eliminated withut its wn cnsent (see Recmmendatin #3: Standard Bylaws, Fundamental Bylaws and Articles f Incrpratin). The Articles f Incrpratin will be amended t clarify that the glbal public interest will be determined thrugh a bttm-up, multistakehlder prcess. Additinally, the CCWG-Accuntability recmmends: Including in the ICANN Bylaws the right fr Decisinal Participants in the Empwered Cmmunity t inspect as utlined in Califrnia Crpratins Cde 6333, althugh this specific article reference wuld nt be mentined in the Bylaws. Including in the ICANN Bylaws the right f investigatin which includes the adptin f the fllwing audit prcess: upn three Decisinal Participants in the Empwered Cmmunity cming tgether t identify a perceived issue with fraud r grss mismanagement f ICANN resurces, ICANN will retain a third party, independent firm t undertake a specific audit t investigate that issue. The audit reprt will be made public, and the ICANN Bard will be required t cnsider the recmmendatins and findings f that reprt. Limitatin assciated with GAC acting as a Decisinal Participant: The GAC may nt participate as a decisin-maker in the Empwered Cmmunity s exercise f a Cmmunity Pwer t challenge the ICANN Bard implementatin f GAC cnsensus advice (referred t as the GAC carve-ut ). In such cases, the GAC will still be entitled t participate in the Empwered Cmmunity in an advisry capacity in all ther aspects f the escalatin prcess, but its views will nt cunt twards r against the threshlds needed t initiate a cnference call, cnvene a Cmmunity Frum, r exercise the Cmmunity Pwer. The GAC carve-ut preserves the ICANN Bard s unique bligatin t wrk with the GAC t try t find a mutually acceptable slutin t the implementatin f GAC advice supprted by cnsensus (as defined in Recmmendatin #11) while prtecting the Empwered Cmmunity s pwer t challenge such Bard decisins. Detailed Explanatin f Recmmendatins 26 January 2016 2
Annex 01 - Recmmendatin #1 2 Backgrund 3 With remval f NTIA as a perceived enfrcement bdy ver ICANN, the CCWG-Accuntability requires a methd t ensure that decisins prduced by cmmunity accuntability mechanisms can be enfrced, including in situatins where the Bard may bject t the results. 4 Objectives 5 In develping a mechanism t ensure the cmmunity can effectively enfrce its decisins, the CCWG-Accuntability agreed t: Minimize the degree f structural r rganizatinal changes required in ICANN t create the mechanism fr these pwers. Organize the mechanism in line and cmpatible with the current ICANN Supprting Organizatin and Advisry Cmmittee structures (with flexibility t evlve these structures in the future). Address the CWG-Stewardship dependencies. Prvide the fllwing pwers that wuld be cnstituted in the Fundamental Bylaws and wuld als be legally enfrceable: The pwer t reject ICANN Budgets, IANA Budgets r Strategic/Operating Plans (CWG-Stewardship dependency). The pwer t reject changes t ICANN Standard Bylaws. The pwer t apprve changes t Fundamental Bylaws (CWG-Stewardship dependency) and changes t the Articles f Incrpratin, and t apprve ICANN s sale r ther dispsitin f all r substantially all f ICANN s assets. The pwer t remve individual ICANN Bard Directrs (alng with appintment, CWG-Stewardship dependency). The pwer t recall the entire ICANN Bard (CWG-Stewardship dependency). The pwer t launch a cmmunity Independent Review Prcess (alng with an appeal mechanism fr issues relating t the IANA functins, CWG-Stewardship dependency). The pwer t reject ICANN Bard decisins relating t reviews f the IANA Functins, including the prcedure t implement a separatin prcess relating t Pst-Transitin IANA (CWG-Stewardship dependency). The rights f inspectin and investigatin. 6 Why the Sle Designatr Mdel? 7 The CCWG-Accuntability s First Draft Prpsal n Wrk Stream 1 Recmmendatins prpsed a Supprting Organizatin/Advisry Cmmittee Membership Mdel as the reference mdel fr the cmmunity enfrcement mechanism. Hwever, in the Public Cmment Perid, 4 May 3 June 2015, significant cncerns were expressed and the CCWG-Accuntability initiated wrk n alternative slutins. A cre cncern f the Supprting Organizatin/Advisry Cmmittee Membership Mdel was the ability f the ICANN cmmunity t fully participate in the new accuntability framewrk, and was integral t the wrk in devising a new apprach. The CCWG-Accuntability s Secnd Draft Prpsal n Wrk Stream 1 Recmmendatins prpsed a Sle Member mdel instead f the Supprting Organizatin/Advisry Cmmittee Membership Mdel. 26 January 2016 3
