Nondominium

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  • meaning one: = Nondominium – reflects the fact that no country or combination of countries has the power of dominant control over the relevant territory and resources.
  • a new form of common property


Definition

Chris Cook:

the consensual legal framework agreement within which value may be created, shared and exchanged (P2P) on credit terms by reference to a unit of account (note that a unit of account is NOT a currency).


Description

1. Chris Cook:

"Many indigenous peoples, such as American Indians and Australian Aborigines, find it impossible to understand how anyone can own land. Whereas, most religious traditions - including Christianity, Islam, and Judaism - were all founded upon a belief that absolute ownership, particularly of land, is God's alone, and that a tribute should be paid accordingly, such as a tithe.

I believe that an apt term to describe this proposal's essentially Gandhian approach to the property relationship is as a Nondominium - and my instinct is that such a framework could revolutionize international economic relations." (http://www.atimes.com/atimes/Global_Economy/MI24Dj01.html)


"Nondominium is an agreement which not only brings together these stakeholders jointly/collectively to hold land in common but also enables them severally/individually to share the rights and obligations as they may consensually agree.

In simple terms, the user of the land pays a rental in money or in kind (‘money’s worth’ such as produce) and a proportion of this flow of value is allocated to a Manager stakeholder group which provides services such as introducing occupiers and investors; dispute resolution; valuation; maintenance or supervision of maintenance.

It will be seen that the Manager’s interests are aligned with those of any Investors who participate in the Nondominium agreement by investing in the value which flows from use of the land. No stakeholder has a dominant or positive right to impose themselves on any other. But stakeholders do have certain veto rights within the agreement to say what may not be done by others.

The outcome of the use of what is essentially a ‘Co-operative of Co-operatives’ is that the Occupier, Investor, Manager, and even the Custodian may all change, but the land is never sold again, remaining in perpetuity within the Nondominium." (https://blogs.ucl.ac.uk/resilience/2013/01/16/submission-by-chris-cook-to-the-land-reform-review-group/)


2. Kurt Laitner (Sensorica):

"Nondominium is a framework to accommodate the voluntary registration of productive resources, the value added to them and by using them, and the outputs resulting from their use and modification, whereby all ownership rights in those resources, value added and outputs are transferred to a Custodian established for that purpose. The Custodian in return, acts in accordance with the Custodian Agreement, which is comprised of a Charter, a Value Equation (VE) and Governance Equation (GE), to return a subset of the ownership rights to the members in proportions determined by the Agreement using the ongoing value registered by members in real time. The members agree, by signing the Custodian Agreement, to register all value added to the Nondominium as well as all valuable outputs resulting from use of the Nondominium. Membership in a Nondominium is open to anyone willing to sign the Custodian Agreement.

The ownership rights granted to members are not divisible, transferable or tradable by the member and the right of the member to register further resources or value added may be withdrawn at any time through the proper exercise of governance rights granted by the Governance Equation.

The Custodian Agreement may only be changed by unanimous consent of the members, [k1] and the Value and Governance Equations may not be changed retroactively (only changed to apply to contributions on a go-forward basis).

Dissolution of a Nondominium must be altruistic. Assets may not be divided amongst members but must be gifted to an equivalently or more permissive (equivalently or less private) ownership structure, as appropriate to the nature of the thing itself (i.e. the Commons, open sourced, or donated to charity). Dissolution is subject to unanimous consent of the members." ([1])


Modification of Ownership Rights under Nondominium

Kurt Laitner:

"Ownership is conceived as a bundle of rights over a given property. Useful outcomes are possible by adjusting how these rights are bundled. Nondominium specifically adjusts the bundle of rights that are available to members using the value equation and governance equation and the structure of the Custodian who accepts all rights and redistributes them. The Custodian in turn is governed by the members of the Nondominium according to the governance equation.

All property rights are transferred to the Custodian by the members of the Nondominium through the act of registering a resource or value added into the Nondominium. The Custodian in return grants the members the right to use, alter/improve (add value), and to receive “rents” (more generally reward in any form) based on the value the member has contributed to the Nondominium in proportion to other members.

