Krystal Energy Company v. Navajo Nation

Appellant Krystal Energy Company (“Krystal”) appeals the district court’s dismissal of its adversary action under the Bankruptcy Code, 11 U.S.C. §§ 505 and 542, against the Navajo Nation, an Indian tribe. The district court based its dismissal on the Navajo Nation’s sovereign immunity to suit in the absence of explicit abrogation of that immunity by Congress. Whether Congress has abrogated the sovereign immunity of Indian tribes by statute is a question of statutory interpretation and is reviewed de novo. Demontiney v. United States, 255 F.3d 801, 805 (9th Cir.2001). Because we conclude that Congress did abrogate the sovereign immunity of Indian tribes under 11 U.S.C. §§ 106 (a) and 101(27), we reverse.

Immunity from suit has been recognized by the courts of this country as integral to the sovereignty and self-governance of Indian tribes. Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751 , 756-58, 118 S.Ct. 1700 , 140 L.Ed.2d 981 (1998) (“Kiowa Tribe”). See also Okla. Tax Comm. v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509 , 111 S.Ct. 905 , 112 L.Ed.2d 1112 (1991) (“Potawatomi ”) (recognizing the sovereign immunity of Indian tribes absent a clear…