Foreign Investments in US Lawsuits Targeted by US House Panel

A congressional panel advanced legislation that would limit the ability of non-US investors to finance American lawsuits, threatening a significant revenue source for litigation funding.

The House Judiciary Committee voted 15-11 Tuesday to recommend to the full body the Protecting Our Courts from Foreign Manipulation Act of 2025 (H.R. 2675). “My bill safeguards the integrity of our judicial system,” Rep. Ben Cline (R-Va.) said in a statement after the vote.

The proposal would bar sovereign wealth funds and foreign governments from funding US lawsuits as a third party, directly or indirectly, and require other non-American investors to disclose their participation.

The legislation, while several steps short of becoming law, shows how Republicans are moving ahead with efforts to hobble legal investments they view as leading to frivolous lawsuits that drive up costs for businesses. The GOP has pushed other—and so far unsuccessful—bills at the US Capitol while winning some success in a few states.

Sovereign wealth funds currently invest in litigation finance, the practice of paying the cost of lawsuits with the goal of winning a return through successful cases that is uncorrelated to financial markets.

Abu Dhabi sovereign wealth fund Mubadala Capital owns a 68% stake in Fortress Investment Group equity, a major player in litigation finance, though Fortress has said the company is entirely controlled by its management team. Burford Capital, one of the few publicly traded litigation funders, has a funding arrangement with an unidentified sovereign wealth fund.

Fortress declined to comment, while Burford in a statement said the sovereign wealth fund it works with is backed by a US partner nation.

The International Legal Finance Association, the trade group for the industry, said in a statement it shares concerns about adversarial nations manipulating US courts, though Cline’s bill “has no limiting principle and targets all foreign financing.” It added, “Disclosure requirements of any kind, and sweeping bans on legal funding, threaten to eliminate the positive results our industry routinely produces.”

Democrats opposed Cline’s legislation, with Rep. Sydney Kamlager-Dove saying the bill would “sanction witch hunts to nullify verdicts that were lawfully obtained.”

Rep. Jamie Raskin (D-Md.) said legal investments even the playing field. “Third party litigation funding helps ensure that nobody—the little guy, the middle guy, the big guy, left, right, center—is denied their day in court simply because of financial obstacles and barriers, and it works.”

A second litigation finance bill, the Litigation Transparency Act of 2025, introduced by Rep. Darrell Issa (R-Calif.) in February, will be reviewed during a hearing Thursday. The bill requires disclosure of any person or entity that has a right to receive payment contingent upon the outcome of the case.

Issa also has an amendment to his bill that expands a disclosure requirement to any person or entity receiving payments contingent “in any respect” of the outcome.