Waivers of 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
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 parties. 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.
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
A 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.
A 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
Sovereign 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.