Annex 01 - Recmmendatin #1 8 Cncerns with a Sle Member Mdel 9 In the Public Cmment Perid n the Secnd Draft Prpsal n Wrk Stream 1 Recmmendatins, cncerns were raised abut the Sle Member mdel. Under Califrnia law, such members have certain statutry pwers that cannt be waived. Cmmenters expressed cncern that these rights, such as the ability t disslve the crpratin, culd nt be adequately cnstrained and might have unintended and unanticipated cnsequences. 10 The Sle Designatr Mdel 11 T address the cncerns described abve, the CCWG-Accuntability recmmends implementing a Sle Designatr mdel. The Empwered Cmmunity will have the statutry pwer t appint and remve individual ICANN Bard Directrs r the entire Bard, which is a requirement f the CCWG-Accuntability and the CWG-Stewardship. This remves the cncerns related t unintended and unanticipated cnsequences f the additinal statutry pwers assciated with a member. Other pwers, such as the pwer t apprve r reject amendments t the Articles f Incrpratin and Bylaws may be prvided t the Empwered Cmmunity. Given that the right t inspect, as utlined in Califrnia Crpratins Cde 6333, is nt a statutry right f a sle designatr, and that the cmmunity felt this was a critical requirement, the CCWG-Accuntability recmmends this right be granted t Decisinal Participants in the Empwered Cmmunity in the Fundamental Bylaws. 12 The CCWG-Accuntability external legal cunsel infrmed the grup that adpting a Sle Designatr mdel culd effectively be implemented while meeting the cmmunity s requirements and having minimal impact n the crprate structure f ICANN. 13 Legal Advice n Implementing the Empwered Cmmunity 14 T implement the Sle Designatr mdel, ICANN s SOs and ACs wuld create a unified entity t enfrce their Cmmunity Pwers. This unified entity will be referred t as the Empwered Cmmunity. 15 The Empwered Cmmunity will have the right t appint and remve ICANN Bard Directrs, whether individually r the entire Bard. 26 January 2016 4
Annex 01 - Recmmendatin #1 16 If the ICANN Bard refused t cmply with a decisin by the Empwered Cmmunity t use the statutry rights, the refusal culd be petitined in a curt that has jurisdictin t frce the ICANN Bard t cmply with that decisin. 17 The CCWG-Accuntability accepts that its statutry pwer will be limited as described abve and that this is sufficient given: 1. All f the recmmended Wrk Stream 1 accuntability mechanisms are cnstituted as Fundamental Bylaws and prtected frm any changes withut Empwered Cmmunity apprval. This includes the Independent Review Prcess (IRP) which issues binding decisins. This als includes the Empwered Cmmunity s pwer t launch a cmmunity IRP challenge if it believes the ICANN Bard is in breach f its Articles f Incrpratin r Bylaws. 1 The ICANN Bard wuld be in breach f its wn Bylaws if it refused t cmply with a decisin by the Empwered Cmmunity with respect t an accuntability mechanism defined in the Fundamental Bylaws. If a cmmunity IRP challenge with respect t such a decisin is successful and the Bard still refused t cmply with the decisin, the Empwered Cmmunity culd petitin a curt that has jurisdictin t frce the ICANN Bard t cmply with that decisin. Alternatively, the Empwered Cmmunity culd remve the Bard with the expectatin that the new Bard wuld respect the decisin. 1 Fr example, if the Bard were nt t accept the decisin f the Empwered Cmmunity t use ne f its Cmmunity Pwers. Cmmunity Pwers are dcumented in Recmmendatin #4: Ensuring Cmmunity Invlvement in ICANN Decisin-making: Seven New Cmmunity Pwers. 26 January 2016 5
Annex 01 - Recmmendatin #1 2. The Empwered Cmmunity has legal standing as a Califrnia unincrprated assciatin. The Empwered Cmmunity will act as directed by participating SOs and ACs (the Decisinal Participants in the Empwered Cmmunity) 3. The Empwered Cmmunity and the rules by which it is gverned will be cnstituted as a Fundamental Bylaw alng with prvisins in the Articles f Incrpratin and Bylaws t prtect it frm any changes withut its wn apprval. 4. The Articles f Incrpratin will be amended t clarify that the glbal public interest will be determined thrugh a bttm-up, multistakehlder prcess. Nte: Legal cunsel indicated that the Articles f Incrpratin culd be amended t ensure that the ICANN Bard must cnsider the cmmunity s interpretatin f the glbal public interest as ICANN pursues the charitable and public purpses set frth in Article III. The CCWG-Accuntability recmmends this change as part f the shift frm a Sle Member t a Sle Designatr mdel. The Articles will be amended t clarify that the glbal public interest will be determined thrugh a bttm-up, multistakehlder prcess. 