The Supreme Court has ruled that foreign law firms or foreign lawyers cannot practise law in the country.
What are the directives?
Practice - Foreign law firms or foreign lawyers cannot practise law in the country either on the litigation or non-litigation side.
This means overseas lawyers or firms -
cannot open offices in the country
cannot appear in courts or before any authority
cannot render other legal services, such as giving opinions or drafting documents
Temporary - However, there is no bar on foreign law firms or foreign lawyers visiting India for a temporary period on a “fly in and fly out” basis.
This could be for giving legal advice to their clients on foreign law or their own system of law and on international legal issues.
The expression ‘fly in and fly out’ will only cover a casual visit not amounting to ‘practice’.
The Court added that any dispute in this issue would be decided by the Bar Council of India.
International Commercial arbitration - The SC also ruled on arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration.
Accordingly, the foreign law firms and lawyers also do not have an “absolute right” in this regard.
However, they might not be debarred from conducting arbitration in India arising out of international commercial arbitration.
But they would be governed by the code of conduct applicable to the legal profession in India.
BPO - The court said Business Process Outsourcing (BPO) companies, providing a range of services, would not come under the Advocates Act.
The services include word processing, secretarial support, transcription and proof reading services, travel desk support services, etc.
What is the need?
It comes as an effort to keeping India’s legal market exclusively for Indians.
The ruling settles a long-standing argument on whether foreign firms or attorneys should be allowed to enter the Indian legal market.
Lawyers' Concern - Sections of the legal fraternity have been opposing the entry of foreign firms for nearly two decades.
There were petitions seeking legal action against 30 foreign law firms that were “illegally practising” in the country.
The Commerce Ministry, setting up earlier in 2005 a committee to consider opening up legal services, was opposed by bar associations.
Lawyers were against the country succumbing to international pressure.
Their main objection was that Indian law firms would not be able to compete with foreign firms.
As, the latter had greater money power and may control the legal market.
Other Countries - Indian advocates were not allowed to practise in the U.K., the U.S., Australia and other nations.
They are allowed only on fulfilling onerous restrictions like qualifying tests, experience and work permit.
It was thus argued that foreign lawyers should not be allowed to practise in India without reciprocity.
Non-litigious Practice - Non-litigation market has seen an exponential increase after globalisation.
The services include drafting of documents, preparation for litigation, etc.
In particular, international commercial arbitration has taken off in a big way.
The foreign law firms had argued that there was no bar on a company carrying on consultancy or support services.
But the Bar Council of India contended that even non-litigious practice came under the term ‘practice of law’.
Thus even these could be done only by those enrolled under the Advocates Act in the country.
What are the implications?
Successive governments were considering permitting foreign law firms to practise law in matters not involving litigation and on a reciprocal basis.
In 2011, the Union Law Ministry held consultations with the Bar Council of India to consider amending the Advocates’ Act for the purpose.
However, the SC's ruling has included both litigation and non-litigation services in ‘practice of law’, laying down restrictions.
The Centre may thus be not able to throw open the legal services sector to overseas players.
Moreover, the court has recognised only limited access to foreign players in arbitration.
It should be limited to matters governed by an international commercial arbitration agreement, and code of conduct applicable to the legal profession in India has to be followed.
This could be a considerable hurdle in India’s ambition to be a global arbitration hub.
