Foreign Law Firms Practising in India

The Madras High Court rendered its judgment on legality of foreign law firms and lawyers practicing in India on 21 February 2012. The judgment is available here and has been covered on Legally India and Bar & Bench, amongst other news services. In short, the judgment permits foreign lawyers to “fly in and fly out” for arbitration proceedings and advising clients on foreign law matters. Participation in litigious or advisory work in India is otherwise prohibited for all foreign law firms and lawyers. Aditya Singh, an Indian LL.M. student at Yale Law School, points out the following important paragraphs in the judgment:

Extracts from AK Balaji v The Government of India, Ashurst LLP, White & Case et al (WP5614/2010) (emphasis added)

Para 3: The 1st respondent in his counter warns that if the foreign law firms are not allowed to take part in negotiations, settling up documents and arbitrations in India, it will have a counter productive effect on the aim of the government to make India a hub of International Arbitration. In this connection, it is stated that many arbitrations with Indian Judges and Lawyers as Arbitrators are held outside India, where both foreign and Indian Law Firms advise their clients. If foreign law firms are denied entry to deal with arbitrations in India, then India will lose many of the arbitrations to Singapore, Paris and London. It will be contrary to the declared policy of the government and against the national interest.

Para 25: The learned counsel referred to the Arbitration and Conciliation Act, 1996 where a specific provision is contained in Section 2(1)(f) which provides for international commercial arbitration for resolving disputes arising out of legal relationships where at least one of the parties is an individual or a body corporate of a foreign origin.  Even the Preamble to the aforesaid Act states that the General Assembly of the United Nations having recommended that all countries give due consideration to the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) and the UNCITRAL Conciliation Rules, the parties are required to seek amicable settlement of disputes arising in the context of international commercial relations by recourse to conciliation. According to the learned counsel, this necessitates the involvement of foreign legal experts having knowledge of foreign law. Learned counsel referred to the judgment rendered by the Supreme Court in the case ofVodafone International Holdings B.V. vs. Union of India in S.L.P. (C) No.26529 of 2010, which extensively dealt with issues relating to the impact of foreign investment and inflow of foreign currency on Indian economy, as also other issues involving fiscal implications on the economic development of the country vis-`-vis international commercial transactions.

Para 51:We find force in the submission made by the learned counsel appearing for the foreign law firms that if foreign law firms are not allowed to take part in negotiations, for settling up documents and conduct arbitrations in India, it will have a counter productive effect on the aim of the Government to make India a hub of International Arbitration. According to the learned counsel, many arbitrations with Indian Judges and Lawyers as Arbitrators are held outside India, where both foreign and Indian law firms advise their clients.  If foreign law firms are denied entry to deal with arbitrations in India, then India will lose many of the arbitrations to foreign countries. It will be contrary to the declared policy of the Government and against the national interest. Some of the companies have been carrying on consultancy/support services in the field of protection and management of intellectual, business and industrial proprietary rights, carrying out market surveys and market research and publication of reports, journals, etc. without rendering any legal service, including advice in the form of opinion, but they do not appear before any courts or tribunals anywhere in India. Such activities cannot at all be considered as practising law in India. It has not been controverted that in England, foreign lawyers are free to advice on their own system of law or on English Law or any other system of law without any nationality requirement or need to be qualified in England.

Para 55: International arbitration is growing big time in India and in almost all the countries across the globe.  India is a signatory to the World Trade Agreement, which has opened up the gates for many international business establishments based in different parts of the world to come and set up their respective businesses in India.

Para 57: Institutional Arbitration has been defined to be an arbitration conducted by an arbitral institution in accordance with the rules of the institution. The Indian Council of Arbitration is one such body. It is reported that in several cases of International Commercial Arbitration, foreign contracting party prefers to arbitrate in India and several reasons have been stated to choose India as the seat of arbitration. Therefore, when there is liberalization of economic policies, throwing the doors open to foreign investments, it cannot be denied that disputes and differences are bound to arise in such International contracts. When one of the contracting party is a foreign entity and there is a binding arbitration agreement between the parties and India is chosen as the seat of arbitration, it is but natural that the foreign contracting party would seek the assistance of their own solicitors or lawyers to advice them on the impact of the laws of their country on the said contract, and they may accompany their clients to visit India for the purpose of the Arbitration. Therefore, if a party to an International Commercial Arbitration engages a foreign lawyer and if such lawyers come to India to advice their clients on the foreign law, we see there could be no prohibition for such foreign lawyers to advise their clients on foreign law in India in the course of a International Commercial transaction or an International Commercial Arbitration or matters akin thereto. Therefore, to advocate a proposition that foreign lawyers or foreign law firms cannot come into India to advice their clients on foreign law would be a far fetched and dangerous proposition and in our opinion, would be to take a step backward, when India is becoming a preferred seat for arbitration in International Commercial Arbitrations. It cannot be denied that we have a comprehensive and progressive legal frame work to support International Arbitration and the 1996 Act, provides for maximum judicial support of arbitration and minimal intervention. That apart, it is not in all cases, a foreign company conducting an International Commercial Arbitration in India would solicit the assistance of their foreign lawyers. The legal expertise available in India is of International standard and such foreign companies would not hesitate to avail the services of Indian lawyers. Therefore, the need to make India as a preferred seat for International Commercial Arbitration would benefit the economy of the country.

Para 63: After giving our anxious consideration to the matter, both on facts and on law, we come to the following conclusion :-

(i) Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfil the requirement of the Advocates Act, 1961 and the Bar Council of India Rules.

(ii) However, there is no bar either in the Act or the Rules for 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 giving legal advise to their clients in India regarding foreign law or their own system of law and on diverse international legal issues.

(iii) Moreover, having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.

(iv) The B.P.O. Companies providing wide range of customised and integrated services and functions to its customers like word-processing, secretarial support, transcription services, proof-reading services, travel desk support services, etc. do not come within the purview of the Advocates Act, 1961 or the Bar Council of India Rules.  However, in the event of any complaint made against these B.P.O. Companies violating the provisions of the Act, the Bar Council of India may take appropriate action against such erring companies.

For my part, without commenting on the substantive aspects, I would only express my reservations with respect to the Court’s observation that “India is becoming a preferred seat for arbitration in International Commercial Arbitrations” and that “[i]t cannot be denied that we have a comprehensive and progressive legal frame work to support International Arbitration and the 1996 Act, provides for maximum judicial support of arbitration and minimal intervention.” As of now, this seems quite a utopian view, far removed from reality, in my opinion. There is a long way to before India becomes a “preferred” seat for arbitration with a “progressive” legal framework.

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