"Native American tribes have become major economic players in recent years. Tribal enterprises generated more than $26 billion in 2009 from gaming revenue alone, and tribes are increasingly diversifying their economies to include new industries. Besides gaming, tribes are involved in real estate, banking and project finance, insurance, telecommunications, manufacturing, natural resource extraction and alternative energy development, among many other activities. As tribes expand beyond gaming, there are more chances for tribes and non-Native companies to do business together—and the unique legal status of tribes presents both opportunities and challenges for such partnerships.

Tribal economic development takes place within the context of federal Indian law. The long history of relations between Indian tribes and the federal government has generated a nuanced legal framework that recognizes the sovereignty of Indian nations (subject to certain limitations), exempts tribes for the application of most state laws, and provides various programs and tax benefits designed to promote tribal economic development. The singular legal status of Native American tribes presents unique opportunities and challenges for non-Native business partners.

Tribes may conduct business and enter into contracts directly or through a subdivision of their government. Such business operations may be overseen by the governing body of the tribe or by a business committee or board. These direct business activities generally share the tribe’s exemption from taxation and state regulation.

Tribes may also organize separate corporate entities to conduct business. For example, the federal IRA authorizes the creation of tribal corporations that may hold tribal property (including land) and carry out corporate business. The charter and bylaws of an IRA corporation should identify the powers that the tribal government has delegated to it. IRA corporations may share the tribe’s sovereign immunity, and tribal assets held by the corporation may be protected from execution to satisfy a monetary judgment.

In addition, tribes may form corporations under tribal law. The corporation may share the tribe’s sovereign immunity if owned by the tribe itself. The rights and obligations of such tribal corporations are defined by tribal law and corporate organizational documents.

Finally, tribes may form a corporation under state law. Corporations organized under state law will be subject to the same laws as any other state corporation, even if owned by a tribe. However, such corporations may still share the tribe’s sovereign immunity, depending on the laws of the state in which the corporation is incorporated. Generally, this option is the least appealing to tribes as it tends to yield the fewest tax benefits.

Given the many ways that tribal governments or business entities may be organized, it is important for tribal and non-Native business partners to be familiar with the nature of the entities involved in any agreement. On any major transaction or partnership, interested parties should review applicable tribal law, the governing documents of the tribe and the organizational documents of any business entity."

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Blaine I. Green and Allen Brandt: Doing business in Indian country: unique opportunities and challenges (Lexology 8/31)