The Second and Ninth Circuit Courts have recently heard cases dealing with the application of the Alien Tort Claim Act (ATCA) against private, U.S. based multinational corporations (MNCs), and come to differing conclusions on the standards that should be used in applying this complicated law to suits by foreign nationals against U.S. based MNCs. The issue of private corporate liability under the ATCA was not definitively resolved by the Supreme Court in its recent decision in Sosa v. Alvarez-Machain , and thus the Circuits must continue to grapple with the application of the ATCA to U.S. based MNCs.
The Second Circuit, in Flores v. Southern Peru Copper Corporation , failed to set a threshold standard for private corporate liability under the ATCA, which would limit such liability to instances of egregious torts only. However, the Ninth Circuit set such a threshold in its panel decision in Doe v. Unocal Corporation , thus abiding by the case law of other Circuits and the legislative history of the ATCA and its sister statute the Torture Victims Protection Act (TVPA). The Unocal case’s threshold analysis provides a much clearer, more workable standard that protects U.S.-based MNCs from double recovery, legal costs, forum shopping, endlessly evolving liability, uncertainty and reduced investment.