The Hualapai Tribal Council could lose the Skywalk as the eventual result started by the recent $28.6 million ruling by an arbiter. Also at risk: The respect of some of its tribal members over the seizure of the famous landmark's contract by eminent domain.
One former council chairwoman called the whole incident an embarrassment to the tribe. And a former tribal corporation board chairman called the council's actions "inappropriate" and warned they could scare off future investors.
An arbiter awarded David Jin's company, Grand Canyon Skywalk Development, $28.6 million in unpaid fees and damages in August. In order to make sure it got the award, the company filed a request to enforce the order in Arizona's U.S. District Court on Tuesday.
However, the Hualapai Tribe's tourism organization, Sa Nyu Wa, is claiming the order is invalid, because Jin didn't get a federal court order forcing arbitration between the two parties.
Jin's company, Grand Canyon Skywalk Development and Sa Nyu Wa have been arguing over the proceeds from Skywalk ticket sales and who is responsible for finishing the visitor's center since 2009.
The Hualapai Tribal Council seized the Skywalk's contract using its power of eminent domain and took over its operation in February while the two sides were in arbitration.
Sa Nyu Wa claims that the award is invalid because the Skywalk contract requires a federal court order to compel arbitration, its spokesman David Cieslak said. Since Grand Canyon Skywalk Development didn't get a court order for arbitration, the arbiter never had jurisdiction over the case and the award is invalid.
Grand Canyon Skywalk Development interprets the contract differently, said Mark Tratos, the company's attorney. He claims the contract allows either side to request arbitration without going through the courts.
"It's set forth very clearly in the contract," Tratos said. The whole point of arbitration is to avoid the courts and settle issues in a timely, speedy manner, he said.
Article 15, section 4a of the contract's general provisions states, "Either party may request and thus initiate arbitration of the dispute by written notice to the other party."
However, a subsection of Article 2 of the contract, which deals with the construction of the Skywalk, states that a federal court order is required to start arbitration talks over any disagreements pertaining to the construction.
Grand Canyon Skywalk Development did try to force arbitration by filing a request in the U.S. District Court in February 2011. The court ruled that Jin had to file in the Hualapai Tribal Court first. He did, and that court ruled that it did not have jurisdiction over the matter.
Jin brought the issue before American Arbitration Association and it ruled it had the authority to hear the case based on its reading of the contract.
Sa Nyu Wa even participated in the arbitration at first, Tratos said. It's members paid arbitration fees, attended meetings, asked for documents and issued subpoenas, although, it refused to give the arbiter or Grand Canyon Skywalk Development access to its financial data.
"When it was clear they were going to lose, they pulled out," he said.
In an email, Cieslak stated that the organization did participate in arbitration but maintained that the arbiter had no jurisdiction because there was no court order and the organization had not waived its sovereign rights.
Sovereign rights protect entities such as tribal governments from getting sued in court for actions involving their normal duties.
When the Hualapai Tribal Council took over the Skywalk contract by eminent domain, Grand Canyon Skywalk Development no longer had any rights under the contract and the tribe could end arbitration, he said.
According to court documents, Sa Nyu Wa did not attend the last two arbitration meetings, including the final meeting where both sides were supposed to present evidence supporting their positions.
The arbiter decided in favor of Grand Canyon Skywalk Developments in August after hearing its evidence and witnesses, who included a former tribal corporation board chairman and the tribal council chairwoman.
"The actions of the Hualapai tribe are inappropriate and I believe a judge will confirm that it was illegal," Ted Quasula said in news release. Quasula was the chairman of the tribe's corporation board of directors when the Skywalk contract was signed with Jin's company. "This business grab by my own tribe hurts all Native American nations because it raises serious questions for American and foreign investors who must have a level of trust when dealing with tribal nations across the United States."
Former Hualapai Tribal Council Chairwoman Louise Benson called the council's actions embarrassing in an affidavit to the arbiter.
According to the arbitration order, the arbiter also took into account what little information he had on Sa Nyu Wa's position.
In a news release, Jin said he is looking forward to the award, but is saddened by the actions of some members of the Hualapai tribe and hopes that the tribe resolves its internal struggles.
"I want to get back my partnership with the Hualapai," he said. "We need each other to deliver a world-class experience for American and foreign tourists."
Sa Nyu Wa had 20 days to respond the arbiter's ruling. It didn't and the ruling became final on Sept. 6. Jin then filed a request with the federal court to enforce the ruling.
This should make sure that Grand Canyon Skywalk Development gets its money, Tratos said. The money would come from the funds in a joint trust account that was set up to hold the Skywalk ticket money in 2008. The company could also collect on the current daily sales of tickets as well.
If Sa Nyu Wa or the tribe still fails to pay, the tribe still has to pay the company compensation for taking over the Skywalk contract by eminent domain, he said. Tratos doesn't believe the tribe has the money to pay.
According to the tribe's eminent domain law, if it can't pay just compensation within the time period set by the tribal court, then it has to give the property back to the original owner, he said. Which means that Grand Canyon Skywalk Development would not only get the Skywalk back, but it wouldn't have to split the proceeds from the ticket sales with the tribe.
According to a press release from Grand Canyon Skywalk Development, the tourist attraction is anticipated to generate more than $100 million over the next 10 years.