Legal barrier

| Updated on March 19, 2018

The SC’s ruling on foreign law firms in India provides some clarity, but will not significantly open up India’s legal services market

The Supreme Court has tightened the rules but the last word has probably not been said on what foreign lawyers can and cannot do in India. On the plus side, the court’s ruling has given clarity and certainty to an issue that has been simmering on and off ever since Indian corporations started going global in a big way back in the 1990s and needed advice from law firms that were well-versed in subjects like cross-border transactions or listing on the Nasdaq. With the apex court holding that foreign lawyers will only be allowed to offer advice on a “fly-in, fly-out” basis, foreign law firms looking to expand into India have got some much needed clarity. So far, they have had to depend on the rules laid down by the Bombay High Court in 2009 and a slightly more liberal ruling by the Madras High Court in 2012.

The fact is that, like in many other areas where it has veered in favour of protectionism, India has been slow to liberalise its legal services market. Indian lawyers argue that there must be strict reciprocity and since they can’t, for instance, practise in UK courts, there’s no question of allowing foreign lawyers to do the same here. The foreign law firms point out that Indian lawyers can, with minimal hurdles, open an office in the UK and practice Indian law, though they can’t appear in court there. That kind of arrangement has been firmly disallowed by the latest Supreme Court ruling which laid down that overly frequent trips to India might violate the fly-in, fly-out rule. In addition, the court said that the Bar Council of India (BCI) should lay down the rules on what constitutes fly-in, fly-out. Additionally, foreign lawyers would be under the jurisdiction of the BCI; the court didn’t accept the argument that they should be subject to their own bar councils, even if they’re providing advice on foreign law. On the subject of arbitration, the court again tightened the rules — while foreign lawyers can take part in proceedings that concern international commercial disputes, they would have to follow the Arbitration Act and, again, the BCI would lay down rules on their participating in proceedings here.

In actual practice, it may just be business as usual for Indian corporations that need foreign law firms despite the latest ruling. As these corporations grow larger and spread their wings, there will be an ever greater need for the services of global law firms. Certainly, foreign law firms opening in India would have meant more jobs for Indian lawyers who would also have gained a greater understanding of international laws. The Government has been keen to open up and has held talks with the BCI regarding this. But, for now, it looks like the Government will have to introduce legislation governing foreign law firms if it wishes to open up the legal services market.

Published on March 19, 2018

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