Business Agreements with Native American Indian Tribes

Many opportunities exist for Native American Indian Tribes and commercial partners to enter into commerce together. When considering such opportunities, several key factors must be considered to navigate the legal landscape effectively:

1. Tribal Law and Constitution: Each tribe has its own set of laws and regulations governing various aspects of tribal life, including business transactions, property rights, and dispute resolution. A review typically begins with a written constitution. Most tribes have adopted constitutions and other governing documents that outline the structure of the tribal government, the distribution of powers, and the rights of tribal members. Understanding the tribal constitution can provide insights into the governance structure and decision-making processes of the tribe, which can be valuable when conducting business with tribes.  It is also necessary to review the underlying charter of any economic development entities who may be the contracting party. It is of significant importance to familiarize yourself with the specific laws of the tribe to ensure compliance and to understand the legal framework within which business will be conducted and any disputes resolved.
2. Sovereign Immunity: Sovereign immunity shields governments, including tribal governments, from lawsuits without their consent. Put simply, a government cannot be sued unless it has agreed to be sued. This concept dates back to the time of kings, when it was clear to all that you could not sue the king, hence the title “sovereign immunity.” This immunity extends to tribal governments, tribal officials acting in their official capacities, and tribal entities engaged in functions on behalf of the government. As a result, businesses entering into contracts or transactions with tribes should be aware that enforcement mechanisms may differ from those typically seen in agreements with non-tribal entities. Tribes may waive sovereign immunity in certain circumstances, but this decision is within their discretion and subject to tribal law and procedures. Understanding the implications of sovereign immunity is crucial for assessing risk and devising strategies for dispute resolution and contract enforcement in dealings with Native American Indian tribes. A key focus with respect to any waiver is that only those remedies and forums expressly provided for in the written waiver will be available in the event of a dispute. This important consideration ties into the next point.
3. Federal Court Jurisdiction: While tribes possess inherent sovereignty and the ability to provide a limited waiver with respect to enforcement of business agreements, the extent of federal court jurisdiction over disputes involving tribes is complex. Generally, federal courts are courts of limited jurisdiction and federal court jurisdiction requires either diversity among the parties (i.e., parties from differing states) or a circumstance where some federal law or rule is implicated. This limited jurisdiction over matters involving tribes is limited even further due to principles of tribal sovereignty and the doctrine of tribal immunity discussed above. Even if a limited waiver of sovereign immunity is granted, federal court jurisdiction will still require (i) diversity; or (ii) a federal law-related question. Legally speaking, tribes are not a “citizen” of the state in which its reservation is located and therefore diversity jurisdiction is generally not available. Moreover, contract law is a state law issue and, as such, a mere “breach of contract” claim would not rise to the level implicating a federal law. In most cases, absent some federal law or rule being relevant to the case, no litigation may be brought in federal court and therefore must be brought in a state court. If consent to state court dispute resolution is not granted in the written limited waiver of sovereign immunity, there will be no forum in which a dispute may be brought. In such instances, there still may exist the ability to bring suit in tribal court; however, as noted, that ability will be subject to the rules of the individual tribe.

As stated, there are many opportunities to undertake business transactions between tribes and business entities, and by focusing on these factors set forth above during the negotiating phase, the parties can navigate the legal landscape effectively and foster mutually beneficial commercial relationships.

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