Doing Business in Indian Country Can Be Lucrative and Perilous

Thirty years ago, there probably wasn’t much point in doing business with an Indian Tribe because the Tribe probably didn’t have much money. That began to change after 1987 when the U.S. Supreme Court decided that Indian Tribes could operate casinos on tribal land and that the state couldn’t interfere.

Since then, Indian Gaming has grown into big business. A study in 2006 found that Indian Casinos contributed $3.2 billion to the Washington economy in 2004. That number appears to be increasing dramatically every year.

Because of Indian Gaming, non-Indian companies in the construction, resort management, and retail businesses stand to make money in Indian Country. However, enforcing a construction contract or other agreement with an Indian Tribe is not a simple state-law contract matter.

A boilerplate construction contract with an Indian Tribe will probably not be enforceable in state, federal, or even tribal court. Therefore, if the project goes south, you will probably be without a remedy.

The solution to this problem is to negotiate a contract that specifically addresses jurisdiction and sovereign immunity long before any dispute arises. The best contract from the point of view of the non-Indian construction company would explicitly waive sovereign immunity as a defense to any contract claims and stipulate to jurisdiction in state court.

This contract would be ratified by a resolution from the Tribal Council. The resolution would specifically and knowingly acknowledge the waiver of sovereign immunity and the stipulation to state court jurisdiction.

However, Indian tribes are zealous defenders of their sovereign immunity and jurisdiction and may not be willing to execute such a contract. Therefore, the non-Indian construction company needs some creative lawyering to protect itself from whatever non-payment, construction defect, or other claims may arise from the project.