Just like each state has its own law, so do tribal nations. Understanding this is key to an effective relationship between sureties, agents, contractors, and tribal nations. Here are some key factors your surety is taking into consideration when underwriting bonds for tribal nations.
1. Tribal nations are sovereign nations, meaning they have the authority to enact their own laws and have their own dispute resolution mechanisms.
2. A sovereign nation has sovereign immunity from suit, meaning they have immunity from suit in U.S. federal and U.S. state courts.
3. Every tribe is different and unique and although the process may be similar, there is no “one-size-fits-all” waiver/language.
4. Consider the sophistication of accounts when working with tribal nations (knowledge of tribal employment rights office/employment laws, taxes, and other tribal laws which may be applicable).
5. Absent a sovereign immunity waiver, a tribal entity is even immune from suit in its own tribal court.
6. Waivers of sovereign immunity are key when securing surety bonds.
- Waivers must be clear, specific, and provide for all aspects of dispute resolution including enforcement of a judgment/collection.
- All parties must understand who has authority to issue a waiver of sovereign immunity on behalf of the tribe and ensure such a waiver is executed properly.
- Most often the waiver of sovereign immunity will be a limited waiver, which is acceptable if it provides a path to sufficient assets.
- Waiver must specify which state law applies and the dispute resolution mechanism (i.e., either a specific state court or arbitration).
- Waivers must apply specifically to the surety.
7. Performance and payment bonds must be tailored to address:
- Dispute resolution in state court with state law governing
- Incorporation of a waiver of sovereign immunity
- Limit of potential claimants under the payment bond
- Notice provisions
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