Transactions involving Indian tribes present both significant opportunity and distinct legal complexity. In Michigan, and across the country, tribal nations are engaged in a wide range of sophisticated economic development initiatives, including gaming and hospitality, renewable energy, infrastructure, real estate, and emerging industries. These projects often involve substantial capital investment and long-term collaboration with non-tribal partners.

Unlike conventional commercial transactions, however, agreements with tribal nations operate within a unique legal and governmental framework shaped by tribal sovereignty, federal law, and, in many cases, overlapping state and local interests. Issues such as sovereign immunity, jurisdiction, choice of law, and tribal regulatory authority are not peripheral considerations — they are often determinative of whether an agreement is enforceable and whether a business relationship can succeed over time.

In Michigan, these dynamics are particularly visible in the context of tribal-state gaming compacts, cannabis agreements, taxation arrangements, and broader economic development initiatives that intersect with surrounding municipalities. Practitioners who approach these transactions without a working understanding of this framework risk avoidable complications, including unenforceable agreements, jurisdictional disputes, and breakdowns in implementation.

This article highlights the recurring legal and practical issues that arise in transactions with tribal nations and offers high-level guidance for navigating them in a manner that respects tribal sovereignty while supporting effective durable commercial relationships.

ASSUMING UNIFORMITY ACROSS TRIBES

Given the diversity among the 575 federally recognized Indian tribes in the United States,¹ including 12 federally recognized Indian tribes and four state-recognized tribes in Michigan,² each tribal nation operates within its own distinct governmental, legal, and cultural framework that shapes how decisions are made, how authority is exercised, and how relationships are developed and sustained. These differences are not merely contextual; they directly impact negotiation style and the process by which contracts are evaluated and implemented from inception through performance and enforcement.

A common mistake is treating tribes as though they operate under a uniform legal or business framework. In reality, each tribe has its own constitution (or similar governing document), governing structure, laws, regulatory systems, and cultural considerations. Some tribes have a large number of members, while others have as few as 10 members. Some tribes are located in extremely remote areas, such as those tribes in Michigan’s Upper Peninsula, while others are situated near urban areas like Grand Rapids.

Reusing agreements from prior tribal transactions without a careful review is a frequent misstep. Provisions that were acceptable or enforceable with one tribe may be inappropriate or ineffective with another. Beyond legal differences, this approach can undermine the potential opportunity at the outset of negotiations.

Successful engagements and enforceable agreements require a tribe-specific analysis, including a review of applicable tribal law, governance structure, and decision-making processes, as well as cultural considerations. When appropriate, visiting the tribe or its entities in person — preferably on tribal lands — can further demonstrate a commitment to understanding the tribe’s unique attributes, its people, and its land.

TRIBAL SOVEREIGNTY

At the core of any discussion of transactions involving Indian tribes is an understanding of tribal sovereignty. Indian tribes are not simply another category of governmental or commercial actor. They are domestic sovereign nations that have exercised inherent powers of self-government since time immemorial, long before the formation of the United States.

Although the United States Constitution grants Congress plenary authority over Indian affairs, the United States Supreme Court has consistently recognized that tribes remain “separate sovereigns pre-existing the Constitution.”³ As such, tribes retain the authority to govern their internal affairs, enact and enforce their own laws, regulate economic activity within their jurisdiction, and determine the terms under which they engage with outside parties. Tribal sovereignty is not merely a negotiating point or a technical consideration; it reflects a tribe’s inherent authority and its ongoing interest in self-determination — much like, but not completely analogous to a foreign nation.

Approaching tribal transactions with appropriate recognition of this status is essential. A failure to do so can lead not only to legal missteps but also to unnecessary friction in negotiations, breakdowns in implementation, and outcomes that are materially adverse for commercial parties and their counsel. Conversely, practitioners who understand and respect tribal sovereignty are better positioned to structure agreements that are both effective and consistent with the sovereign nature of tribal governance.

TRIBAL SOVEREIGNTY PROVIDES UNIQUE BUSINESS OPPORTUNITIES

Precisely because tribes are domestic sovereign nations, they possess regulatory autonomy that may create unique and mutually beneficial business opportunities. Tribal governments can, in some circumstances, offer more flexible local laws or streamlined approval processes compared to federal or state regulatory frameworks. Partnering with tribal entities may also provide access to economic incentives, such as federal and state tax credits, grants, and other funding mechanisms that support tribal economic development.

Additionally, unlike traditional commercial deals, partnerships with tribes or their economic arms can provide an opportunity to support the economic and cultural development of historically underserved communities while enhancing a company’s corporate social responsibility profile.

That said, each tribe is unique, and so too are the opportunities associated with it. Any potential venture should be evaluated through a tribe-specific analysis, as the challenges and benefits can vary.

