Until recently, the primary legal liabilities of U.S.-based multinational corporations (MNCs) for their overseas operations consisted of U.S. federal and state laws and the laws of the country that hosted their investments. In addition to these legal liabilities, the court of public opinion frequently has expressed a special distaste for MNCs and their profit-seeking overseas operations, and accordingly has imposed a set of extra-legal liabilities.1 For example, MNCs have been subject to corporate charter revocation actions by U.S. states,2 U.S. state sanctions against MNCs by way of selective purchasing ordinances, municipal boycotts,4 public awareness IMAGE FORMULA6campaigns, consumer boycotts,5 and, in 2001, a hunger protest at sixty-three universities in the United States and abroad.6
But now there is a newly exhumed weapon against MNCs: the forum of U.S. federal court and a thirty-three word federal statute enacted in 1789 called the Alien Tort Claims Act (ATCA).7 Activists have seized upon this archaic, sparse statute that was originally designed to provide U.S. courts as a forum for foreign victims of pirates and slavers, and have turned it into the newest way to haul MNCs into U.S. federal court. Unlike other, more standard U.S. laws of extraterritorial application that establish liability for violations of domestic law, the ATCA creates legal liability for violations of international law, a body of law much more expansive, obscure, and fluid than domestic law.
A brief overview of cases filed using the ATCA as a cause of action reads like a list of "Who's Who" in the Fortune 500. Notable corporate defendants include energy companies Unocal and Chevron, as well as a host of well-known American retailers, including Nordstrom, J. Crew, Gymboree, Cutter and Buck, Ralph Lauren, Donna Karan, Phillips-Van Heusen and Chadwick's of Boston.8
This Note will discuss the new and emerging post-Unocal liabilities of MNCs for their activities abroad. Part II-A will address the threshold question of why firms choose to go abroad and invest instead of producing domestically and then engaging in export trade. Part II-B will briefly discuss the increasing importance of MNCs to the U.S. economy. Part II-C will then discuss the ATCA and other causes of action used to haul MNCs into U.S. courts. It IMAGE FORMULA8will demonstrate that the chances of a MNC being sued in America are clearly on the rise under both the ATCA and other statutes.9 These suits, accompanied by U.S. federal and state claims10 appended to the core ATCA federal claim, are developing as the most significant piece in the larger pattern of U.S. courts serving as an increasingly popular forum for plaintiffs to bring suit against MNCs.
Part II-D will provide a detailed examination of the most significant case to date construing the ATCA, Doe v. Unocal ("Doe I").11 In international law circles, this case is widely regarded as having the greatest potential impact on the scope and interpretation of the ATCA.12 Doe I was the first case to find that the ATCA can be used to hold a MNC liable for violations of universally recognized human rights standards committed jointly by the MNC and its foreign business partners.13 This case and others like it face jurisdictional, legal, and factual hurdles, but if the ultimate disposition of the case follows the initial holdings in favor of the plaintiffs, the ATCA will provide another powerful legal weapon against MNCs. The significance of this line of cases is the scope of MNCs' liability in the United States for acts done abroad cannot be overstated.
Part III will argue that the confusion resulting from a lack of clear legal rules about the liability of MNCs for their acts abroad could lead to several scenarios: first, the statutory codification in the U.S. of rules designed to spell out the liabilities of MNCs operating abroad; second, codification of such rules in international law in the form of a new international convention (such as one similar to the Multilateral Agreement on Investment) or development of rules by the process of customary international law; third, promulgation of voluntary codes of corporate conduct regarding MNC conduct abroad, formulated by MNCs either alone or with states and other interested groups. …