Exclusive use is not returned to the members but managed by the Custodian. Non-members may be excluded by the Custodian from use of the Nondominium. Members may be temporarily or permanently excluded from use of the Nondominium as an act of censure (based on agreed upon sanctions) or may be temporarily excluded from use of a portion of the Nondominium in the process of apportioning the use of rivalrous goods. Management (regulation of use) is performed through the fluid governance mechanisms described below. Temporary exclusive use of a rivalrous good (for example a piece of equipment) may be subject to tolls expressed in exchange value terms.

Withdrawal (including consumption) of a rivalrous good may be subject to provision of exchange value or to a system of account where credit balances must revolve. Destruction of value follows similar logic. Where withdrawal occurs across the boundary of the Nondominium it must be authorized by the appropriate decision making process. Any surplus exchange value realized through internal or external withdrawal shall accrue to the membership through the operation of the Value Equation.

It is worth noting that the rights to ‘keep’ or ‘abandon’ along with ‘exclude’ are the most problematic of property rights, in particular when applied artificially to non-rivalrous goods. These rights are withdrawn from the system by the Custodian to encourage use and development of resources in a sustainable way in the service of human needs, and to discourage hoarding and financialization of assets.

Alienation rights are modified to ensure that the Nondominium is only dissolved altruistically." ([2])

Characteristics

In the Sensorica, Open Value Accounting nondominium charter:


Governance

Nondominium and the Principles of Governance

1. Well Defined Boundaries: As a Nondominium applies to intangible as well as well bounded physical resources, boundaries are defined by whether a person has signed the Nondominium agreement. This is considered an open and largely permeable boundary, but also very clear regarding membership boundaries. Resource boundaries are established through a registry where resources are provided to the Nondominium explicitly. Use value of those resources is made available to members and the use of rivalrous goods are managed by the Custodian. Where a resource of the Nondominium is improved the modified resource is to be registered with the Nondominium. Where an output is created using the Nondominium that output is to be registered with the Nondominium.

2. Proportional Equivalence between Benefits and Costs: The Value Equation tracks all dimensions of value and reward flows to members based on their relative contributions.

3. Collective-Choice Arrangements: The governance equation apportions decision making authority to members of the Nondominium in a transparent and predictable way. This ensures those who have a stake in the resource have a say in its use. There is a concern that parties who have a stake in or are affected by the resource are not members or may not have added sufficient value to have standing. This is an ongoing concern.

4. Monitoring: All actions in a Nondominium need to be intermediated by an information system to be able to capture them and use them in the equations. If relevant use of assets is not being captured or if value added or outputs created are not being registered then sanctions will need to apply. These will be determined through the operation of the governance equation on given decision types. Monitoring mechanisms will need to be created as needed.

5. Graduated Sanctions: Sanctions will be determined through the operation of the governance equation.

6. Conflict-Resolution Mechanisms: Mechanisms will be determined through the operation of the governance equation.

7. Minimal Recognition of Rights: This is an external force, and requires that Nondomium is a recognized legal form in the jurisdictions it operates in

8. Nested Enterprises: Nondominium is an infinitely nestable structure as Nondominiums can be members of other Nondominiums. Actual nesting will be left as an operational choice." ([3])


Example

Nondominium for land

As proposed by Chris Cook:

"Nondominiumis an agreement which not only brings together these stakeholders jointly/collectively to hold land in common but also enables them severally/individually to share the rights and obligations as they may consensually agree. In simple terms, the user of the land pays a rental in money or in kind ('money's worth' such as produce) and a proportion of this flow of value is allocated to a Manager stakeholder group which provides services such as introducing occupiers and investors; dispute resolution; valuation; maintenance or supervision of maintenance.

It will be seen that the Manager's interests are aligned with those of any Investors who participate in the Nondominium agreement by investing in the value which flows from use of the land. No stakeholder has a dominant or positive right to impose themselves on any other. But stakeholders do have certain veto rights within the agreement to say what may not be done by others.The outcome of the use of what is essentially a 'Co-operative of Co-operatives' is that the Occupier, Investor, Manager, and even the Custodian may all change, but the land is never sold again, remaining in perpetuity within the Nondominium."


