Sen. John Kennedy has introduced a new bill aimed at reforming the courtroom practice of third-party litigation funding.
Kennedy, R-La., introduced the Protecting Our Courts from Foreign Manipulation Act last week, and it was immediately supported by the insurance industry trade association the American Property Casualty Insurance Association (APCIA).
“Foreign-backed litigation funding is a clear and present risk to our national security and economic stability,” said Sam Whitfield, APCIA’s senior vice president of federal government relations and political engagement.
The legislation in a companion to House bill (HR 2675), sponsored by Rep. Ben Cline, R-Va. The bill advanced out of the House Judiciary Committee, also last week.
Related: APCIA: House Judiciary Committee Must Pass Litigation Funding Disclosure Reforms
“With Senator Kennedy’s bill introduced in the Senate and Congressman Cline’s bill advancing out of markup in the House, Congress is taking decisive action to close this dangerous loophole,” added Whitfield. “APCIA urges swift passage of these critical reforms to protect consumers and uphold national security.”
APCIA said Kennedy’s bill would:
- Prohibit foreign governments and sovereign wealth funds from financing U.S. litigation.
- Require disclosure of foreign funding sources and litigation financing agreements to courts and the Department of Justice.
- Mandate oversight and reporting by the DOJ’s National Security Division to track foreign involvement in litigation.
“Right now, hostile foreign nations can pour money into our legal system like it’s a slot machine, hoping to shake loose our military technology, undercut U.S. companies, or push political agendas,” said Kennedy, in a statement. “The Protecting Our Courts from Foreign Manipulation Act ensures these foreign bad actors cannot sneak through our justice system through the back door.”
The insurance industry has routinely blamed litigation funding—investments in lawsuits in exchange for a percentage of a settlement or judgment—for the rapid increase in litigation costs, and subsequently higher insurance costs for consumers.
Related: Court Orders Start to Expose ‘Startling’ Data on Litigation Funding Sources
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