Tribal Co. Shielded From Biodiesel Plant’s Claim

(CN) - Despite a biodiesel refinery's efforts to get Chickasaw Nation Industries to waive its sovereign immunity, the 6th Circuit ruled that the tribal corporation is protected from contract litigation in U.S. courts.

Chickasaw and Memphis Biodiesel struck a deal in 2006, whereby Chickasaw would deliver diesel fuel and soybean oil to Memphis Biodiesel's refinery in Tennessee.

Before they signed the contract, Memphis Biodiesel made Chickasaw waive any sovereign immunity and sign a "representation and warranty" that the waiver was valid, enforceable and effective.

Chickasaw signed the agreement after its lawyers tweaked the waiver to require board approval, which was never granted.

Chickasaw later repudiated the deal, prompting mediation. When negotiations broke down, Memphis Biodiesel demanded arbitration, but Chickasaw refused.

Both parties sued in their respective venues - Chickasaw in tribal court and Memphis Biodiesel in federal court in Tennessee. Memphis Biodiesel asked the court to declare the waiver effective, compel arbitration and issue a temporary restraining order barring Chickasaw from moving forward in tribal court.

The district court dismissed Memphis Biodiesel's complaint based on tribal sovereignty, and the Cincinnati-based federal appeals court affirmed.

"In short, without board approval, (Chickasaw's) sovereign immunity remains intact," Judge Cole wrote.

The appellate panel rejected Memphis Biodiesel's claim that Chickasaw had automatically waived its tribal sovereign immunity by incorporating.

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