Sovereign Immunity Key to Contracting with Indian Tribes
Sovereign immunity poses a unique consideration for private companies that
contract with a tribal entity,
but it need not be a deterrent
In this period of robust
construction activity, tribal lands play host to a broad range of sophisticated
projects. For such projects, the concept of sovereign immunity and its influence
on legal disputes inevitably come into play.
Sovereignty has varied
meanings but can generally be defined as "the power to govern, vested by the
people in their leaders and government." One attribute of sovereignty is
immunity from suit; likewise, a government's decision to waive its immunity is
another expression of sovereignty. Tribes may waive their immunity on a
case-by-case basis and negotiate limited waivers suitable to all contracting
A limited waiver of
immunity may include the following provisions:
Who may bring a claim
A waiver should specify who can bring a claim, e.g. the general contractor
but not any other party, including any successor or assignee of the contractor.
Types of claims allowed
A waiver should specify claims to enforce the contract and any
related disputes. A waiver can bar alternative theories of recovery, such as
tort claims. Although claims would primarily pertain to monetary damages, they
might include injunctive or declaratory relief.
Choice of forum
limited waiver can permit suit against the waiving tribe in any forum that would
otherwise have jurisdiction over the subject matter. If federal court
jurisdiction exists, it may be a forum to which all parties can agree. However,
federal jurisdiction will not exist in many situations; arbitration has become a
common mechanism for dispute resolution, and waivers may include arbitration
with suit to enforce the arbitration and any arbitration award.
Choice of law
Generally, a waiver should include a statement specifying the choice of law
(i.e., the jurisdiction under whose laws the waiver is subject) to be applied by
the court hearing the claim.
basic way in which a waiver can be limited is to a maximum dollar amount. The
limitation may be based on the total contract amount or on some other figure.
Type of damages
If a waiver allows for monetary damages, the types of monetary damages can also
be limited. For example, a limited waiver may permit recovery of only
foreseeable damages, not lost profits, or only back pay and benefits, not from
pay and emotional damages. Since many standard contracts include a provision
allowing the recovery of attorneys' fees to a successful litigant under the
contract, a limited waiver of tribal sovereign immunity should include such a
recovery, or the standard contract should be modified. Post-judgment interest
may also be specifically addressed.
Duration of the waiver
A waiver may be limited in duration. Generally, the relevant period
is determined by the specific circumstances involved with the contract (e.g.,
the length of the construction contract).
A final word of advice
immunity poses a unique consideration for private companies that contract with a
tribal entity, but it need not be a deterrent to doing business in a tribal
environment. It is in the best interest of a non-tribal party and, in the
majority of cases, the tribe to negotiate acceptable and beneficial waiver
provisions. Absent a waiver, the resulting forfeiture of contract remedies can
be devastating for the contractor.