from the desk of Frank Musica
Many design firms are providing services to sovereign American Indian nations related to casino and resort development and the many other types of projects funded by these sources of tribal income. Although we have published extensively on the claims that often occur on such projects and on the difficulty in relying on tribal law to resolve design disputes, one of the common remedies to avoiding tribal courts—contractually mandated arbitration—might need special consideration.
Contracts might specify mandatory and binding arbitration of disputes between a design firm and a tribal client. But without a waiver of the sovereign immunity of the tribal client, such a provision—or any award made by an arbitrator—might be impossible to enforce. Arbitration awards are not self-effectuating; they have to be enforced through court approval. While a federal court might consider an agreement to arbitrate by a tribal client as an implied waiver of the tribe’s sovereign status, such a ruling is problematic.
If a firm is providing services to a sovereign tribal nation and wants to rely on arbitration rather than the application of the often unclear tribal law to any dispute, it makes sense to work with legal counsel to include in the contract a limited waiver of the tribal client’s sovereign immunity for the purposes of enforcing the award. This also often involves a clear statement of choice of laws where the tribal law might be applied in some situations but state law in others. Entering into a contract with a sovereign American Indian client could result in a firm surrendering its right to payment or recovery unless appropriate legal advice guides the contract formation.