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Kennedy, Manchin introduce bipartisan Protecting Our Courts from Foreign Manipulation Act to end overseas meddling in U.S. litigation

September 18, 2023

Kennedy, Manchin introduce bipartisan Protecting Our Courts from Foreign Manipulation Act to end overseas meddling in U.S. litigation

Sen. John Kennedy (R-La.), a member of the Senate Judiciary committee, and Sen. Joe Manchin (D-W.Va.) today introduced the Protecting Our Courts from Foreign Manipulation Act of 2023 to stop foreign entities and governments from funding litigation in America’s courts.  “Leaving our courts unprotected from foreign influence—such as from China—poses a major risk to U.S. national security. The Protecting Our Courts from Foreign Manipulation Act would put necessary safeguards in place to ensure that foreign nations, private equity funds and sovereign wealth funds linked to hostile governments are not tipping the scale in federal courtrooms,” said Kennedy. “Foreign actors such as China and Russia use third-party litigation funding to support targeted lawsuits in the United States, undermining our economic and national security. This legislation would provide a commonsense strategy to protect our legal system by requiring greater transparency and accountability from third-party groups and preventing third-party litigation funding from foreign states and sovereign wealth funds. I urge Senators on both sides of the aisle to support this bipartisan bill to ensure that our federal courts are protected from foreign influence,” said Manchin.  Rep. Mike Johnson (R-La.) introduced companion legislation in the House of Representatives. “Foreign states and sovereign wealth funds should not meddle in our justice system. This bill prevents foreign actors like China from financing malicious lawsuits, protects critical industries and prioritizes the interests of Americans in court,” said Johnson.  Currently, foreign entities flood courts with billions of dollars in litigation financing in order to achieve a particular outcome in a case. Hostile foreign governments or companies that are connected with those governments could fund lawsuits in federal courts in order to achieve their geopolitical objectives and undermine America’s national security, especially by targeting proprietary commercial and military technology and exploiting U.S. disclosure requirements. The Protecting Our Courts from Foreign Manipulation Act would:
  • Require disclosure from any foreign person or entity participating in civil litigation as a third-party litigation funder in U.S. federal courts.
  • Ban sovereign wealth funds and foreign governments from participating in litigation finance as a third-party litigation funder, either directly or indirectly. 
  • Require the Department of Justice’s National Security Division to submit a report on foreign third-party litigation funding throughout the federal judiciary.
In January, Kennedy urged U.S. Supreme Court Chief Justice John Roberts and U.S. Attorney General Merrick Garland to take action in order to mitigate the threat foreign actors like China pose by covertly funding litigation in U.S. courts. “The U.S. Chamber of Commerce applauds Sens. John Kennedy (R-LA) and Joe Manchin (D-WV), and Rep. Mike Johnson (R-LA) for introducing this landmark bill, and we urge Congress to quickly pass it to protect consumers, businesses, and U.S. national and economic security,” said Harold Kim, President of the U.S. Chamber of Commerce Institute for Legal Reform. “The R Street Institute is excited to support and endorse Senator Kennedy’s legislation that will shine a light on the shadowy funders of third-party litigation, and limit the ability of foreign governments to negatively impact various U.S. industries by tying them up in anonymous third-party litigation. The current third-party litigation funding laws lack much needed transparency, and they could open the door to foreign entities detrimentally impacting our national security. We applaud the Senator for his leadership on this issue, and we urge more lawmakers to join him in this effort,” said Anthony Lamorena, Senior Federal Affairs Manager at the R Street Institute. Full text of the legislation is available here.

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Commentary Argues Funding Disclosure Bills Would Weaken Small-Business Patent Enforcement

A new opinion piece defends third-party litigation funding as a precondition for small businesses and independent inventors being able to enforce their intellectual property rights, and argues that pending federal disclosure legislation would undercut them.

As reported by the Washington Examiner, the commentary is written by Kristen Osenga, chief policy counselor of the Inventors Defense Alliance and a professor of law at the University of Richmond School of Law. She frames funding as an access-to-justice question for the innovation economy rather than a question of litigation volume.

