Congress Is About to Cut Off Foreign Investors Who Have Been Gaming American Courts for Profit

Democrats spent four years screaming about foreign interference while ignoring the foreign money quietly colonizing American courtrooms.

Now a Republican congressman from Oklahoma is about to slam the door shut.

And the moment this bill passes, a multibillion-dollar industry built on exploiting American families is finished.

The Racket Nobody Is Talking About

Here is how it works.

A foreign hedge fund or sovereign wealth fund bankrolls a lawsuit against an American manufacturer.

The lawsuit may be weak – the kind that would never have been filed without a deep-pocketed backer looking for a payday.

But fighting it is expensive.

So the American company settles, not because they're guilty, but because the game is rigged in favor of whoever is financing the case.

The foreign funder collects a cut of the settlement and wires the money out of the country.

Then comes the part that should make every taxpayer's blood boil.

They pay lower taxes on those winnings than the Americans who filed the suit – and in many cases, foreign investors pay no U.S. taxes at all.

Foreign funders structure these investments to qualify for capital gains treatment rather than ordinary income.

For foreign entities with no U.S. presence, those gains are entirely exempt from U.S. withholding tax.

The U.S. tax code is subsidizing foreign interests' ability to use American courts against American businesses.

ExxonMobil Already Caught Them Doing It

This is not a theoretical threat.

In early 2025, ExxonMobil filed a federal countersuit in Texas exposing exactly this scheme.

An Australian billionaire named Andrew Forrest – whose company Fortescue competes directly with ExxonMobil in energy markets – allegedly used his nonprofit subsidiary to fund a lawsuit against ExxonMobil through U.S. environmental groups acting as proxy plaintiffs.

The Justice Department's response was almost unprecedented.

DOJ required the plaintiffs' law firm to register as a foreign agent under FARA – the same law used to expose foreign government influence operations.

A foreign competitor was bankrolling a lawsuit against an American energy company through American environmental groups, and the only reason anyone found out is because FARA registration blew the cover.

Now imagine how many operations nobody has found out about – because outside that one case, there is no disclosure requirement at all.

A Chinese Firm Was Suing Samsung in American Courts and Nobody Knew

The answer is: plenty.

In 2023, a Chinese litigation investment firm called PurpleVine IP was discovered financing multiple patent infringement lawsuits against Samsung inside U.S. federal courts.

The only reason it came to light is that one federal judge in Delaware required funding disclosure in his courtroom through a personal standing order.

Remove that one judge's individual rule and it stays hidden forever.

Foreign third-party funding now plays a role in roughly 30% of U.S. patent infringement cases – and the identities of those funders are almost never disclosed.

This is a $16 billion industry operating in the dark, inside American courts, with no meaningful oversight.

The Hern Bill Fixes It – and the Fix Is Simple

Rep. Kevin Hern of Oklahoma and Sen. Thom Tillis of North Carolina have introduced the Tackling Predatory Litigation Funding Act.

The fix is straightforward: tax litigation funders' profits the same way the plaintiffs they are funding get taxed.

Right now, plaintiffs pay ordinary income rates on their recoveries.

Funders pay capital gains rates – or, if they are foreign, nothing at all.

The Hern-Tillis bill closes that gap, taxing litigation funding profits at the top individual rate plus a 3.8% surcharge for using American courts as an investment vehicle.

The Wall Street Journal editorial board backed it.

A coalition of American businesses and trade groups wrote Congress demanding its passage.

The logic is airtight: if you tax something, you get less of it.

Right now, the tax code hands out a subsidy for foreign money to flood American courtrooms.

This bill ends that subsidy.

The Costs Are Hitting Your Wallet Right Now

This is not an abstract policy debate.

The U.S. Chamber of Commerce estimated excessive litigation costs American households roughly $4,200 each.

Those costs don't come from nowhere.

They show up when a manufacturer delays hiring because it just spent millions defending a meritless suit.

They show up when an energy company pulls back investment after a foreign-backed lawsuit ties up a project for years.

They show up when prices quietly climb for everyone buying the product.

Factories, trucking firms, and energy producers in red-state America are absorbing these costs – and the people collecting on the other end are overseas investors paying no American taxes on the transaction.

No other country tolerates this.

China would never allow American-backed money to quietly steer lawsuits inside Chinese courts.

The MAGA movement was built on the principle that Americans should not be played for suckers – not by Beijing, not by foreign sovereign wealth funds, and not by foreign billionaires using American environmental groups as legal proxies.

Congress should pass the Hern bill now.

If the Senate's plaintiff-bar allies use procedure to kill it, President Trump should make clear through executive action that American courts are not a tax-free profit center for foreign interests.

Sources:

• Will Chamberlain, "Foreign Money Is Gaming Our Courts. American Families Are Paying for It," Human Events, May 13, 2026.
• "Ending a Tax Break for Lawsuits," The Wall Street Journal, June 4, 2025.
• "Tillis Introduces Legislation to Target Predatory Litigation Funding Practices," Sen. Thom Tillis Press Release, May 24, 2025.
• "The ExxonMobil Lawsuit: Foreign Entities Are Funding Lawsuits to Target American Businesses," Institute for Legal Reform, February 12, 2025.
• "Setting the Record Straight on Third-Party Litigation Funding," U.S. Chamber of Commerce, October 15, 2024.
• "Policy Brief: Third-Party Litigation Funding," Institute for Energy Research, May 2026.