18 Additinal Pwer Granted by Inclusin in the ICANN Bylaws Right t inspect accunting bks and recrds f ICANN 19 In additin t the statutry right that the Empwered Cmmunity will have and the new Cmmunity Pwers described in Recmmendatin #4, the CCWG-Accuntability recmmends including in the ICANN Fundamental Bylaws the right fr Decisinal Participants in the Empwered Cmmunity t inspect as utlined in Califrnia Crpratins Cde 6333, althugh this specific article reference wuld nt be mentined in the Bylaws. 20 This inspectin right is distinct frm the Dcument Infrmatin Disclsure Plicy (DIDP). While any eligible party can file a request accrding t the DIDP, inspectin rights are nly accessible t Decisinal Participants in the Empwered Cmmunity. The scpes are als different as explained belw. This inspectin right wuld include the accunting bks and recrds f ICANN and the minutes f prceedings f the Bard f Directrs and cmmittees f the Bard f Directrs, n the cnditins discussed belw. Since ICANN will nt have statutry members, the right t inspect member meeting minutes wuld nt apply. Althugh the Crpratins Cde des nt define bks and recrds f accunt, the term is generally understd t refer t the jurnals and ledgers in which financial transactins are riginally entered and recrded, and the statements cmpiled frm them. The term generally des nt extend t surce dcuments n which bks and recrds f accunt are based, such as canceled checks and invices. Similarly, the term generally encmpasses dcuments relevant t the peratin f the crpratin as a whle, and nt t thse relevant t nly a small r islated aspect f the crpratin s peratins. Authrity under Sectin 6333 is sparse, but it is nnetheless clear that a purpse reasnably related t [a] persn s interests as a member des nt include a member s cmmercial r plitical interests, harassment, r massive and repeated inspectin 26 January 2016 6
Annex 01 - Recmmendatin #1 demands prbing the minutiae f financial recrds and details f management and administratin. Similar limitatins will be applied t rights f inspectin prvided by the Bylaws. Unlike the exercise f the ther Cmmunity Pwers, which require cmmunity engagement and escalatin befre initiating a request fr actin by the Empwered Cmmunity, the CCWG-Accuntability recmmends that a petitin fr inspectin be brught directly by a single Decisinal Participant in the Empwered Cmmunity r by multiple Decisinal Participants in the Empwered Cmmunity thrugh making a written demand n ICANN fr the requested materials. If the Bard refused r ignred the request, the petitining Decisinal Participant(s) culd enfrce its inspectin right directly thrugh the IRP r by petitining the Empwered Cmmunity t initiate the escalatin prcesses fr a cmmunity IRP r fr remving the Bard. 21 Investigatin right There culd be areas where the cmmunity might wish t have additinal pwer in having transparency int investigatins f ptential fraud r financial mismanagement in ICANN. T address these cncerns the CCWG-Accuntability recmmends the adptin f the fllwing audit prcess: upn three Decisinal Participants in the Empwered Cmmunity cming tgether t identify a perceived issue with fraud r grss mismanagement f ICANN resurces, ICANN will retain a third party, independent firm t undertake a specific audit t investigate that issue. The audit reprt will be made public, and the ICANN Bard will be required t cnsider the recmmendatins and findings f that reprt. This right f investigatin wuld be included in the ICANN Fundamental Bylaws. 22 The Empwered Cmmunity 23 Implementatin f the Empwered Cmmunity currently anticipates that all f ICANN s SOs, the At-Large AC, and Gvernmental Advisry Cmmittee wuld participate in the Empwered Cmmunity that is, they will be listed in the Bylaws as the five Decisinal Participants. The GAC may nt, hwever, participate as a decisin-maker in the Empwered Cmmunity s exercise f a Cmmunity Pwer t challenge the ICANN Bard s implementatin f GAC cnsensus advice (referred t as the GAC carve-ut ). In such cases, the GAC will still be entitled t participate in the Empwered Cmmunity in an advisry capacity in all ther aspects f the escalatin prcess, but its views will nt cunt twards r against the threshlds needed t initiate a cnference call, cnvene a Cmmunity Frum, r exercise the Cmmunity Pwer. The GAC carve-ut preserves the ICANN Bard s unique bligatin t wrk with the GAC t try t find a mutually acceptable slutin t the implementatin f GAC advice supprted by cnsensus (as defined in Recmmendatin #11) while prtecting the Empwered Cmmunity s pwer t challenge such Bard decisins. 24 Clarificatins relating t the GAC carve-ut: The GAC carve-ut will nly apply t Empwered Cmmunity challenges t ICANN Bard actins that were based n GAC cnsensus advice, meaning the GAC advice was "apprved by general agreement in the absence f any frmal bjectin. The GAC carve-ut will nt apply t Empwered Cmmunity challenges t Bard decisins that were based n GAC advice that was nt supprted by cnsensus (i.e., nt apprved by general agreement in the absence f any frmal bjectin ). 26 January 2016 7
