Entry of Foreign Law Firms into India –Yes or No?

It is the time of globalisation and opening up of economies, where competition is the buzzword. The Indian Supreme Court has passed an Interim Order which contradicts that buzzword, in the case of Bar Council of India v A.K. Balaji and Ors.(Petitions for Special Leave to Appeal (Civil) Nos. 17150-17154/2012) by holding that Foreign Law Firms cannot practise in Indian courts. The Division Bench of Justice R. M. Lodha and Justice Anil. R. Dave passed an Order on 4thJuly 2012 directing the Reserve Bank of India (RBI) not to grant any permission to Foreign Law Firms to open liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973 (FERA). The Apex Court specifically clarified that the expression ‘to practice the profession of law’ under Section 29 of the Advocates Act, 1961 (the Act), covers the persons practicing litigious matters as well as non-litigious matters.

This matter reached the Apex Court through an Appeal in the case of A. K. Balaji v Government of India & Ors. ((2012) 35 KLR 290 (Mad))(Hereinafter A. K. Balaji) in which the Madras High Court clearly held that Foreign Law Firms cannot practice in India unless they fulfil the requirements of the Act and the Bar Council of India Rules. However, the High Court held that such firms can visit India for a temporary period on a fly in and fly out basis, for the purpose of giving legal advice to their clients in India regarding foreign laws. The Bar Council of India filed the SLPs under article 136 with the main contention that A. K. Balaji is in complete dissonance with the Bombay High Court in Lawyer’s Collective v Bar Council of India & Ors. (2010 (112) Bombay Law Reporter 32) (Hereinafter Lawyer’s Collective), which comprehensively decided the issue in dispute, and over which, no appeal has reached the Supreme Court. The Bombay HC delivered it judgment on 16th December 2009, after almost 14 years of litigation, in which it held that the RBI was not justified in granting permission to the foreign law firms to open liaison offices in India under Section 29 of FERA. The Division bench held that the expression ‘to practise the profession of law’ in section 29 of the Act is wide enough to cover the persons practising in litigious matters and non litigious matters. The Court held that even the rendering of legal assistance or executing of documents, negotiations and settlements of documents would unquestionably amount to the practice of law.

The contention of BCI that A. K. Balaji contradicts and travel beyond Lawyer’s Collective cannot be appreciated fully. In paragraph 44 of A. K. Balaji, the Court clearly states that – “The Bombay High Court, has 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”. However, fortunately, if I am to say so, the Madras High Court went a little further than its Bombay counterpart to allow foreign firms to render legal advice to its clients in India on foreign law by visiting India for temporary periods. This step is indeed a reasonable one, considering the fact that it is indispensable for foreign lawyers/firms to advise clients on matters relating to foreign laws with which the Indian Bar may not have expertise. Another sensible move made by the Madras High Court was to declare that foreign lawyers cannot be debarred to visit India and conduct proceedings related to International Commercial Arbitration. This point may look flawed to a layman because it is reasonable for him to speculate how arguing in arbitrations, cannot be seen as a ‘practice of law’ in any sense. This is where the prudence and wisdom of the judges are to be appreciated. Even though they were aware of this anomaly, they were equally, if not more, aware of the Government’s policy to make India an International Arbitration hub, which would clearly not be possible without foreign lawyers being allowed to arbitrate here. The Madras High Court has recognised the vital role that International Commercial Arbitration would play in the overall economic growth of India.

Interpretation of ‘to practise the profession of law’ –

There is an inherent flaw in the interpretation of this phrase in section 29 of the Act. As the phrase has been uniformly interpreted by three Constitutional Courts including the Supreme Court, I think it is very crucial to look into one argument of Navroz. H. Seervai (Sr. Adv) in the Lawyer’s Collective case. According to him, if it is accepted that that the Act applies both to non-litigious matters as well as litigious matters before the Supreme Court and High Courts, then, it would render the Act ultra vires of the Constitution, because the Act was enacted by the Central Government using its power under entry 77 and 78 of the Union List in the Seventh Schedule of the Constitution. The schedule specifically provides for enacting laws relating to persons practising in the Supreme Court and the High Courts. Therefore, the interpretation given by the Courts till now , cannot be good in law. The Supreme Court has to extensively discuss the interpretation of this phrase in the current matter in order to reach the most accurate interpretation.

Obligations under the Statute –

Let us analyse a few significant provisions of the Act relevant for further discussion of this judgment. Section 29 specifies that only ‘Advocates’ as defined under the Act are entitled to practice the profession of law in India. An Advocate is defined under section 2(1)(a) as an advocate entered in any roll under the provisions of this Act. Further, section 24 lays down the qualifications needed for a person to be admitted as an Advocate under the State Rolls. Section 24(1)(a) states that a person has to be a citizen of India for getting enrolled as an Advocate. Therefore, a plain reading of this section makes it clear that no foreign national can enroll as an advocate under the Act in order to practice in India. However, it is an integral rule of Statutory Interpretation, that a statute should be read en block i:e as a whole. The proviso to section 24(1)(a) lays down that subject to other provisions of the Act, a national of any other country may be admitted as an advocate on the rolls of the State Bar Council, if Indian citizens who are duly qualified are permitted to practice law in that other country. In addition, section 47(1), pertaining to reciprocity stipulates that where any country prevents Indian citizens from practicing the profession of law or subjects them to unfair discrimination in that country, then no subject of that country shall be entitled to practice law in India. Therefore, the harmonious reading of the provisions of the Act without isolation makes it understandable that foreign nationals can be admitted as advocates and allowed to practice in Indian Courts if certain conditions are satisfied.

As we all know, the UK and the USA are very receptive to foreign lawyers including Indian lawyers to practice in their countries. Thus, India should be courteous enough to abide by the statutory obligations to allow Foreign Law Firms/Lawyers to practice in India. The Supreme Court is bound to consider the language and mandate of these provisions before finally disposing the matter. To go back to where we started, it is high time that India open up the arena of legal profession as well, to the spirit of globalisation and competition.



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