The tribal economy
is booming![1] Since the
passage of the Indian Gaming Regulatory Act in 1988[2],
tribal gaming enterprises have grown into a $30 billion industry.[3] However,
now tribes are looking for new ways to diversify their governmental revenues
stream and are moving into off-reservation business ventures: marijuana[4],
government contracts[5], manufacturing[6], and more.
These
off-reservation activities are providing new opportunities for local businesses
to partner with tribes and grow their businesses and local economies. Michigan
is home to twelve federally recognized tribes[7],
each unique and presenting opportunities for local, non-indian companies
willing to partner with them. However, before you enter a contractual agreement
with tribal partners, you must address some unique considerations.
The First thing to
remember about tribes is that they are governments. Like the Federal, State,
and foreign governments, the sovereign immunity doctrine shields them from
suit.[8] This
special protection exists regardless kind of activities ("commercial"
or "governmental") or where these activities take place
("on-reservation" or "off-reservation").[9] While the
governing body of a tribe may waive this immunity, courts will not assume that
they have done so unless it is clearly expressed.[10]
Without a written
waiver, a business can not enforce a contract against an Indian tribe (or
affiliated entity). Thus, business owners must seek a limited waiver of
sovereign immunity when contracting with tribal entities.
Tribal Courts
Even after getting
a tribe to waive its sovereign immunity, it's essential to consider where
disputes might be heard if they arise. Commonly disputes happen in state or
federal courts, but occasionally people select third party to arbitrate. Lots
of contracts answer this question through a "Forum Selection" clause.[11]
When
dealing with tribal entities, they may request that their tribal courts be the
forum of choice. Because tribes are governments, they have the right to
establish judicial systems that hear cases and controversies (like a contract
dispute). While each tribal court is unique, most mirror the Anglo-American
courts used by state and federal governments. They include standard features
like an attorney-judge, juries, due process procedures, and an opportunity to
appeal.[12] However, it is essential to note that each of
these tribal courts is unique.
Tribal courts can
differ from American courts in several ways. Judges are not always required to
be attorneys. While many Tribal judges are required to have a law degree, other
tribes permit elders to hear cases.[13]
Additionally, tribal courts are not bound by the precedent of state courts.
Instead, they will analyze each case under tribal precedent (though they might
look to state law as persuasive authority). This should be no surprise.
Michigan state courts do not follow the other state’s court precedent when
deciding Michigan cases. Finally, an attorney who practices in tribal court
must be licensed in that specific tribal court. The uniqueness of tribal court
may limit the number of attorneys capable of representing you in a tribal court
case. Even though tribal courts differ from American courts, tribal Courts are
considered "competent law-applying bodies" as a matter of United
States federal law.[14]
If you don't
include a choice of law provision in your contract with tribal entities, you
might be subject to tribal law. This is especially true when a business
contracts with a tribe and performs service on the reservation.[15] In that
case, tribal law can determine what kind of suits you can bring, how long you
have to bring your claims, and the amount you may receive in damages.
Ultimately the reach of tribal civil law depends on several fact-specific
issues. Still, it is essential to be aware that such issues may arise.
Finally, whether a
tribal court has jurisdiction over your case is a matter of federal law.
However, before you challenge the jurisdiction of the tribal court, you must
exhaust all your option at the tribal level. This is called the tribal
exhaustion doctrine. Thus, significant litigation is required before you can
overcome a tribal court determination that tribal law applies. If you fail to
appear at the tribal level, the tribal court’s default judgment binds you and
your business.
In conclusion,
tribes are gaining economic independence and looking for new partners to help
them continue to grow. This provides terrific opportunities for local
businesses. However, contracting with an Indian tribe involves unique issues
that are uncommon in other kinds of transactions. Awareness of the potential
issues that can arise from these kinds of relationships is critical. Before
signing such an agreement, you should consult a licensed attorney.
[1] https://communityempowermentmatters.blogspot.com/2022/03/the-growing-field-of-tribal-economic.html
[2] 26 USC §2701 et seq.
[3]https://www.americangaming.org/wp-content/uploads/2018/11/Economic-Impact-of-Tribal-Gaming-Two-Pager-11.5.18.pdf
[4] https://www.natlawreview.com/article/new-administration-could-provide-ideal-backdrop-tribes-entering-cannabis-industry
[7] https://www.michigan.gov/mdhhs/adult-child-serv/native/overview/federally-recognized-tribes-in-michigan
[8] https://www.irs.gov/government-entities/indian-tribal-governments/itg-faq-13-answer-what-is-tribal-sovereign-immunity
[10] Santa Clara Pueblo v. Martinez, 436
U. S. 49, 58
[12] See
Kevin K. Washburn, American Indians, Crime, and the Law, 104 MICH. L. REV. 709, 761
(2006); Castillo, supra note 17, at 328 (“The Navajo Nation not only allows
non- Indians to serve on its juries, it even has a procedure in place to ensure
than non- Indians are called to serve.”).
[14] See Santa
Clara Pueblo
v. Martinez, 436
U. S. 49, 58
[15] “First, the two Montana exceptions to the
general rule for consensual relationships and threats to the tribe do not
provide bright line rules. Courts must decide cases involving tribal civil
jurisdiction over nonmembers based on the unique facts of each case.” https://sgp.fas.org/crs/misc/R43324.pdf