ILR Presses ITC to Close Litigation Funding Disclosure Gaps

The U.S. International Trade Commission has proposed a rule requiring parties in Section 337 investigations to disclose when outside litigation funders are bankrolling their cases, and the Institute for Legal Reform wants the agency to go further.

ILR filed comments last week supporting the proposal and recommending changes to make the rule more effective, according to a post on the U.S. Chamber of Commerce's website.

The proposal targets a practice that has grown fast and stayed largely invisible. Third-party litigation funders are outside investors who finance lawsuits in exchange for a share of the winnings. Under current rules, nobody in a major trade investigation has to disclose their involvement.

That creates a transparency problem at the heart of some of the most consequential proceedings in U.S. trade law. When a company gets hauled into a major trade investigation, the assumption is that the opposing party is driving the case. Increasingly, that is not the whole story, the ILR argues.

The stakes extend beyond basic fairness, the group contends. When foreign-backed funders tied to sovereign wealth funds or entities from adversarial nations quietly finance U.S. trade proceedings, they gain access to sensitive commercial information.

Section 337 investigations at the ITC are among the most powerful tools in U.S. trade law. They can result in exclusion orders that block imported products from the U.S. market entirely, which makes them attractive vehicles for parties seeking to hobble competitors. The presence of undisclosed financial backers with no direct stake in the dispute changes the calculus for defendants, regulators and the market.

ILR's filing signals that the business community views the ITC's proposed disclosure requirement as a starting point rather than an endpoint. The organization says current rules leave open loopholes that allow funders to remain hidden even when a disclosure obligation exists.

The ITC has not yet finalized the rule. The comment record, including ILR's submission, will shape the final version and determine how far the agency goes in forcing funders into the open.

For companies operating in sectors where Section 337 complaints are common, the outcome matters directly. A strengthened disclosure regime would reveal who actually profits from trade litigation and whether foreign capital is influencing cases that restrict access to the U.S. market.