Proposed Bill Mandates Disclosure of Foreign Lawsuit Funding, Bans Foreign State Investment in U.S. Civil Cases

This bill, the "Protecting Our Courts from Foreign Manipulation Act of 2025," aims to shed light on who is financially backing lawsuits in U.S. federal courts. It introduces rules requiring parties in civil cases to reveal if foreign entities have a financial stake in the outcome and outright bans funding from foreign governments and their investment arms. The core idea is to increase transparency and limit potential manipulation of the U.S. legal system by foreign powers.

Pulling Back the Curtain on Lawsuit Cash

The biggest change here is the new disclosure requirement outlined in the proposed Section 1660 of Title 28, U.S. Code. If you're involved in a federal civil lawsuit, you (or your lawyer) would need to tell the court, the other parties, and the Department of Justice about any "foreign person," "foreign state," or "sovereign wealth fund" that stands to profit if you win. A "foreign person" is basically any non-U.S. individual or entity (but not foreign governments or their sovereign wealth funds, which are handled separately). You'd have to provide names, addresses, citizenship/incorporation details, a copy of the funding agreement, and certify whether the money came from foreign sources, including amounts. This disclosure needs to happen within 30 days of making the funding agreement or filing/being served in the case.

Real-world example: Imagine a small U.S. company suing a larger competitor over intellectual property theft. If a private investment fund based overseas provides the cash for the lawsuit in exchange for a percentage of any settlement or award, this bill requires that arrangement to be disclosed upfront.

Red Lines Drawn: Who Can't Fund a Fight?

Beyond just disclosure, the bill draws a hard line against certain funders. It explicitly makes it illegal for any party in a lawsuit to accept funding from a "foreign state" (another country's government) or a "sovereign wealth fund" (investment funds owned/controlled by foreign states) if that funding is contingent on winning the case. Any agreement that violates this rule would be legally void.

This provision targets direct financial influence by foreign governments in U.S. litigation. While it aims to prevent strategic manipulation, it could also potentially limit funding options for plaintiffs or defendants who might otherwise rely on such sources, especially in complex or expensive international disputes.

Keeping Tabs: The Annual Check-Up

To track the impact and extent of foreign funding, the bill requires the U.S. Attorney General to submit an annual report to Congress (specifically, the Senate and House Judiciary Committees). This report would detail who the foreign funders are, where the money is coming from (including country and estimated amounts), which court districts see the most activity, and the types of cases being funded. The first report would be due one year after the bill becomes law.

What This Means on the Ground

If enacted, these rules apply immediately to all ongoing and newly filed federal civil cases. Failing to disclose the required information carries consequences, treated like violating other federal court discovery rules (specifically Rule 26(a)), meaning potential sanctions under Rule 37. The legislation tries to balance the goal of transparency and preventing foreign state interference against the practicalities of litigation funding, which can be crucial for accessing the justice system. It introduces new administrative steps and places a clear prohibition on funding from foreign governments and their investment funds.