Foreign Litigation Funding Disclosure

Summary#

This bill would force parties in federal civil cases to disclose most third-party funding that comes from non‑U.S. persons and would ban cases funded by foreign states and sovereign wealth funds. Its goal is to increase transparency about who is paying for litigation and to prevent state‑linked money from influencing U.S. courts.

• Main change: Parties and their lawyers must tell the court, all other parties, and certain Department of Justice officials about any person or entity outside the United States that has a contingent (outcome‑dependent) right to payment tied to the case. They must also produce the funding agreement.
• Ban: Funding that is sourced, even indirectly, from a foreign state or a sovereign wealth fund would be illegal; any agreement that violates that ban would be void.
• Timing and format: Disclosures must be made within 30 days after the funding agreement or by the filing date, whichever is later, and must be sworn (under penalty of perjury). Parties must correct incomplete disclosures within 30 days of learning of the error.
• Sanctions and enforcement: Failure to disclose is treated like other discovery failures and can bring court sanctions under federal civil procedure rules. The Attorney General must report annually to Congress about foreign third‑party funding in federal courts.
• Scope: Applies to any civil action pending on or started after the law takes effect.

What it means for you#

• Parties in federal civil cases (plaintiffs and defendants):

  • If anyone outside the U.S. has a contingent financial interest in your case, you must disclose their name, address, and country of incorporation or citizenship and give the court a copy of the funding agreement.
  • If the funding is (directly or indirectly) from a foreign state or sovereign wealth fund, that funding is prohibited and the agreement would be void.
  • You must update disclosures if they become inaccurate.

• Attorneys and law firms:

  • Counsel of record must make the disclosures and produce agreements unless the court orders otherwise.
  • Disclosures are made under penalty of perjury, so lawyers must make a reasonable inquiry before filing.
  • Failure to disclose can trigger sanctions under existing federal civil procedure rules.

• Third‑party litigation funders (non‑U.S. and others):

  • Non‑U.S. funders that give contingent funding to U.S. civil cases will be identified in court filings and to DOJ officials.
  • Foreign states and sovereign wealth funds cannot be sources of contingent litigation funding for covered cases.

• Foreign states and sovereign wealth funds:

  • They are explicitly barred from being sources of contingent funds for civil litigation covered by the law.

• Courts and the Department of Justice:

  • Courts will receive and consider the disclosures. The DOJ (including a national security official named in the bill) will receive copies for review.
  • The Attorney General must prepare an annual report to Congress on foreign third‑party funding in federal courts.

• General public / other groups:

  • The law mainly affects federal civil litigation processes and people involved in those cases. It does not directly change criminal law or state court procedures.

Expenses#

No publicly available information.

• The bill requires the Attorney General to produce an annual report, which implies work for DOJ staff to collect and summarize data.
• Courts and parties will have additional administrative and compliance work: preparing sworn disclosures, producing agreements, and responding to challenges and sanctions.
• There may be private costs for parties and law firms to assemble and verify disclosure materials. The bill does not include a fiscal estimate or budget numbers.

Proponents' View#

• The bill appears intended to increase transparency about who funds litigation in U.S. federal courts.
• It appears designed to prevent foreign states and sovereign wealth funds from using money to influence U.S. civil litigation.
• Requiring sworn disclosures and production of agreements could let courts and the public see potential foreign influence over cases.
• An annual DOJ report would give Congress information about the scale and sources of foreign litigation funding.

Opponents' View#

• One concern is that the bill could impose significant compliance costs and paperwork on parties and lawyers, especially in complex cases with multiple funders.
• The bill does not fully explain how courts should handle confidentiality claims or commercially sensitive information in funding agreements. This may raise privacy and business‑secrets issues.
• Voiding agreements that violate the ban could leave litigants without promised funding mid‑case, which could affect access to justice for parties who rely on third‑party funding.
• It is unclear how broadly “indirect” sourcing is interpreted; that could create uncertainty about when funds are prohibited.
• Applying the law to cases already pending may disrupt existing arrangements and lead to litigation over past funding.