Discussion

Valnora Leister and Mark Frazier:

"A new legal framework – Nondominium – offers an approach for sharing revenues from resource development in arenas beyond the effective actual (or de jure) control of national jurisdictions. Building upon ideas advanced by Chris Cook, a fellow of the Institute for Security and Resilience Studies at the University College of London, the new framework focuses on veto rights – rather than recognized ownership claims – to ensure development of common pool resources (or resources with conflicting national ownership) on a basis of mutual benefit. The nondominium approach may have special applicability as a framework for developing space and ocean sea-bed resources to benefit humanity in the near and far future.

Under a nondominium framework for economic development of Common Heritage of Mankind (CHM) resources, each country interested in receiving benefits could appoint a representative to an association of beneficiaries.

A trustee (custodian) for the CHM would be elected by the representatives to oversee the legal operation of a collective entity. The representatives would also appoint a Manager, for a parallel partnership venture, to identify opportunities to develop the common pool resource in accord with a transparent revenue-sharing formula. Each representative would have power to exercise a veto with regard to the resource development proposal(s) circulated by the manager.

Once an agreed formula (non-vetoed by the countries) emerged for recognizing needed inputs, and for overall revenue-sharing, the manager of the nondominium partnership would arrange open tenders to seek economic partners to maximize the value of the common pool resources.

These tenders would be neutral with regard to the nationality or domicile of service providers and investment partners. Revenues from ensuing activities would be distributed to the association members on the originally-agreed basis. Oversight of compliance would rest with the nondominium’s trustee, who could apply Ostrom’s key principles of successful collective choice agreements and monitoring by independent auditors.

The nondominium framework, in these ways, would conform with the requirements of international law that no country or combination of countries has the power of dominant control over relevant common pool resources.

It seems particularly suited for easing disputes in highly polarized or contentious settings.

Since the breakup of the Soviet Union, for example, conflicting claims have arisen among what are now five Caspian-littoral nations (including Azerbaijan, Kazakhstan and Turkmenistan). The Nondominium framework as originally advanced by Cook envisions that the littoral Caspian nations “should form a Caspian Foundation legal entity, and commit to that entity all existing rights in respect of the use, and the fruits of use (usufruct) of the Caspian Sea, and everything on it, in it or under it. The Caspian Foundation would act as custodian or steward and the Caspian nations would have agreed governance rights of veto.”

As Cook has noted, “the proposed negative or passive veto right of stewardship differs fundamentally from conventional property rights of absolute ownership and temporary use under Condominium. Moreover, it does not confer the active power of control held under common law by a Trustee on behalf of beneficiaries, and the legal complexities and management conflicts which accompany that status.”

In parallel with the Foundation’s custodial role, a Caspian Partnership framework agreement would be established by the member countries to maximize the value of developing the resources. It would “simply be an associative framework agreement within which Caspian nations self-organize to the common purpose of the sustainable development of the Caspian Sea,” Cook’s has stated. “The Caspian Partnership agreement would comprise a master framework agreement within which a myriad of associative agreements between the Caspian littoral nations individually or severally would be registered.”

A similar transnational opportunity for application of the nondominium framework exists in the Sudan, with regard to disputed oil reserves between the original country of Sudan and the new breakaway nation of South Sudan. There, a nondominium framework would sidestep the question of ownership of disputed oil resources, in favor of a balanced (i.e. non-vetoed by either side) revenue-sharing system within which private sector investors and partners could then operate. This legal innovation for development of common pool resources could encourage Ostrom’s user association-based systems of economic governance to more rapidly advance in outer space, the oceans, and other Common Heritage of Mankind (CHM) areas." (http://www.earthsystemgovernance.org/lund2012/LC2012-paper94.pdf)


Contrasting Nondominium with Other Forms of Ownership

Nondominium and the Commons

Nondominium is to be viewed in contrast with a Commons, which consist of resources which are not owned or not ownable, usually abundant but often depletable / subtractable without governance. They are not excludable or are considered a fundamental human right so must allow free access. Governance of a commons is a voluntary group process that ensures it is maintained or enhanced and not destroyed (such as air and water, or Common Heritage of Mankind (i.e. high seas, antarctica or space).