THE COMPLEXITY OF SOVEREIGN IMMUNITY

One common error practitioners make is failing to distinguish the concepts of sovereignty and sovereign immunity. The latter is one of the most significant legal risks in contracting with tribes or their corporate entities. As a general rule, tribes and many tribally affiliated entities are immune from lawsuits unless that immunity is waived clearly and is unequivocally expressed.⁴ However, what constitutes a clear and unequivocal waiver can vary across jurisdictions, including between federal circuits. For non-tribal parties, this can present a substantial barrier to enforcement.

Even a carefully negotiated agreement may be effectively unenforceable absent a valid waiver of sovereign immunity. Practitioners frequently encounter issues after a dispute arises where a purported “waiver” is later found to be unenforceable due to deficiencies under tribal law or governing federal precedent. On the other hand, from the tribal perspective, sovereign immunity is a foundational aspect of self-governance and is not lightly waived.

Each tribe’s approach to immunity waivers is unique and can change if new leadership is elected. Addressing sovereign immunity requires careful attention to several items. For instance, whether the tribe or a tribal corporation is party to the contract can greatly impact how a valid waiver is obtained. The tribe’s laws applicable to such waivers, whether in the tribal constitution, a gaming ordinance, a tribal resolution, creation documents, or a corporation’s code, can all greatly impact the manner in which a valid waiver can be provided because many jurisdictions hold that a clear and unequivocal waiver must be obtained in accordance with the tribe’s laws. This includes which tribal representative has the right to waive such immunity.

Tribal counsel are not typically positioned to educate counterparties on these issues, making it critical that practitioners independently develop familiarity with the applicable tribe’s legal framework. The major takeaway is that early and informed discussions on this issue can prevent breakdowns later in negotiations. Also knowing where and when to compromise on sovereign immunity issues is critical to moving forward with potential partnerships.

If a tribe is unwilling to provide a waiver of its immunity that is necessary to a non-tribal partner, a practitioner should try seeking alternative dispute resolutions, such as arbitration or mediation, request the tribe carry liability insurance, or analyze the tribal entity’s legal status to determine whether or not it is entitled to immunity from suit. But these paths also remain complicated, as depending on the jurisdiction, a limited waiver of sovereign immunity may be required for arbitration, and often it is hard if not impossible to obtain the correct documents to be fully assured an entity is not entitled to immunity from suit.

TRIBAL BUSINESS STRUCTURES

Tribes may enter economic development transactions in a variety of ways, including as a direct party to an agreement or through one of its affiliated entities. The latter approach is common, as tribes generally avoid exposing their governmental funds to direct contractual risks with outside parties.

The structure of the tribal entity executing the agreement can significantly affect key issues, such as how to obtain a waiver of immunity, governance and decision-making authority, and assets subject to recovery. Tribal economic enterprises may be organized as federally chartered corporations, tribally chartered entities, or entities formed under tribal or state law.

At a minimum, practitioners should understand that determining whether an entity qualifies as an “arm of the tribe”⁵ for immunity purposes is a fact-intensive analysis that varies by jurisdiction.⁶ Courts frequently look to factors articulated in a Tenth Circuit case, though the precise framework is not uniform across jurisdictions.⁷ The United States Court of Appeals for the Sixth Circuit and federal courts in Michigan have recognized that tribally affiliated entities may share in sovereign immunity but have not adopted a formal, multi-factor “arm-of-the-tribe” test. Instead, they apply a functional, fact-specific analysis and often look to persuasive authority from other circuits for guidance.⁸

Moreover, assumptions based on entity labels alone can be unreliable. For example, while entities organized under state law are not considered an “arm of the tribe” entitled to sovereign immunity, courts have recognized exceptions.⁹ Conversely, some entities organized under tribal law have been found not to qualify for immunity following application of the “arm-of-the-tribe” analysis.¹⁰

Accordingly, this inquiry requires familiarity with relevant federal case law across multiple jurisdictions as well as an understanding of tribal and state legal frameworks and entity structures. With that foundation, practitioners are better positioned to assess risk and structure agreements that are more likely to be enforceable.

CHOICE OF LAW AND JURISDICTION

A frequent mistake made by practitioners inexperienced in Indian law is confusing the concepts of choice of law provisions with jurisdiction provisions and corresponding waivers of immunity. These concepts are frequently conflated, but they serve distinct legal functions.

Choice of law

A choice of law provision indicates which laws will govern the contract in the event of a dispute. Tribes will often prefer that their own tribal law governs the agreement, while the non-tribal entity will desire state law. Additionally, there may be federal laws that are automatically applicable. Depending on the robustness of the tribe’s laws, allowing governing law of the tribe is not necessarily a bad outcome so long as the law has been shared, reviewed, and vetted by the non-tribal party. However, note that like any sovereign, a tribe’s laws may change at any time, but unlike federal and state laws, these may not be accessible to the public online.