Annex 01 - Recmmendatin #1 Prcess fr identifying GAC cnsensus advice and applying the GAC carve-ut: GAC cnfirmatin: When the GAC prvides advice t the Bard, the GAC will need t indicate whether the advice was apprved by cnsensus. Bard cnfirmatin: When the Bard takes actin that is based n GAC cnsensus advice, the Bard will need t state in its reslutin that its decisin was based n GAC cnsensus advice. GAC carve-ut identified in petitin t use Cmmunity Pwer: When a Bard actin that is based n GAC cnsensus advice is challenged, the petitining SO r AC will need t indicate in the initial petitin that the matter meets the requirements fr the GAC carve-ut and clearly identify the applicable Bard actin and GAC cnsensus advice at issue. The decisin threshlds (as revised when the GAC carve-ut is invked in accrdance with Annex 2) required fr the escalatin and enfrcement prcesses will need t be met fr the Cmmunity Pwer that is being exercised. Timing fr invking the GAC carve-ut: The petitining SO r AC will need t indicate in the initial petitin t the Empwered Cmmunity that the matter meets the requirements fr the GAC carve-ut. Therefre, the timing restrictins fr this aspect f the escalatin prcess will apply (i.e., the petitin must be brught within 21 days f a Bard decisin being published). While this addresses timing f the Bard challenge, the Bard decisin that is being challenged culd be based n standing GAC cnsensus advice that the GAC had prvided at an earlier date. 25 The threshlds presented in this dcument were determined based n five Decisinal Participants. If fewer than five f ICANN s SOs and ACs agree t be Decisinal Participants, these threshlds fr cnsensus supprt may be adjusted. Threshlds wuld als have t be adjusted if ICANN changes t have mre SOs r ACs. 4. Changes frm the Third Draft Prpsal n Wrk Stream 1 Recmmendatins Scpe and limitatins with respect t the right t inspect accunting bks and recrds f ICANN cnfirmed, stressing the difference between DIDP and inspectin rights. Inspectin rights fr accunting bks and recrds and minutes based n a ne Decisinal Participant threshld. Intrduce additinal suggestin by the ICANN Bard regarding investigatin right (audits), based n 3 Decisinal Participants in the Empwered Cmmunity threshld. Cnfirmed directin fr implementatin t avid abusive claims. Cmprmise n Recmmendatin #11 required the creatin f the GAC carve-ut t the Empwered Cmmunity. 5. Stress Tests Related t this Recmmendatin ST5, 6, 7, 8, 9 10, 16, 24, 26 January 2016 8
Annex 01 - Recmmendatin #1 ST28 ST31, 32, 36 6. Hw des this meet the CWG-Stewardship Requirements? 26 These recmmendatins meet the CWG-Stewardship requirement that the CCWG- Accuntability recmmend the creatin f cmmunity rights regarding the ability t appint/remve Directrs f the ICANN Bard and recall the entire ICANN Bard. 7. Hw des this address NTIA Criteria? 27 Supprt and enhance the multistakehlder mdel. Decentralizing pwer within ICANN thrugh an Empwered Cmmunity. Prviding a legal set f pwers t the cmmunity while aviding the risks f making changes t ICANN s rganizatinal structure. 28 Maintain the security, stability, and resiliency f the Internet DNS. Creates an effective system f checks and balances n the ICANN Bard versus decisins which culd affect the security, stability, and resiliency f the Internet DNS. 29 Meet the needs and expectatin f the glbal custmers and partners f the IANA services. Prvides a clear set f mechanisms and prcesses fr hw the cmmunity can participate in and interact with the Empwered Cmmunity. 30 Maintain the penness f the Internet. Preserving plicies f pen participatin in ICANN s SOs and ACs. Retaining decisin-making based n cnsensus rather than vting. 31 NTIA will nt accept a prpsal that replaces the NTIA rle with a gvernment-led r an inter-gvernmental rganizatin slutin. Retaining decisin-making based n cnsensus rather than vting. Maintaining the advisry rle f gvernments in the SO and AC structure. 26 January 2016 9
Annex 01 - Recmmendatin #1 26 January 2016 10