Throughout recent years, many tribal nations have managed to build strong tribal economies by way of gaming and other business enterprises. They have created opportunities to support business partnerships and small business development. Despite these successes, the question still arises: “Are tribes prepared to facilitate business transactions across tribal borders or to attract outside investors to fund important business projects?” One way to address this is for tribes to develop a consistent and standardized set of laws that help to govern business transaction across jurisdictions.
A Uniform Commercial Code (UCC) is a set of laws that apply to these types of secure business transactions. They include laws that address loans and extensions of credit that involve collateral. Most American business start-ups and growth are funded this way. A Standard Uniform Commercial Code was first established by the National Conference of Commissions on Uniform State Laws (NCCUSL) and became U.S. law in the early 1970s; this allowed states to address problems in doing business across state jurisdictions and helped to bring conformity to business laws and since then all states have enacted some version of the model code. Most free market economies today have a secured transaction system that legally supports their economic development.
A tribal model of a Uniform Commercial Code entitled the Model Tribal Secured Transaction Act (MTSTA) was developed in 2005 by the NCCUSL, it was drafted by a special committee that included an advisory group of Indian tribes from: The Cherokee Nation, the Navajo Nation, the Chitimacha Nation, the Oneida Nation, the Crow Nation, the Confederated Tribes of Warm Springs, the Chickasaw Nation, the Little Traverse Bay Bands of Odawa Indians, the Sac and Fox Nation, and several California Rancherias.
“The code is meant to serve as a model; tribes can use it to develop their own laws that reflect their own particular cultural and legal environment,” said Susan Woodrow, who served as an advisor to the drafting committee. This along with its publication and an active tribal filling system can help to support successful tribal development.
It is important for tribes to understand that most commercial lending institutions will feel more confident in doing business when such laws exist, most lenders and many investors will only do business in an environment that has a system in place that lays out the rules and regulations for these types of secured business transactions. It may not be easy for most tribes to adopt such a complicated and structured legal code, but the benefits can help tribes to cultivate a strong and stable business environment.
“It is a small, but an important step in creating a strong business environment. I think it is a small benefit, but we need to have our codes and courts prepared to have money coming through. It is just one piece to building a good business environment.” States Joel Rossette (Chippewa) Assistant Attorney with the Chippewa-Cree Tribe who help to enact his tribe’s UCC code last year.
For more on the MTSTA, visit the NCCUSL website at: http://uniformlaws.org.