At the beginning of this month, senior officials responsible for the U.S. Department of Justice’s (DOJ) Foreign Agents Registration Act (FARA) Unit made important announcements at the American Conference Institute’s 5th National Forum on FARA. The announcements included their concerns with third party foreign entities secretly funding litigation in U.S. courts.
ILR has expressed concerns with foreign entities, including U.S. adversaries, using third party litigation funding (TPLF) against U.S. businesses to advance their strategic goals to the detriment of U.S. economic and national security. These concerns are highlighted in our research, ILR Briefly: A New Threat: The National Security Risk of Third Party Litigation Funding.
At the national forum on FARA, DOJ FARA Unit Chief Evan Turgeon echoed these concerns. Specifically, he noted that litigation could be weaponized by foreign entities for strategic advantage to harm U.S. competitor companies, that foreign funders could gain access to proprietary and sensitive commercial information through discovery, and that foreign entities could fund litigation over controversial issues to sow discord among the American public. He also noted that foreign litigation funding could be reportable already under existing FARA requirements, and announced the DOJ’s intention to scrutinize foreign litigation funding as well as the activities of sovereign wealth funds that promote the political or policy goals of foreign governments.
In addition, last week the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (Select Committee) released a report that outlines a strategy to fundamentally reset the United States’ economic and technological competition with the People’s Republic of China. Among the Select Committee’s bipartisan recommendations are two related to TPLF:
- Determine and establish what safeguards are needed to prevent foreign adversaries from obtaining intellectual property through TPLF.
- Require enhanced disclosures of foreign funding of litigation in federal court.
The lack of safeguards in TPLF provides a clear path for foreign adversaries to undermine U.S. national economic and security interests through the infiltration of the American litigation system. It’s time for government officials to shine a light on this secretive industry by requiring transparency and other reforms.