The bill adds section 1660 to chapter 111 of Title 28 to force parties and counsel to disclose third‑party litigation funding where the money is sourced, directly or indirectly, from foreign persons, foreign states, or sovereign wealth funds; to produce funding agreements; and to certify whether the funds’ source is foreign. It separately makes it unlawful for any party or counsel to enter into contingent‑payment agreements funded in whole or in part by foreign states or sovereign wealth funds and declares those agreements void.
Beyond immediate compliance duties for litigants and law firms, the bill ties disclosure failures to the Federal Rules of Civil Procedure (Rule 26/37) sanctions framework and directs the Attorney General to report annually on foreign‑sourced funding in federal courts. The measure shifts surveillance and enforcement obligations onto counsel, the courts, and the Justice Department while raising implementation questions about privilege, tracing indirect funding, and access to justice for claimants who rely on third‑party capital.
At a Glance
What It Does
The bill requires written disclosure to the court, all named parties, the Attorney General, and the Principal Deputy Assistant Attorney General for National Security of any contingent financing that is sourced, in whole or in part, from foreign persons, foreign states, or sovereign wealth funds, and demands production of funding agreements and a certification about the source. It bans contingent‑payment funding arrangements funded directly or indirectly by foreign states or sovereign wealth funds and makes such agreements null and void, and it makes failures to disclose subject to Rule 26/37 sanctions.
Who It Affects
Affected parties include third‑party litigation funders, plaintiffs who rely on litigation financing, law firms and counsel of record (who must disclose and certify), federal district courts (which will manage disclosures and sanctions), and the Department of Justice (which will receive disclosures and produce annual reports).
Why It Matters
This bill is an early statutory effort to regulate the source of litigation capital on national‑security grounds, setting a federal precedent for scrutinizing cross‑border funding of civil cases, raising compliance costs for participants in contingency arrangements, and creating new operational duties for courts and the DOJ.
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What This Bill Actually Does
The bill creates a new, standalone statutory rule in federal civil procedure focused on third‑party litigation funding with foreign links. It first defines key terms: a “foreign person” is any non‑U.S. person (but the statute separately treats foreign states and sovereign wealth funds), a “foreign state” references the definition already in federal law, and a “sovereign wealth fund” includes state‑owned or state‑controlled investment vehicles and certain agents.
Those definitions establish who the disclosure and prohibition rules target.
For every civil action, each party or that party’s counsel must disclose in writing the identity and contact details of any foreign person, foreign state, or sovereign wealth fund that has a contingent right to payment tied to the case’s outcome or tied to a portfolio that includes the case and involves the same counsel. Parties must also produce copies of agreements creating contingent payment rights.
Where financing has come or will come, in whole or in part, from a foreign source, the statute requires a certification about that source; alternatively, a party may certify that the disclosure criteria do not apply. The required disclosures go not only to the court and other parties but specifically to the Attorney General and to the Principal Deputy Assistant Attorney General for National Security.The statute prescribes timing and format: initial disclosures are due by the later of 30 days after the funding agreement is signed or the filing date of the case; parties who join later must disclose within 30 days of being served or joined.
Disclosures and certifications must be declarations under penalty of perjury (per 28 U.S.C. 1746) made after reasonable inquiry, and parties must supplement incorrect or incomplete disclosures within 30 days after discovering the inaccuracy.Crucially, the bill bars any contingent‑payment agreement whose terms are to be satisfied by money that has been or will be sourced, directly or indirectly, from a foreign state or a sovereign wealth fund. Any agreement entered in violation is unlawful and void.
To give the rules teeth, the bill treats these disclosure duties as information required by Federal Rule of Civil Procedure 26(a) and makes failures subject to Rule 37 sanctions. Finally, the Attorney General must report to the Judiciary Committees within one year and annually thereafter with named funders, source identities, judicial districts involved, country‑level funding estimates, and subject‑matter summaries; the new rules apply to cases pending on or commenced after enactment.
The Five Things You Need to Know
The statute defines “foreign person” to exclude foreign states and sovereign wealth funds and then handles foreign states and sovereign wealth funds separately for disclosure and prohibition purposes.
Disclosures must be delivered to the court, all named parties, the Attorney General, and the Principal Deputy Assistant Attorney General for National Security, and must identify names, addresses, and, where applicable, citizenship or country of incorporation.
Disclosures and certifications must be declarations under penalty of perjury (28 U.S.C. 1746), must be formed after reasonable inquiry, and must be corrected or supplemented within 30 days of discovering material inaccuracies.
The bill makes it unlawful for parties or counsel to enter contingency agreements that are funded in whole or in part (directly or indirectly) by foreign states or sovereign wealth funds; any such agreement is declared null and void.
The Attorney General must report to the House and Senate Judiciary Committees within one year and then annually, providing funder identities, source countries and amounts, affected judicial districts, and summaries of case subject matters.
Section-by-Section Breakdown
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Definitions and scope
This subsection sets the statute’s universe: it introduces three distinct labels (foreign person, foreign state, sovereign wealth fund) and carves who is covered and how. By excluding foreign states and sovereign wealth funds from the general “foreign person” definition and then defining them separately, Congress creates a two‑track approach—one track for non‑state foreign entities and a second, stricter track for state actors and their investment vehicles. Practically, that choice signals an intent to subject state‑linked capital to a categorical bar while treating other foreign capital primarily through disclosure.