The most important thing to understand is that a governing law provision is not the same as choosing the jurisdiction in which a dispute will be adjudicated and is not a submission or waiver by the tribe. This mistake can be fatal to obtaining an enforceable agreement.

Jurisdiction

A jurisdictional clause in an agreement designates the jurisdiction that will decide disputes utilizing the chosen governing law. These provisions with tribes are often more complex than in standard commercial agreements. Like the choice of law provision, a tribe will frequently desire its own tribal court as the chosen jurisdiction. The non-tribal party will usually request a state jurisdiction. Additionally, there may be issues that require federal jurisdiction.

At times, the parties come to a compromise, and there are several variations of what that compromise can entail — the details are dependent on the tribe and the subject matter in dispute, among other things.

One key legal concept critical for practitioners to be knowledgeable about is the tribal court exhaustion doctrine. This legal doctrine may require the parties to exhaust all available remedies in the tribe’s judicial system before pursuing litigation in the contractually agreed-upon jurisdiction.¹¹ This could even entail, but is not limited to, obtaining a ruling from the tribal court determining whether it has subject matter jurisdiction. This procedure could delay or fully prevent adjudication in the jurisdiction that was indicated in the agreement.

Fortunately, with the right contractual language waiving tribal remedies, implications of the tribal exhaustion doctrine may be avoided, but again, the specific language necessary varies depending on the tribe, the subject matter, and the dispute.

It is also prudent to remember that there are alternative dispute resolution mechanisms, including mediation or arbitration. While these options can be effective, they raise additional considerations, particularly regarding whether a waiver of sovereign immunity is required. In some jurisdictions, specific language submitting to arbitration is considered a clear and unequivocal waiver of immunity.¹²

Careful drafting of choice of law, jurisdiction, and waiver of tribal exhaustion doctrine, and dispute resolution provisions coupled with the corresponding appropriate immunity waiver, are essential to avoid uncertainty and delay.

TRIBAL REGULATORY COMPLIANCE

Tribes are sophisticated sovereign nations with sophisticated laws and regulations. A practitioner should be aware of whether the subject matter and activity of the partnership with a tribe will be subject to a tribe’s laws. Applicable tribal laws or regulations may appear in a tribe’s constitution, intergovernmental agreements, ordinances, codes, tribal court orders, government resolutions, federal law, or other places.

A tribe may have land use regulations, labor laws, gaming regulations, secured transactions codes, tax codes, civil procedure laws, criminal codes, and business ordinances, to name a few. Depending on the industry, the non-tribal party may be required to obtain tribal permits or licensing under those laws to carry out the obligations applicable under the contract. Those permits or licenses may be subject to a fee and renewal similar to state or local licensing and permitting.

For example, certain gaming on Indian lands is subject to the Indian Gaming Regulatory Act,¹³ the state-tribal gaming compact, and the tribe’s gaming regulations, resulting in vendors contracting with a tribal casino being required to obtain a license or permit. This is usually the case for those businesses providing services to tribes for cannabis, online lending, manufacturing, and several other areas. Additionally, employment laws, including but not limited to the Tribal Employment Rights Ordinance, may require businesses operating on the tribe’s lands to give preference to qualified Indians in employment and contracting. Finally, a tribe may have taxation codes or agreements that result in taxes being imposed on the activity within its tribal lands.

Failure to account for these requirements at the contracting stage can lead to operational and legal complications as well as additional costs while performing under the agreement.

CONCLUSION

Transactions involving Indian tribes require more than the application of standard commercial contracting principles. They demand a deliberate and informed approach grounded in an understanding of tribal sovereignty, the legal doctrines that flow from it, and the institutional framework in which tribal governments operate.

Many of the challenges that arise in these transactions are not the product of adversarial positions, but of misalignment — where one party approaches the transaction through a conventional state-law lens that does not fully account for the sovereign status of the tribal counterparty. The result can be agreements that are difficult to implement, uncertain in enforcement, or ultimately ineffective.

Conversely, practitioners who take the time to understand tribe-specific governance structures, carefully address sovereign immunity, and thoughtfully draft provisions governing law, jurisdiction, and dispute resolution are better positioned to structure agreements that function as intended. Equally important, this approach fosters the trust and mutual understanding necessary for long-term partnerships.

As tribal nations continue to expand and diversify their economic activities, opportunities for collaboration will only increase. Practitioners who engage with this space with both legal rigor and cultural awareness will be best equipped to support successful transactions that benefit both tribal and non-tribal partners.