3

Iowa

U. S. C. § 1332 as the basis for federal jurisdiction. Mutual sought a declaration that it had no duty to defend or indemnify the Wellmans or the Ranch because the injuries sustained by the LaPlantes fell outside the coverage of the applicable insurance policies. The LaPlantes moved to dismiss the action for lack of subject-matter jurisdiction and the District Court granted the motion. Relying on R. J. Williams Co. v. Fort Belknap Housing Authority, 719 F. 2d 979 (CA9 1983), the court held that the Blackfeet Tribal Court must first be given an opportunity to determine its own jurisdiction. The District Court noted that the Montana state courts lack jurisdiction over comparable suits filed by Montana insurance companies; it indicated that its jurisdiction was similarly precluded because, based on its reading of Woods v. Interstate Realty Co., 337 U. S. 535, 538 (1949), federal courts sitting in diversity operate solely as adjuncts to the state court system. The District Court held that "[o]nly if the Blackfeet Tribe decides not to exercise its exclusive jurisdiction... would this court be free to entertain" the case under 28 U. S. C. § 1332.

4

The Court of Appeals for the Ninth Circuit affirmed the District Court's order. 774 F. 2d 1174 (1985). It found R. J. Williams Co. v. Fort Belknap Housing Authority, supra, to be consistent with this Court's intervening decision

Iowa Mutual also asserted lack of coverage as an affirmative defense in its answer to respondents' amended Tribal Court complaint. See Reply Brief for Petitioner 1, n. 1.

'A federal statute, Pub. L. 280, originally allowed States to assume civil jurisdiction over reservation Indians without tribal consent, but Montana did not take such action with respect to the Blackfeet Tribe. See Kennerly v. District Court, 400 U. S. 423 (1971). Tribal consent is now a prerequisite to the assumption of jurisdiction, see 25 U. S. C. § 1326, and the Blackfeet Tribe has not consented to state jurisdiction. Petitioner does not contend that the Montana state courts would have jurisdiction over the dispute. Brief for Petitioner 5 and 7; see Milbank Mutual Ins. Co. v. Eagleman, 218 Mont. 35, 705 P. 2d 1117 (1985) (Montana state courts lack subject-matter jurisdiction over suit between Indian and nonIndian arising out of on-reservation conduct).

Opinion of the Court

480 U. S. in National Farmers Union Ins. Cos. v. Crow Tribe, 471 U. S. 845 (1985). Quoting id., at 857, the Court of Appeals concluded: "We merely permit the tribal court to initially determine its own jurisdiction. The tribal court's determination can be reviewed later with the benefit of [tribal court] expertise in such matters."" App. to Pet. for Cert. 5a-6a. We granted certiorari. 476 U. S. 1139 (1986).

II

We have repeatedly recognized the Federal Government's longstanding policy of encouraging tribal self-government. See, e. g., Three Affiliated Tribes v. Wold Engineering, 476 U. S. 877, 890 (1986); Merrion v. Jicarilla Apache Tribe, 455 U. S. 130, 138, n. 5 (1982); White Mountain Apache Tribe v. Bracker, 448 U. S. 136, 143-144, and n. 10 (1980); Williams v. Lee, 358 U. S. 217, 220–221 (1959). This policy reflects the fact that Indian tribes retain "attributes of sovereignty over both their members and their territory," United States v. Mazurie, 419 U. S. 544, 557 (1975), to the extent that sovereignty has not been withdrawn by federal statute or treaty. The federal policy favoring tribal selfgovernment operates even in areas where state control has not been affirmatively pre-empted by federal statute. "[A]bsent governing Acts of Congress, the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them." Williams v. Lee, supra, at 220.

Tribal courts play a vital role in tribal self-government, cf. United States v. Wheeler, 435 U. S. 313, 332 (1978), and the Federal Government has consistently encouraged their

'Numerous federal statutes designed to promote tribal government embody this policy. See, e. g., 25 U. S. C. §§ 450, 450a (Indian SelfDetermination and Education Assistance Act); 25 U. S. C. §§ 476–479 (Indian Reorganization Act); 25 U. S. C. §§ 1301-1341 (Indian Civil Rights Act).

development. Although the criminal jurisdiction of the tribal courts is subject to substantial federal limitation, see Oliphant v. Suquamish Indian Tribe, 435 U. S. 191 (1978), their civil jurisdiction is not similarly restricted. See National Farmers Union, supra, at 854-855, and nn. 16 and 17. If state-court jurisdiction over Indians or activities on Indian lands would interfere with tribal sovereignty and selfgovernment, the state courts are generally divested of jurisdiction as a matter of federal law. See Fisher v. District Court, 424 U. S. 382 (1976); Williams v. Lee, supra.