Who must disclose and what to produce
This provision requires each party or counsel of record to disclose any third party with a contingent right to payment tied to the case or to an affiliated portfolio, and to produce copies of contingent‑payment agreements. The portfolio and affiliated counsel language expands the reach beyond single‑case funding: it sweeps in arrangements where the same funder or counsel is financing multiple matters, reducing opportunities to hide foreign involvement through bundled deals or related counsel structures.
Timing, format, and supplementation requirements
Disclosures are due by the later of 30 days after the funding agreement is signed or the case filing date, with a 30‑day window for parties who join later. Declarations must be made under penalty of perjury after reasonable inquiry, and any material omissions or errors require supplementation within 30 days of discovery. This turns what might otherwise be an informal duty into a formal, auditable event with a built‑in perjury risk and a clear remediation window that counsel must operationalize in intake and discovery processes.
Prohibition on foreign‑state/SWF funding and sanctions
The statute flatly prohibits any contingent‑payment agreement whose performance is sourced, directly or indirectly, from a foreign state or a sovereign wealth fund; agreements in violation are null and void. It also makes disclosure obligations part of Rule 26(a) information and subjects noncompliance to Rule 37 sanctions. The combination of a categorical ban with the FRCP enforcement mechanism means courts will determine sanctions and potentially unwind deals, which could leave plaintiffs without funding and counsel exposed to professional and financial risk.
Attorney General annual reporting to Judiciary Committees
The Attorney General must produce an initial report within one year and then annual updates identifying foreign funders, funding sources (by country), judicial districts involved, estimated amounts, and case subject‑matter summaries. These reporting elements require DOJ to collate sensitive data from court disclosures and turn it into public or committee‑level intelligence, creating both transparency for Congress and new administrative responsibilities inside DOJ.
Applicability and statutory housekeeping
The bill applies to civil actions pending on or commenced on or after enactment and adds the new section to the statutory table of contents. The retroactivity carve is narrow—covering pending matters at enactment—and forces parties with existing contingent arrangements to reassess compliance and potential voidability immediately after the law takes effect.
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Explore Justice in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Federal courts and judges — gain formalized disclosure about foreign ties to litigation, which assists case management, conflict assessment, and judicial determinations about adverse influence.
- U.S. defendants facing suits with foreign state backing — receive earlier visibility into adversaries’ funding sources and a statutory route to challenge or unwind state‑backed financing arrangements.
- Department of Justice and national‑security officials — obtain structured reporting and direct disclosures that support oversight, interagency analysis, and potential enforcement of foreign‑influence concerns.
- Domestic policymakers and Congress — get annual data to monitor cross‑border influence in civil litigation, enabling targeted legislative or diplomatic responses.
Who Bears the Cost
- Third‑party litigation funders and investors — face a compliance burden to trace capital provenance, increased legal risk, and a categorical ban if their capital is state‑sourced or tied to sovereign wealth funds.
- Plaintiffs who rely on contingent financing — may lose funding options where foreign capital is involved, which could impede meritorious claims and raise access‑to‑justice issues, particularly for cross‑border commercial disputes.
- Law firms and counsel of record — must build intake procedures, due‑diligence workflows, certification processes under penalty of perjury, and documentation practices; they also risk sanctions and contract nullification if disclosures fail.
- Federal courts and clerks — shoulder additional case‑management duties (receiving, docketing, and potentially sealing sensitive disclosures) and adjudicating discovery and sanctions disputes tied to funding provenance.
- Department of Justice — must aggregate disclosures, verify reporting data, and produce annual reports, imposing administrative and intelligence‑analysis costs.
Key Issues
The Core Tension
The central dilemma is protecting the integrity of U.S. courts against state‑backed influence versus preserving access to justice through third‑party financing: the statute aggressively blocks state and sovereign wealth fund involvement and increases transparency, but those steps risk choking off legitimate private financing, imposing heavy investigative duties on counsel, and producing collateral harm to claimants and confidential commercial arrangements.
The bill trades transparency and a categorical prohibition against state‑sourced financing for practical and doctrinal headaches. Requiring disclosures under penalty of perjury forces counsel to investigate funding chains, but tracing indirect or layered transfers—through intermediaries, holding companies, or pooled funds—may be technically infeasible.
That gap creates a risk of both false negatives (undiscovered foreign state involvement) and false positives (innocent funders flagged because of distant, opaque ties).
Declaring offending agreements void is a blunt instrument. It protects courts from direct state influence but may leave claimants without remedies or counsel unpaid; unwinding contracts after litigation has begun could shift costs onto parties who had no role in sourcing decisions.
The statute’s portfolio and affiliated‑counsel language widens the net but also increases litigation over scope—courts will likely face a wave of disputes about when an arrangement is “affiliated” or part of a “portfolio.” Finally, funneling disclosures to the Attorney General and a national‑security official raises privacy and diplomatic concerns about whether certain data must be sealed, how DOJ will verify foreign‑source claims, and how the executive branch will use the information beyond reporting to Congress.
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