Clarity on practice by foreign lawyers

Nikhil Kanekal & Amritha Venketakrishnan | Live

The Madras high court ruled on Tuesday that lawyers not registered in India could advise clients on foreign law and continue to participate in international commercial arbitration within the country, saying it’s in the “national interest”. The court’s ruling brings clarity to the role lawyers registered overseas can play in the practice of law in India—until now a grey area.

Legal process outsourcing units (LPOs, the legal version of business process outsourcing units, or BPOs) are permitted to function in India as they are not violative of the Advocates Act, 1961, but they could not render legal advice to clients, the court ruled.

The decision does not allow foreign lawyers and firms to set up a permanent establishment in India. The court has ruled that their entry will be on a “temporary” basis, according to lawyers present in the courtroom when the operative portion of the judgement was read.

Tuesday’s ruling stems from a 2010 case brought by a Chennai lawyer, A.K. Balaji, who filed a writ petition seeking a permanent ban on foreign lawyers entering India to advise clients. Balaji filed the case against 31 foreign law firms whose representatives were “flying in and out” of India to service domestic clients.

The Union law, home and finance ministries, the Bar Council of India, the income- tax department and the Reserve Bank of India were also made parties to the litigation. Foreign law firms do not fall under the jurisdiction of the Bar Council of India, the legal profession’s regulator.

Madras high court chief justice M. Yusuf Eqbal, delivering Tuesday’s ruling, said the court found “force” in submissions made by foreign law firms that if they were not allowed to take part in negotiations and conduct arbitration proceedings in the country, “it will have a counter-productive effect on the aim of the government to make India a hub of international arbitration”.

“Therefore, to advocate a proposition that foreign lawyers or foreign law firms cannot come into India to advise their clients on foreign law would be a far-fetched and dangerous proposition and in our opinion, would be to take a step backward,” said the judgement.

“The learned counsel appearing for the foreign law firms have taken a definite stand that the clients whom they represent do not have offices in India, they do not advise their foreign clients on matters concerning Indian law, but they fly in and fly out of India only to advise and hand-hold their clients on foreign laws,” it said.

As per the ruling, foreign lawyers cannot litigate or advise clients in India on Indian law.

“I still haven’t read the judgement. It seems only ‘fly-in, fly-out’ (temporary visit) is permitted,” lawyer Senthil Kumar told Legally India, an industry website. Kumar represented 13 US law firms in the case.

Neither side chose to call the decision a victory or a defeat. “The court appears to have said that the practice of foreign lawyers assisting their clients in the course of international arbitration as well as transactional work (commercial work and negotiations governed by foreign law) isn’t violative of the Advocate’s Act. It isn’t a question of victory or defeat,” said T.K. Bhaskar, a lawyer with HSB Partners.

Bhaskar represented London-based legal firms Herbert Smith Llp and Norton Rose Llp in the case. “The judgement recognizes that foreign lawyers can accompany clients for international litigation as well as non-litigation issues,” he said.

Foreign lawyers would be permitted to participate in arbitration between Indian and foreign entities, according to Kumar.

Some issues don’t appear to have been clarified, including so-called best-friend relationships that Indian firms have with foreign partners.

Indian firms have in recent years established ties with foreign firms to benefit from each other’s practices. Employees—known as secondees—are exchanged between firms to understand each other’s work culture and clientele. Secondees from foreign companies are also employed by companies, often acting as liaison between the foreign law firm and the Indian company.

The petition in the case (A.K. Balaji vs the government of India, Ashurst Llp, White & Case et al) contended that various arms of the state were “mute spectators” and were allowing foreign lawyers to continue “illegally practising” in India.

“In a globalized scenario, we can’t keep foreign lawyers out,” said N.L. Rajah, a civil lawyer practising in the Madras high court. “But it’s important to ensure there is a reciprocal arrangement with the foreign country that’s honoured.”

In December 2009, the Bombay high court had ruled in the Lawyer’s Collective case that foreign lawyers were not permitted to practise law in India as they were not citizens of India and not enrolled under the Advocates Act.

“The Bombay high court, therefore, rightly held that establishing liaison office in India by the foreign law firm and rendering liaisoning activities in all forms cannot be permitted since such activities are opposed to the provisions of the Advocates Act and the Bar Council of India rules. We do not differ from the view taken by the Bombay high court on this aspect,” said the Madras high court, referring to the Lawyer’s Collective case.

Bar Council of India chairman Ashok Parija said he would comment on the matter only after reading the judgement. Law minister Salman Khurshid was not immediately available for comment.

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