Skywalk’s Financial Balancing Act

skywalkBuilder of the popular tourist stop, the glass-floored Skywalk over the Grand Canyon, must go through the Hualapai Indian Tribal court to resolve a long-running contract dispute over the project. The 9th U.S. Circuit Court of Appeals ruled Friday that Grand Canyon Skywalk Development must exhaust its tribal court remedies before it can take the issue to federal court.

Skywalk is a horseshoe-shaped walk way that juts out 70-feet over the room of the Grand Canyon with a glass floor that allows clear viewing of the Colorado River thousands of feet below.

Grand Canyon Skywalk Dev. GCSD, entered into a revenue-sharing contract with a tribal corporation, Sa Nyu Wa, SNW, for a share of the proceeds after it completed construction.

GCSD is a Las Vegas developer, which built the $30 million tourist attraction in 2003 in exchange for half the future revenues.

But a dispute grew up between GCSD and the tribal corporation and GCSD sought arbitration of the dispute. While that was under way the Hualapai Tribal council exercised eminent domain to condemn GCSD’s intangible property rights to the contract, meaning the income rights, rather than the skywalk itself.

GCSD went to federal court in Arizona to block the eminent domain, but the trial judge refused to step in, recognizing the tribal court’s sovereignty and failure of GCSD to seek to resolve the dispute there.

The 9th Circuit agreed. “The facts of this case do not support a finding of bad faith on the part of the tribal court,” wrote Judge Richard Tallman.

“Moreover, GCSD should have reasonably anticipated being subjected to the tribe’s jurisdiction,” he said.

The ruling is separate from a 2012 arbitration decision that sided with developer David Jin of GCSD, that the tribe owed him $28.6 million in ticket revenue. A federal judge in Flagstaff in February upheld the arbitration award.

Then in March the Hualapai tribe put the SNW corp. into bankruptcy after losing the arbitration decision.

The Skywalk attracts roughly 370,000 visitors a year.

Case: Grand Canyon Skywalk Development v. Sa Nyu Wa Inc., No. 12-15634

 

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