NEWS FOR LEGAL PRACTITIONERS

Entry Of Foreign Law Firms In India

Introduction

The most hotly debated issue in the legal world these days is the prospects of entry of foreign law firms in India. The foreign law firms, taking the plea of globalisation, are continuously pressing for their presence on the Indian legal platform, whereas India wants the world to reciprocate with a similar welcome to Indian lawyers/law firms in the countries of foreign law firms, before asking for any favours to open the legal gateways for them.

What the Statute says on the right to practise law?

The Advocates Act, 1961, (“the Act”) lays down an embargo on any foreign lawyer to practise law in India. The Act clearly specifies that only 'advocate' (as defined under the Act) whose name is entered in the State rolls (“State Rolls”) which are maintained by the State Bar Councils (“Bar Council”) is entitled with the right to practice the profession of law in India, subject to provisions of the Act. The qualification to enter name in the State Rolls is that:

·      The applicant should be the citizen of India

·      The applicant must have attained an age of 21 years or above, and

·      The applicant be duly vested with a degree of law from a recognised university.

Interestingly, the Act provides that even foreign lawyers can apply for getting their names entered in the State Rolls to enable them to practice law in India. The foreign lawyers can get the license to practice in India only if, they are citizens of such a country and their country extends reciprocity in the same way to Indian Lawyers.

The Quest of foreign law firms to gain entry into Indian legal market and the views of judiciary

The debate regarding the entry of the foreign law firms first arose in the year 1994, when two New York-based law firms (White & Case and Chadbourne & Parke) and one London–based law firm (Ashurst Morris Crisp) sought permission from the Reserve Bank of India (“RBI”) to establish their liaison offices in India to render non-litigious services (i.e. other than appearing before the courts in India) to their non-Indian clients in connection with their business activities in India and outside India. The law firms to establish their liaison offices in India for rendering the intended services, were granted permission to practice by RBI. However, in 1995, Lawyers’ Collective (a public interest trust set up by lawyers to provide legal aid) moved an application before the Bombay High Court challenging the right of foreign law firms to “practice law” in India. The question involved in the writ petition was whether the word “practice the profession of law” under section 29 of the Act would include only litigious matters or the scope would also include non-litigious matters (like drafting, negotiation, advising, etc.).

The Bombay High Court held that the practices engaged by these firms amounted to “practicing the law” [in India] and that the RBI was not justified in granting permission to these law firms. The court further clarified that the Act applies to all advocates rendering services in both litigious and non-litigious matters. The foreign law firms would therefore be bound to follow the provisions of the Act and cannot practice law in India. 

The debate was further ignited, when the Madras High Court ("Madras HC") in the case of A. K. Balaji vs. Government of India (on February 21, 2012) while agreeing with the order of the Bombay High Court (referred above), held that there is no embargo, either in the Act or in the rules framed there under, on the foreign law firms or foreign lawyers to visit India for a temporary period on a fly in and fly out basis, for the purpose of rendering legal advisory services to their clients in India regarding foreign law or their own system of law and on diverse international legal issues.

The Bar Council of India has challenged the above view taken by the Madras HC that foreign law firms / lawyers could visit India on fly-in fly-out basis before the Hon’ble Supreme Court of India (“SC”) and the SC vide its order dated 4th July, 2012 restrained foreign lawyers from engaging in legal practice in India, either direct or indirect (which has restricted the visit of foreign lawyers in India on a fly-in fly-out basis). The SC has also held that the RBI should not permit the foreign lawyers / law firms to establish their liaison offices in India.

Can there be a win-win situation?

Many foreign law firms have entered into best friend referral arrangements (on both an exclusive and a non-exclusive basis) with [Indian] law firms, wherein such law firms generally exchange their work culture and refer legal work to each other. It is definitely not at par with gaining entry into India by foreign law firms, but surely acting as a vehicle to foreign law firms to serve their clientele in a different jurisdiction with a strong handholding gesture. However, so far the experience of such arrangements is not eliciting positive results for a number of reasons; the paramount reason being that such tie-ups restrict the referral work only from law firms which are in such an arrangement. Still, many foreign law firms find it better to have such relationships with Indian law firms / lawyers, till the desired amendment is made to the Act leading the way of foreign law firms / lawyers to establish their independent presence in India.

On a separate note, India, being a signatory to the General Agreement on Trade in Services (which is an organ of the World Trade Organization) is under an obligation to open up the service sector (including services in the legal field) to all member nations. The need of globalization of the Indian economy is putting a peer pressure on the government of India for opening the Indian legal market to the international legal fraternity. Protagonist of globalisation are pitching that the opening the Indian legal market would mean, globalisation of the legal scholars but that does not mean the voices from the Indian legal scholars pitching for reciprocity at the global platforms should go unheard. 

It seems that the globalisation of Indian legal profession is not a simple and an automatic phenomena, but has this debate to open the gates to foreign law firms has come to the rest with the judgment of the SC (referred above) or the silence is to set the stage for globalisation of legal profession, that only time will tell.

 [The author of this article is Deepak Dahiya, who is an expert of corporate and litigation practice and writes regularly for a reputed Diplomatist Magazine. He is Managing Partner of Legal Imperials and the team of Legal Imperials has recently authored a book on "One Person Company".]

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