On Feb. 11, U.S. District Judge David Campbell ruled in favor of Jin. He found that the tribe had "clearly waived its sovereign immunity" and that its legal arguments were "odd," "nonsensical," and "wholly unconvincing."
The sore effects of this decision go far beyond the $28.6 million judgment against the tribe. Louise Benson, chairwoman of the tribe when the Skywalk contract was signed, said current tribal leaders are "giving the Hualapai a terrible reputation that will injure the tribe for years." She added, "All over Indian country, I think this is bad."
Such actions shake the confidence of investors and lenders who could help Native Americans climb out of the poverty trap. As Nancy Vermeulen, a banker in Billings, Mont., who would like to do more business on reservations told Forbes, "We take on such a huge extra risk with someone from the reservation. If I knew contracts would be enforced, then I could do a lot more business there."
When the U.S. Supreme Court ruled that Montana courts had no jurisdiction to enforce payment of a debt owed by a Blackfeet tribal member to a non-Indian store owner, a state judge opined that the result "was to dry up credit sources throughout the state to responsible Indian citizens."
The lack of confidence in tribal business and legal practices is measurable. A 1953 federal law, which required that "lawless" tribes relinquish their judicial systems to the states in which they reside, allows a comparison with tribes retaining control of their own court systems. Per-capita incomes on the former average 30 percent more, and lenders are 50 percent more likely to make home loans to Native Americans on state-jurisdiction reservations.
All governments face the dilemma: Should they take the entire pie now or accept a smaller slice of a larger pie in the future? Solving this dilemma isn't easy in Indian Country, especially with examples like the Skywalk dispute.
On the bright side, tribes are training their judges better and improving their judicial procedures. Some tribes are adopting uniform commercial codes and implementing legislation to better secure transactions with off-reservation partners.
Those tribes that can resist the temptation to extract wealth today at the expense of future growth have the best hope of breaking the shackles of dependency and becoming truly sovereign.
Terry L. Anderson is president of the Property and Environment Research Center in Bozeman, Mont., and senior fellow at Stanford's Hoover Institution.