Nondominium is not open access. It is open access only to members and even then only when dealing with non-rivalrous goods. Consumption and use of rivalrous goods must be managed by the Custodian and so cannot be considered open access. Nondominium may refer to excludable resources, to which access can be practically limited, and which may or may not be subtractable/abundant.

Nondominium is not the absence of ownership, but rather a refactoring of ownership rights between the individual member and the Custodian of the Nondominium.


Nondominium and Cooperative Ownership

Cooperative ownership, based on the Rochdale principles, insists that a cooperative be governed democratically. Members may allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership. Members contribute equitably to, and democratically control, the capital of their co-operative. Investors usually receive limited compensation, if any, on capital subscribed as a condition of membership.

Nondominiums may be a collection of governance modalities, as each decision type within a Nondominium is associated with a Governance Equation that can be modified to approximate democracy or meritocracy or any other form. There is no capital requirement for membership. Capital may only be contributed as use value. Surpluses are distributed to members per the Value Equation and the notion of retained earnings as described in cooperatives is replaced by voluntary reinvestment.


Nondominium and Collective Ownership

Nondominium is to be viewed in contrast with Collective Ownership, where property is jointly held according to an agreement, which includes member only clubs, and private property held by groups of individuals or by corporations.

Nondominium ownership is indivisible and non-transferable (except altruistically). There are no shares that can be redeemed or transferred. There is no fiduciary duty to maximize shareholder value. When one places property or value into a Nondominium, the member retains the beneficial ownership (the right to benefit from the value created by the property) but surrenders exclusive ownership. Ownership rights are not redeemable from the custodian, as no ‘shares’ are issued in response to property donated or value created through the operation of productive assets. Use, usufruct and beneficial ownership rights are distributed to members of the nondominium by the Custodian according to the agreement.

Nondominium is only excludable based on whether or not a party is willing to sign the Custodian Agreement, not on any other basis. In particular no capital requirements exist for membership. Nondominium and For Benefit Corporations

In an article for Harvard Business Review (2011/11) Heerad Sabeti outlines the key characteristics of for-benefit forms:

“ · Primary Characteristics

o Embedded Purpose: A commitment to mission is in the organizations DNA. Fiduciary duty is to purpose. o Earned Income: Sales of goods and services generate most of the income

· Secondary Characteristics

o Inclusive Ownership: Ownership rights are allocated among stakeholders in accordance with their contributions o Stakeholder Governance: Decision rights regarding information and control are distributed among stakeholder constituencies o Fair Compensation: Employees and other stakeholders are compensated in proportion to their contributions o Reasonable Returns: Limitations on investment returns protect the organization’s ability to achieve its mission o Social and Environmental Responsibility: Social and environmental performance is constantly improved throughout the stakeholder network o Transparency: Social, environmental, and financial performance and impact are fully and accurately assessed and reported o Protected assets: social purpose assets are preserved upon dissolution, conversion, or ownership transfer”

This description of for-benefit is highly aligned with the Nondominium concept. The points of difference would be in the embedded purpose, where Nondominium does not have restrictions on what this should be, whereas notions of for-benefit are of it solving a social ill. If unemployment, underemployment, and lack of workplace engagement are considered social ills the perhaps the two forms are not so far apart.

On the points of earned income and related reasonable returns, a Nondominium is free to accept donations or to sell its goods or services, but it is proposed that taking capital in return for equity or control will be against the interests of the Nondominium. If this is permitted to skew value equations or governance equations, it subjects the network to the possibility of capture by financial interests. Debt issued against productive assets (see Kleiner and Bauwens (2014)) being paid back on an ‘as used’ basis with no interest may be acceptable. The point here is that extraction of rents by financial capital is to be disallowed. All returns or surpluses are to be distributed to the membership using the value equation. The membership or a portion thereof may choose to reinvest this exchange value in the form of productive assets and this shall be recognized as a further contribution to the Nondominium as it is used. In such a way financial assets may be used to provide productive assets and may attract a return for its use value through the normal operation of the value equation. Whether or not such use value of assets should be a part of the governance equation is left to an operational Nondominium to decide." ([4])

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