Trade Court for Trump Tariff Fights Wants Suit Funders Revealed

A federal court already seeing a spike in refund disputes over Trump administration tariffs wants to know if outside funders are backing these and other cases.

The US Court of International Trade this month updated its mandatory corporate disclosure form to include information about third-party litigation funders. The move is designed “to provide greater transparency,” Gina Justice, the court’s clerk, said in a statement.

The Manhattan court has seen a slew of preemptive lawsuits by importers who plan to seek refunds if tariffs implemented by the Trump administration are shot down by the US Supreme Court. The justices are expected to rule as soon as next month on challenges to Trump’s authority to impose the duties, which lower courts, including the Court of International Trade, have already ruled are unlawful.

Refund suits are likely to surge if the Supreme Court rules against Trump, said trade lawyer Barry Appleton. It’s not clear whether outside investors already are backing cases in the trade court, but the large refunds potentially at stake could make them attractive for funders, according to Appleton.

“One of the big issues if you’re a hedge fund and you’re dealing with a case is will the other side be able to pay,” said Appleton, co-director of the Center for International Law at New York Law School. “They want to know the credit-worthiness of the other side—do they have to chase ‘em? You don’t have to chase the US government.”

The trade court’s new rule follows similar moves by federal courts in New Jersey and California. It comes as House Republicans are narrowing their attention on foreign funders who back lawsuits in US courts.

The court oversees a variety of customs disputes, such as anti-dumping cases, in which foreign companies sell goods at a lower price in the US to drive out competition and then raise prices once competitors exit the market. Disclosures would reveal whether countries, such as China, which is frequently accused of dumping, are picking up the tab to challenge anti-dumping duties, Appleton said.

The court’s judges approved the move—requiring parties to state whether they have outside funding and name the funders—in December, following an advisory committee’s recommendation.

Justice, the court clerk, said the rule change was adopted as part of an open process and was subject to public notice and opportunity for comment. She said she could not comment on whether any comments were received.

The court’s advisory committee, which meets quarterly, consists of private sector trade attorneys along with lawyers from the Justice Department, Commerce Department, and other agencies.

Transparency ‘Skirmishes’

Parties in cases already ongoing in the court could have to refile disclosure forms—Form 13—if they have outside funding, according to Appleton. That makes the situation ripe for disputes, he said.

“You can expect to see what I call disclosure skirmishes,” Appleton said. “I’m expecting opposing council to start using the flawed Form 13s to delay cases or disqualify funding.”

Litigation funding opponents, including large insurers and the US Chamber of Commerce, describe the industry as opaque and push disclosures as a way to regulate funders. Efforts to require disclosures across federal courts have stalled in Congress. A US Courts committee is considering whether to recommend a rule that would force such disclosures in federal civil cases.

In the interim, individual courts are left to decide for themselves.

The US District Court for the District of New Jersey requires litigation funding disclosures in all cases, while the US District Court for the Northern District of California requires disclosures in class actions.

Freda Wolfson, the former New Jersey federal judge who spearheaded the court’s disclosure rule recently said there were only nine disclosures filed in the court last year.

In Delaware, Chief Judge Colm F. Connolly issued a standing order in April 2022 requiring litigation funding disclosure in his courtroom at the US District Court for the District of Delaware. Filings fell 41% in the two-year period after according to a University of Utah study.

Paul Kong, executive director of the industry trade group the International Legal Finance Association, said the group did not submit comment on the trade court’s rule change.

“The amendment to Form 13 requires limited disclosure of legal finance, addressing potential conflicts of interest without requiring disclosures that would implicate confidential or sensitive information of parties or their counsel,” he said in a statement.

Appleton said the court is taking a measured approach to disclosures.

“It is not unfair because it’s not overly burdensome, but I think there’s going to be a lot of fighting given how politically sensitive what they handle is,” he said.