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ICANN Special: New legal hurdles (Part 2)

I hear you knocking - but you can't come in.

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Internet Security Threat Report 2014

With Andy Mueller-Maguhn of Germany's Chaos Computer Club ("Welcome ... Hackers!") heading the European nominations for its at-large elections, you'd think ICANN would have enough to worry about.

But a bigger threat to its notorious closed-door sessions could come not from Europe, but from its own backyard. The issue has been raised by Karl Auerbach, who coincidentally leads the US side of nominations for those at-large elections. Auerbach will be familiar to anyone who follows Internet governance: he's both a distinguished hacker with Cisco's advanced research group, and a member of the Californian bar.

According to Auerbach, long-standing issues about ICANN's compliance with Californian law - where it's registered as a nonprofit organisation, could soon boil over into class action suits against the beleaguered Internet quango.

The Californian corporations code has special provisions for three types of nonprofit organisations. But to qualify, they've each got to have something in common: they must be membership organisations. And to qualify as a membership organisation, you should do one of two things. Firstly, you can declare that you have members - and that's something ICANN has refused to do.

Auerbach says repeated requests for ICANN to release the list have been declined: "By my reading of the law, their refusal to make the membership list available is quite improper," he tells us.

But a second qualification for being a membership organisation is to have an election in which people vote directly for board seats "pursuant to a specific provision of the bylaws or articles". Isn't that what ICANN's just done? Not exactly, seems.

Although ICANN describes this as an election in its publicity material, and on its website, it wasn't actually steered through in any bylaw or article. "They don't use the word 'election' but instead use the word 'selection,'" notes Auerbach. "And they didn't create an election in bylaws, but instead passed a resolution. But if you look at the minutes it was clearly 'pursuant'.

So ICANN appears to have weaseled its way out of fulfilling either of its obligations under Californian nonprofit law. Remember that this is a corporation without shareholders as such - but it still has to fulfill obligations and responsibilities that a regular corporations do - which is where the members step in.

"Membership gives us a whole laundry list of rights," says Auerbach. "For example, a corporation is considered to be a legal entity to itself - like a fictitious person. So a corporation can sue its own management - these members or directors can bring a derivative action - and the corporation foots the bill," he notes. "It's an enormously heavy and powerful hammer against misbehaving management."

However the at-large elections could be the clincher. Auerbach sees a class action suit as a real possibility. "They've been trying to evade this reponsibility for a time now" he says. ®

Also in today's special:
ICANN Special: New legal hurdles (Part 1)
ICANN Special: The Triangulations of Esther Dyson

Related stories

Who the hell does WIPO think it is?
Users come last in ICANN elections scramble

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