The expression \( x^2 + y^2 + 2xy \sin \alpha \) is equivalent to \( (x + y \sin \alpha)^2 \), which is always non-negative.
The condition \( \cos^{-1} x - \sin^{-1} y = \alpha \) constrains \( x \) and \( y \) to the interval \([-1, 1]\), the principal range for these inverse trigonometric functions.
Rewriting the expression yields:
\[ x^2 + y^2 + 2xy \sin \alpha = (x + y \sin \alpha)^2. \]
The term \( (x + y \sin \alpha)^2 \) achieves its minimum value of 0 when \( x + y \sin \alpha = 0 \).
Therefore, the minimum value of \( x^2 + y^2 + 2xy \sin \alpha \) is 0.