(CN) - The developer of the Grand Canyon Skywalk cannot skip tribal court in its battle to take back the remote tourist attraction, the 9th Circuit ruled Friday.
Grand Canyon Skywalk Development (GCSD) had leveled federal breach of contract claims last year in Phoenix after the Hualapai Tribal Council condemned the glass-bottom walkway, which hangs 4,000 feet above the Grand Canyon on the tribe's remote and largely undeveloped reservation in northwestern Arizona.
The move capped years of infighting and accusations between Sa Nyu Wa, a tribally chartered corporation, GCSD and Las Vegas developer David Jin over their profit-sharing contract.
While the tribe accuses Jin and GCSD of ignoring a promise to build a visitor center and develop the attraction, Jin and the company point to the tribe's alleged failure to account for profits and properly manage site, among other things.
Refusing to grant the developer an injunction, U.S. District Judge David Campbell said the company must first exhaust its options in Hualapai Tribal Court.
GCSD took the issue to the 9th Circuit, arguing that the tribal court and tribal council were wrapped together in bad faith.
Arguing before the three-judge appellate panel in October 2012, GCSD attorney Troy Eid called the tribe's seizure of the attraction "an extreme exercise of tribal sovereignty." Eid also accused the Hualapai Tribal Court of having been "grossly manipulated by members of the tribal council."
Federal law allows exceptions to the usual exhaustion requirements in cases of obvious bad faith, futility and "plain lack of tribal governance."
The San Francisco-based court resolved the jurisdictional dispute Friday, finding no evidence the Hualapai Tribal Court lacks independence from the tribal council.
"GCSD has failed to show that the Hualapai Tribal Court does not offer an adequate and impartial opportunity to challenge jurisdiction," Judge Richard Tallman wrote for the panel.
"The submitted evidence supports the district court's finding that the tribal court operates independently from the tribal council and the evidence presented does not meet the narrow futility exception," he added. "GCSD is actively litigating its case in Hualapai Tribal Court, contradicting its argument that it has not had an 'adequate opportunity to challenge the court's jurisdiction.'"
Meanwhile, GCSD filed a separate amended complaint in Arizona District Court on Wednesday to compel arbitration on the issue of the tribe's allegedly unpaid management fees, which the company claims sparked the condemnation in the first place. The parties had participated in arbitration on that issue until February 2012 when the "proceedings came to an abrupt halt when the arbitrator ordered that SNW produce point-of-sale information related to monies received by the Tribe for Skywalk admissions and related discovery," according to the complaint, abbreviating Sa Nyu Wa.
GCSD claims that the Hualapai Tribal Council then seized the Skywalk, to "avoid having SNW comply with the arbitrator's order that it produce vital point-of-sale information due the next day."
SNW's appeal of the $28 million arbitration award Judge Campbell upheld against it in February is pending before the 9th Circuit. SNW filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Arizona on March 4, automatically staying the arbitration award action.
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