Congress abrogated tribal sovereign immunity in bankruptcy-related disputes, a federal appeals court ruled on Tuesday.

Tribes are not mentioned specifically in the federal Bankruptcy Code. But in the first decision of its kind, a unanimous panel of the 10th Circuit Court of Appeals concluded they are open to lawsuits under a section that mentions "foreign and domestic governments."

"Indian tribes are certainly governments, whether considered foreign or domestic," Judge Marsha S. Berzon wrote for the three-judge panel.

The court's ruling is precedent-setting, the judges acknowledged. They found no other case, either in the U.S. Supreme Court or other circuits, that considered tribal immunity under the Bankruptcy Code.

In several decisions, the high court has protected tribes from lawsuits. "As a matter of federal law, a tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity," Justice Anthony Kennedy wrote in 1998's Kiowa Tribe case.

Relying on that principle, a federal judge in Arizona dismissed a bankruptcy-related action involving the Navajo Nation, the largest tribe in the country. U.S. District Judge Mary H. Murguia found that Congress did not abrogate the tribe's immunity.

An energy company that went broke appealed the decision. Krystal Energy claims the tribe unlawfully seized its assets, including oil wells on the reservation. The company also disputes the tribe's $691,000 tax assessment.

Under Supreme Court precedents, a waiver of tribal immunity must be explicit and "unequivocally expressed," according to the Kiowa decision. But in examining the Navajo case, the 10th Circuit found no language in the Bankruptcy Code that mentions tribes.

So instead, the judges looked at cases involving state sovereign immunity. They concluded that Congress, in enacting the code, "did intend to abrogate the sovereign immunity of all 'foreign and domestic governments.'"

Berzon wrote that "the Supreme Court's decisions do not require Congress to utter the magic words 'Indian tribes' when abrogating tribal sovereign immunity. Congress speaks 'unequivocally' when it abrogates the sovereign immunity of 'foreign and domestic governments.'"

The last time the Supreme Court considered tribal immunity was in 2001. In a unanimous decision, the justices held that the Citizen Potawatomi Nation of Oklahoma waived its immunity by signing a contract that included arbitration provisions.

The court avoided touching immunity in a case involving the Bishop-Paiute Tribe of California. County law enforcement are asserting a right to serve criminal warrants on the tribal government.

Get the Decision:
KRYSTAL ENERGY CO. v. NAVAJO NATION (February 10, 2004

Relevant Links:
Navajo Nation - http://www.navajo.org
U.S. Bankruptcy Code - http://www4.law.cornell.edu/uscode/11