A federal court's exercise of jurisdiction over matters relating to reservation affairs can also impair the authority of tribal courts, as we recognized in National Farmers Union. In that case, a Tribal Court had entered a default judgment against a school district for injuries suffered by an Indian child on school property. The school district and its insurer sought injunctive relief in District Court, invoking 28 U. S. C. §1331 as the basis for federal jurisdiction and claiming that the Tribal Court lacked jurisdiction over nonIndians. The District Court agreed and entered an injunction against execution of the Tribal Court's judgment, but the Court of Appeals reversed, holding that the District Court lacked jurisdiction. We refused to foreclose tribal court jurisdiction over a civil dispute involving a non-Indian. 471 U. S., at 855. We concluded that, although the existence of tribal court jurisdiction presented a federal question within the scope of 28 U. S. C. § 1331, considerations of comity direct that tribal remedies be exhausted before the question is addressed by the District Court. 471 U. S., at 857. Promotion of tribal self-government and self-determination re

'For example, Title II of the Indian Civil Rights Act provides "for the establishing of educational classes for the training of judges of courts of Indian offenses." 25 U. S. C. § 1311(4).

'See also Santa Clara Pueblo v. Martinez, 436 U. S. 49, 60 (1978) (providing a federal forum for claims arising under the Indian Civil Rights Act interferes with tribal autonomy and self-government).

quired that the Tribal Court have "the first opportunity to evaluate the factual and legal bases for the challenge" to its jurisdiction. Id., at 856. We remanded the case to the District Court to determine whether the federal action should be dismissed or stayed pending exhaustion of the remedies available in the tribal court system. Id., at 857.

8

Although petitioner alleges that federal jurisdiction in this case is based on diversity of citizenship, rather than the existence of a federal question, the exhaustion rule announced in National Farmers Union applies here as well. Regardless of the basis for jurisdiction, the federal policy supporting tribal self-government directs a federal court to stay its hand in order to give the tribal court a "full opportunity to determine its own jurisdiction." Ibid. In diversity cases, as well as federal-question cases, unconditional access to the federal forum would place it in direct competition with the tribal courts, thereby impairing the latter's authority over reservation affairs. See Santa Clara Pueblo v. Martinez, 436 U. S. 49, 59 (1978); see also Fisher v. District Court, supra, at 388. Adjudication of such matters by any nontribal court also infringes upon tribal lawmaking authority, because tribal courts are best qualified to interpret and apply tribal law.

As National Farmers Union indicates, proper respect for tribal legal institutions requires that they be given a “full opportunity" to consider the issues before them and "to rectify any errors.' 471 U. S., at 857. The federal policy of promoting tribal self-government encompasses the develop

99

As the Court's directions on remand in National Farmers Union indicate, the exhaustion rule enunciated in National Farmers Union did not deprive the federal courts of subject-matter jurisdiction. Exhaustion is required as a matter of comity, not as a jurisdictional prerequisite. In this respect, the rule is analogous to principles of abstention articulated in Colorado River Water Conservation Dist. v. United States, 424 U. S. 800 (1976): even where there is concurrent jurisdiction in both the state and federal courts, deference to state proceedings renders it appropriate for the federal courts to decline jurisdiction in certain circumstances. In Colorado River, as here, strong federal policy concerns favored resolution in the nonfederal forum. See id., at 819.

ment of the entire tribal court system, including appellate courts. At a minimum, exhaustion of tribal remedies means that tribal appellate courts must have the opportunity to review the determinations of the lower tribal courts. In this case, the Tribal Court has made an initial determination that it has jurisdiction over the insurance dispute, but Iowa Mutual has not yet obtained appellate review, as provided by the Tribal Code, ch. 1, §5. Until appellate review is complete, the Blackfeet Tribal Courts have not had a full opportunity to evaluate the claim and federal courts should not intervene.

Petitioner argues that the statutory grant of diversity jurisdiction overrides the federal policy of deference to tribal courts. We do not agree. Although Congress undoubtedly has the power to limit tribal court jurisdiction, we do not read the general grant of diversity jurisdiction to have implemented such a significant intrusion on tribal sovereignty, any more than we view the grant of federal-question jurisdiction, the statutory basis for the intrusion on tribal jurisdiction at issue in National Farmers Union, to have done so. The diversity statute, 28 U. S. C. § 1332, makes no reference to Indians and nothing in the legislative history suggests any intent to render inoperative the established federal policy promoting tribal self-government. Tribal courts in the Anglo-American mold were virtually unknown in 1789 when Congress first authorized diversity jurisdiction, see Judiciary Act of 1789, § 11, 1 Stat. 78-79; and the original statute did not manifest a congressional intent to limit tribal sovereignty. Moreover, until the late 19th century, most Indians were neither considered citizens of the States in which their reservation was located, nor regarded as citizens of a foreign State, see, e. g., Cherokee Nation v. Georgia, 5 Pet. 1, 15–18 (1831); Elk v. Wilkins, 112 U. S. 94, 102-103 (1884), so a suit to which Indians were parties would not have satis

"Congress has plenary authority to limit, modify or eliminate the powers of local self-government which the tribes otherwise possess." Santa Clara Pueblo v. Martinez, supra, at 56. See generally F. Cohen, Handbook of Federal Indian Law 207-216 (1982).