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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
Senate: FIN DP 7-0-0-0 | 3rd Read 29-0-0-1 |
SB
1542: personal property exemption; money proceeds
S/E: litigation; financing; foreign adversaries; enforcement
Sponsor: Senator Carroll, LD 28
Committee on Judiciary
Summary of the Strike-Everything Amendment to SB 1542
Overview
Requires third-party litigation funders to disclose any financial involvement from foreign adversaries in civil litigation and prohibits such foreign entities from influencing litigation strategy.
History
According to the American Bar Association, litigation finance is the practice of an unrelated third party providing capital to a plaintiff to fund litigation in return for a portion of any monetary recovery.
Under 15 Code of Federal Regulations § 791.4, the US Secretary of Commerce has formally identified specific foreign governments and entities as foreign adversaries for the purposes of implementing certain Executive Order-based regulations. The countries and entities currently listed are China, Cuba, Iran, North Korea, Russia and the Maduro Regime in Venezuela. This designation is based on conduct deemed significantly adverse to US national security and is informed by various national security strategies and intelligence assessments. The list may be amended at the Secretary's discretion without prior notice, and any changes take effect immediately upon publication.
Provisions
1. Requires a third-party litigation funder in a civil action against Arizona or one of its political subdivisions to, when it knows that its funding includes monies from a foreign entity, disclose in writing to the Attorney General the following:
a) names and details of foreign entities with a financial stake in the litigation;
b) entities receiving proprietary or national security-related information through funding agreements; and
c) copies of the relevant funding agreements. (Sec. 1)
2. Specifies that said disclosure must occur within 30 days of executing the agreement, filing the action or learning of the foreign funding — whichever is latest. (Sec. 1)
3. Instructs the third-party litigation funder to make the disclosure by declaration under penalty of perjury; the declaration must be based on actual knowledge formed after reasonable inquiry. (Sec. 1)
4. Specifies that the disclosure must be updated no later than 30 days after the third-party litigation funder knows that a correction or supplement is needed. (Sec. 1)
5. Prohibits foreign third-party litigation funders from:
a) creating agreements where non-parties have contingent financial interests funded by foreign entities; and
b) influencing litigation strategy, including attorney selection or settlement decisions. (Sec. 1)
6. Asserts that the right to make decisions with respect to the course of any civil action remains solely with the party and the party's attorney. (Sec. 1)
7. Asserts that the existence of a litigation funding contract is subject to discovery in all civil actions. (Sec. 1)
8. Specifies that this Act does not apply to nonprofit legal organizations. (Sec. 1)
9. Makes agreements in violation of this Act voidable. (Sec. 1)
10. Authorizes the Attorney General to:
a) enforce compliance;
b) impose civil penalties;
c) prohibit foreign third-party litigation funders from operating in Arizona; and
d) impose any other appropriate sanctions. (Sec. 1)
11. Directs the Attorney General to submit a report with specified information to designated members of the legislative branch at least once each year. (Sec. 1)
12. Defines foreign entity to mean an entity that is controlled or based in a country designated as a foreign adversary by the US Secretary of Commerce in 15 CFR § 791.4. (Sec. 1)
13. Defines additional pertinent terms. (Sec. 1)
14. Designates this legislation with the short title Arizona Transparency and Limitations on Foreign Third-party Litigation Funding Act. (Sec. 2)
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SB 1542
Initials NM Page 0 Judiciary
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