SB 1542
Initials NM Page 1 Caucus & COW
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature
First Regular Session
Senate: FIN DP 7-0-0-0 | 3
rd
Read 29-0-0-1
House: JUD DPA/SE 7-2-0-0
SB 1542: personal property exemption; money proceeds
S/E: litigation; financing; foreign adversaries; enforcement
Sponsor: Senator Carroll, LD 28
Caucus & COW
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)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note SB 1542
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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)
Amendments
Committee on Judiciary
1. Applies this Act to a third-party litigation funder in a civil action against any party other
than Arizona or its subdivisions, rather than a third-party litigation funder in a civil
action against Arizona or its subdivisions.