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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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FCA Attacks Consumer Group Over Funding in £9.1bn Car Finance Battle

The Financial Conduct Authority has turned on a consumer campaign group in the escalating fight over Britain's £9.1 billion motor-finance redress scheme, questioning how the organization is funded and its ties to the law firm representing it.

As reported by The Guardian, the regulator has urged judges to dismiss a legal challenge brought by Consumer Voice, arguing the group failed to give "a full and frank explanation" of its own interest and that of its solicitors, Courmacs Legal. In court filings, the FCA suggested Consumer Voice had not been honest about its business model or its relationship with Courmacs, and had not disclosed details of its funding arrangements.

Consumer Voice contends the FCA's compensation scheme will low-ball victims of mis-sold car loans, who face an average payout of roughly £829 per agreement — higher than the £695 the regulator floated in its earlier consultation, but still, the group argues, well short of fair value. Lenders including Lloyds Banking Group, Santander, and the finance arms of Volkswagen and Mercedes-Benz are on the hook for the £9.1 billion the FCA expects the scheme to cost.

The clash places the funding and structure of claims-side campaign groups squarely in the regulator's sights, echoing a wider debate over transparency in third-party-backed consumer litigation. With millions of drivers due payouts this year, the dispute over who speaks for claimants — and who pays for that advocacy — is likely to intensify.

Commercial

Treasury Rejects Longo’s Warning Over ASIC’s Depleted Litigation War Chest

Australia's Treasury has brushed aside warnings from former corporate regulator chair Joe Longo that the Australian Securities and Investments Commission is running short of the money it needs to fund major enforcement litigation, insisting the watchdog is adequately resourced.

As reported by Capital Brief, Treasury said there were no funding concerns around ASIC, despite Longo's plea in May for an urgent top-up at the close of what he described as the regulator's most successful year in court. Longo had warned a parliamentary committee that ASIC's Enforcement Special Account — the reserve built to absorb the costs of large, complex cases — was on track to fall to its minimum viable level by 30 June 2026.

"Absent replenishment, this will impede ASIC's ability to maintain its current enforcement program," Longo cautioned, adding that without additional funding the regulator might have to scale back or defer cases that would otherwise proceed. The account is designed to let ASIC pursue resource-intensive matters against well-funded corporate defendants without straining its operating budget.

The exchange spotlights a tension increasingly familiar to litigation-finance observers: even a public enforcement agency depends on a dedicated pool of case capital to sustain high-stakes litigation, and the adequacy of that pool shapes which matters get pursued. Treasury's rejection of Longo's alarm leaves unresolved how ASIC will bankroll its most ambitious cases as the special account approaches the floor he flagged.

Commercial

Meru’s Withdrawal Highlights the Case for Litigation Funding in India

The decision by cab aggregator Meru to abandon its long-running competition appeal against Ola and Uber has become an unlikely rallying point for advocates of third-party litigation funding in India, illustrating how the absence of outside capital can force even well-founded claims to be dropped.

As reported by Moneycontrol, the National Company Law Appellate Tribunal permitted Meru Travel Solutions to withdraw its appeal challenging a 2018 Competition Commission of India order that had closed its antitrust complaint at the preliminary stage. The tribunal noted that Meru's operations and revenues had deteriorated to the point that continuing the litigation was no longer viable.

The commentary argues that Meru's exit is less a verdict on the merits than a reflection of a financing gap. Had third-party funding been readily available, the analysis contends, a cash-strapped litigant might have pressed on rather than surrender a claim it could no longer afford to pursue.

India permits third-party funding — no statute expressly prohibits it, and agreements are governed largely by the Indian Contract Act and Bar Council conduct rules — but the market remains thinly developed and lightly regulated. As commercial courts gain stronger procedural powers under 2026 reforms and high-value technology, energy, and infrastructure disputes proliferate, general counsel and chief financial officers are increasingly weighing outside capital as a strategic tool. Meru's withdrawal, the piece suggests, is a case study in the cost of leaving that tool underused.