The piece points to two measures now before Congress: Representative Darrell Issa's Litigation Transparency Act and Senator Thom Tillis's Tackling Predatory Litigation Funding Act. Osenga argues that mandatory disclosure of funding arrangements would hand well-resourced defendants insight into a plaintiff's financial position and litigation strategy, giving them a means to outlast smaller opponents rather than resolve the merits.

Her economic case rests on the role small firms play in US innovation. Small businesses account for roughly 45% of US GDP, and smaller companies produce approximately 50% more patents per employee than large companies. Without outside capital, she contends, those inventors face infringement by parties who can afford to litigate indefinitely.

The commentary likens litigation funding to the contingency fee arrangement, a long-accepted mechanism for shifting cost risk away from claimants who cannot bear it. "The right to sue is only valuable if you can afford to exercise it," Osenga writes, casting the disclosure debate as one over who retains practical access to the courts.

Commercial

Pogust Goodhead Asks High Court to Rule Client Committee Cannot Remove It From Mariana Dam Case

Pogust Goodhead has escalated its dispute over control of the multi-billion-pound Mariana dam group action against BHP, taking the matter to the High Court rather than accepting the claimant committee's decision to change firms.

As reported by Legal Futures, the firm has applied for declarations that the committee had no contractual authority to terminate its retainer, no authority to direct a change in legal representation, and no authority to prevent it from instructing Quinn Emanuel for the damages phase of the claim.

The committee, made up of 17 members whose identities are confidential, decided in early September to move the claim to Bailey Glasser International, a joint venture between a firm run by former Pogust Goodhead staff and the US firm Bailey & Glasser. Pogust Goodhead had announced in June that it would instruct Quinn Emanuel on damages.

In a statement, the firm said that clients "are being encouraged to walk away from an established litigation structure on the representation that they can simply move to another firm with no material consequences."

The timing raises the stakes considerably. A damages trial listed for 22 weeks is only months away, and the underlying claim has been built on an extensively financed litigation structure whose economics depend on the identity of the firm carrying it to trial. The application asks the court to determine, in effect, who holds the contractual right to control the running of one of the largest group actions in the English courts, and on what terms a claimant committee can override the arrangements that funded it.

Commercial

Burford-Affiliated Investor Pursues $109M Claim Against Alberta Law Firm Over 2018 Funding Agreement

A Delaware investment vehicle closely affiliated with Burford Capital is pursuing a debt claim of roughly $109 million against Alberta lawyer Jeffrey Rath and his firm, Rath & Company, alleging default on a litigation funding agreement first entered into in 2018.

As reported by Global News, Diriba Investments LLC claims the firm defaulted two years ago on financing tied to First Nations and COVID-19 litigation, with the outstanding balance now standing at approximately $108.8 million plus interest and costs. Diriba acts as agent for co-funder Western Springs Investments LP, also a Delaware entity. A 2023 amendment expanded the agreement's scope to cover all claimant-side work at the firm, including First Nations treaty claims and litigation over COVID-19 restrictions.

The alleged breaches include failure to provide monthly reports, failure to keep the funders informed, failure to report or remit proceeds, non-disclosure of client terminations, and the granting of competing security to a separate Delaware entity, Vance SPV LLC. Diriba issued a default notice in November 2024 and, in late July 2026, served a formal demand alongside a notice of intention to enforce security under the Bankruptcy and Insolvency Act describing the firm as an "insolvent person."

The supporting affidavit was sworn by Paul Mysliwiec, Burford Capital's deputy general counsel, acting as Diriba's authorized representative. Burford did not respond to requests for comment, and Diriba's Calgary counsel declined to comment.

The claim runs alongside separate actions by the Tallcree and Sturgeon Lake First Nations alleging misappropriation of trust funds, a Mareva injunction freezing $8.5 million, and a court-appointed receiver. Diriba is seeking an expanded receivership mandate at a September 14 hearing in Calgary. The allegations have not been proven in court, and Rath denies wrongdoing.