## Facts

- Val-U Construction Company of South Dakota contracted with the Rosebud Sioux Tribe in July 1989 to build housing units on the Rosebud Sioux Reservation.
- The contract contained an arbitration clause incorporating the American Arbitration Association (AAA) Construction Industry Arbitration Rules.
- After performance problems, the Tribe terminated the contract in September 1990.
- Val-U demanded AAA arbitration on October 26, 1990.
- The Tribe notified the AAA on December 11, 1990 that it would not participate, asserting tribal sovereign immunity.
- The AAA set the matter for hearing and advised it would proceed; the hearing occurred on May 6, 1991.
- Val-U appeared and presented evidence; the Tribe did not appear or participate.
- The arbitrator issued an award for Val-U; the Tribe refused to recognize the award.
- In earlier related appellate litigation, the court had held the arbitration clause waived the Tribe’s sovereign immunity for Val-U’s breach-of-contract claims (but not tort claims).
- In this later phase, the district court granted summary judgment enforcing the arbitration award and denied Val-U’s request to amend the judgment to add prejudgment interest; the Tribe appealed and Val-U cross-appealed.

## Issues

1. Whether the Tribe’s sovereign immunity barred enforcement of an arbitration award where the contract’s arbitration clause had been held to waive immunity for contract claims.
2. Whether the award was invalid as an impermissible “default” award because the Tribe refused to appear.
3. Whether the arbitration clause and incorporated AAA rules authorized the arbitrator to proceed and issue an award in the Tribe’s absence after notice.
4. Whether enforcement was improper because Val-U did not move to compel arbitration participation or to stay the federal litigation.
5. Whether Val-U was entitled to prejudgment interest from the date of the arbitration award to the date of the federal judgment.

## Decision

- The court affirmed summary judgment enforcing the arbitration award against the Tribe.
- The court held that the previously recognized waiver of sovereign immunity for contract claims encompassed enforcement of the resulting arbitration award.
- The court rejected the argument that the award was invalid as a “default,” because a hearing was held and evidence was received from the participating party.
- The court concluded the arbitrator acted within the authority granted by the contract and AAA rules permitting proceedings to continue after due notice despite a party’s nonappearance.
- The court held Val-U was not required to obtain an order compelling participation or staying litigation as a condition of enforcing the award.
- The court affirmed denial of prejudgment interest.

## Legal Principles

- A tribal agreement to arbitrate in a commercial contract can waive tribal sovereign immunity for contract claims, and that waiver can extend to judicial enforcement of the arbitration award.
- Under AAA Construction Industry Arbitration Rules incorporated by contract, an arbitrator may proceed and decide the dispute based on the evidence presented when a duly noticed party fails to appear.
- An arbitration award entered after one party’s voluntary nonparticipation is not invalid merely because it is labeled a “default,” where the arbitrator conducted an evidentiary hearing consistent with the parties’ agreement.
- Judicial review of arbitration awards is limited; absent a statutory ground to vacate or modify, courts enforce awards when the arbitrator acted within contractual authority.
- Prejudgment interest on an enforced arbitration award is not automatic and may be denied in the court’s discretion.

## Conclusion

The Eighth Circuit enforced an arbitration award against the Rosebud Sioux Tribe, holding that the contract’s arbitration clause effected a waiver of sovereign immunity for the contract dispute and permitted arbitration to proceed under AAA rules despite the Tribe’s refusal to participate; the court also upheld the district court’s discretionary denial of prejudgment interest.


Val-U Construction Co. of S.D. v. Rosebud Sioux Tribe, 146 F.3d 573 (8th Cir. 1998)