The Unlimited Sovereign Immunity of Indian Tribal Businesses Operating Outside the Reservation: An Idea Whose Time Has Gone

Monday, January 1st, 1996 at 12:00 am by Brian C. Lake
Brian C. Lake, The Unlimited Sovereign Immunity of Indian Tribal Businesses Operating Outside the Reservation: An Idea Whose Time Has Gone, 1996 Colum. Bus. L. Rev. 87

This Note argues that unlimited sovereign immunity should not be extended to off-reservation tribal businesses because it produces two fundamental problems of unfairness. First, a non-tribal party dealing with an off-reservation tribal business is often un aware that the tribal business has the right to claim sovereign immunity, or even that the business is owned by an Indian tribe, and therefore is at a disadvantage in negotiating its transactions. This informational imbalance allows the tribe to externalize the costs of retaining its sovereign immunity. Second, tort victims and other involuntary creditors, who generally have not voluntarily assumed the risk of interacting with a judgement-proof corporation, are denied fair compensation for injuries caused by the tribal business. Because the judicial approaches to this problem have failed to properly balance the interests of the tribes with those of the public, this Note proposes a comprehensive statutory solution which will address these two fundamental problems, while still protecting the sovereign rights of Indian tribes to the maximum extent possible. Part I will discuss the historical development of the doctrine of tribal sovereign immunity and its application to tribal businesses, including the legislative and judicial attempts to address this problem. Part II will explore in more detail the problems of informational imbalance and injuries to involuntary creditors which most often give rise to claims that allowing sovereign immunity for tribal businesses is “unfair.” Part III will outline a proposed statutory measure that addresses these problems by establishing equitable and consistent standards to govern the application of sovereign immunity to tribal businesses outside of Indian territory.

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