Dear Ms. Gellie:
I am writing on behalf of the U.S. Chamber of Commerce Institute for Legal Reform (“ILR”)¹ to offer comments on the U.S. Department of Justice (“DOJ”)’s Notice of Proposed Rulemaking (“NPRM”) to “update and clarify” the regulations under the Foreign Agents Registration Act (“FARA”).² For the reasons discussed below, ILR believes that any amendments to the FARA regulations should, in the interest of national security, take full account of the critical need for increased transparency regarding foreign-sourced third-party litigation funding (“TPLF”) in the United States.³
The alarm about the exigent need for such transparency has been sounded by many observers. As Professor Maya Steinitz of the Boston University School of Law warned over a decade ago, foreign sources, such as sovereign wealth funds (“SWFs”) like the China Investment Corporation, could file “suit against an American company in a sensitive industry such as military technology” and over the course of that litigation, receive “highly confidential documents containing proprietary information regarding sensitive technologies from the American defendant-corporation.”⁴
More recently, in 2023, Senator John Kennedy (R-LA) highlighted similar concerns in a letter to Chief Justice John Roberts and former Attorney General Merrick Garland, warning that “by financing litigation in the United States against influential individuals, corporations, or highly sensitive sectors, a foreign actor can advance its strategic interests in the shadows since few disclosure requirements exist in jurisdictions across our country.”⁵ Senator Kennedy’s concerns are not limited to foreign-controlled litigation funders operating in the U.S., but also to indirect foreign financiers—foreign government entities or government-controlled entities (e.g., sovereign wealth funds) that funnel cash through U.S.-based litigation funders and thereby potentially exercise behind-the-scenes direction as to certain lawsuits.⁶
Several other prominent federal legislators have also voiced concerns regarding the risks of foreign influence exerted through litigation funding activity, including Senators John Cornyn (R-TX) and Thom Tillis (R-NC). In a July 11, 2024 letter to the Committee on Rules of Practice and Procedure of the U.S. Judicial Conference, those Senators warned that “litigation funding is an available weapon for foreign investors to attack domestic businesses” and that “foreign adversaries could use litigation funding mechanisms to weaken critical industries or obtain confidential materials.”⁷ U.S. Senators Rick Scott (R-FL) and Marco Rubio (R-FL) (now U.S. Secretary of State) echoed these concerns in letters to the chief judges of Florida’s federal district courts in November 2023, highlighting “the dangers of foreign [TPLF] and the need for more transparency in the federal judiciary.”⁸
These concerns were echoed in a December 2023 report by the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, which recommended that Congress determine and establish guardrails to address foreign adversary access to sensitive intellectual property through third-party litigation funding, as well as require enhanced disclosures for foreign adversary-controlled entities.¹⁰ ¹¹
Executive branch officials at both state and federal levels have also voiced growing concern about risks from foreign-sourced litigation financing. In December 2022, fourteen state attorneys general submitted a letter to DOJ questioning whether opaque TPLF practices threaten U.S. national security.¹² In December 2023 remarks, FARA Unit Chief Evan Turgeon specifically identified risks of undisclosed foreign-funded litigation, including competitive harm to U.S. companies, access to sensitive information through discovery, and litigation funded to influence divisive public policy issues.¹³ ¹⁴
Recent examples illustrate these concerns. A lawsuit initiated against ExxonMobil by the California Attorney General and several nonprofit organizations allegedly involved funding by the Intergenerational Environment Justice Fund (“IEJF”), affiliated with an Australian billionaire and rival energy interests. DOJ subsequently concluded that a U.S. law firm involved was required to register under FARA—revealing foreign influence that otherwise may have remained hidden.¹⁵
Additional concerns arise from litigation financed by Purplevine IP Operating Co., Ltd., a China-based firm funding IP lawsuits against Samsung Electronics. Court-ordered disclosures revealed access to sensitive and potentially privileged discovery materials related to advanced technology.¹⁶–¹⁹ Further concerns include reporting that Russian-linked litigation finance operations have supported fraudulent personal-injury lawsuits in U.S. courts, with proceeds potentially funding organized criminal activity and sanction-evasion efforts.²⁰ ²¹
As these examples illustrate, foreign-sourced TPLF poses serious national security concerns. Accordingly, ILR respectfully urges DOJ, in considering any revisions to FARA regulations, to examine measures that would increase transparency and shed light on foreign-sourced litigation funding used in U.S. courts.
Sincerely,
Stephen Waguespack
President, Institute for Legal Reform
Senior Vice President, U.S. Chamber Federation, State and Local Advocacy
- ILR program description
- Amending and Clarifying FARA Regulations, 90 Fed. Reg. 40 (Jan. 2, 2025)
- DOJ FARA Unit advisory opinion (June 24, 2024)
- Maya Steinitz, 95 Minn. L. Rev. 1268 (2011) 5–21. As cited inline in original letter
Exported verbatim from the original ILR PDF. Formatting preserved; images omitted per text-only export.
