India has one of the largest judicial systems in the world, with a multi-level branch of courts functioning at district, state and national levels. The Indian legal domain is considered to be highly lucrative for both the Indian as well as foreign law firms. With the advent of Foreign Direct Investment and Multi-National Companies, India has seen an increase in cross-border disputes along with the need of expertise from foreign lawyers and law firms.
This has led to a debate over the admission of foreign lawyers and law firms practicing in India in a fashion similar to how Indian lawyers and law firms practice law in India. The debate is decades old, with a divided view over the entry of foreign law firms in India.
The on-going discussions over the entry of foreign law firms have seen a new turn as the Bar Council of India (BCI) informed the Supreme Court on January 10, 2018, that it was set to frame rules for allowing entry of foreign law firms in India. However, the BCI is not in favour of allowing foreign law firms to open liaison branch offices in India.
The debate over ingress of foreign law firms has escalated as the Supreme Court is set to hear the BCI’s appeal against the decision of Madras High Court in 2012. The High Court in its decision, allowed foreign lawyers to fly in and advise their clients in India.
The Madras High Court’s decision was in contrast with the Bombay High Court’s decision in 2009 that prohibited foreign law firms from setting up their associate offices in India by obtaining the Reserve Bank of India’s permission. The appeal against this decision is pending in the Supreme Court as well.
What does the Law say about Entry of Foreign Law Firms?
Section 7(1) of the Advocates Act, 1961 lays down the principle of reciprocity, which means that a national of another country may be admitted as an advocate in India if Indians nationals are allowed in the other country. However, the Act prohibits foreign nationals from practicing the legal profession in India.
Section 24 of the Advocates’ Act also provides the conditions required to be fulfilled for enrolment of advocates in State Bar Councils. The provision also allows enrolment of foreign nationals on reciprocity principle. Section 47(1) states that a foreign national cannot practice law in India if there is no reciprocal arrangement in the foreign national’s country.
Section 49 gives the power to BCI to make appropriate rules with regards to enrolment of non-Indian citizens who hold a foreign degree in law. In 2016, the BCI laid down draft rules relating to registration and regulation of foreign lawyers in India.
Registration and Regulation of Foreign Lawyers in India Rules, 2016
The draft rules relating to registration and management of foreign lawyers in India. The draft rules include the following provisions:
- Foreign law firms and lawyers are allowed to set up an office in India, on a condition that they register with BCI for an initial period of 5 years and practice only non-Indian law.
- Foreign lawyers would be considered as Indian lawyers under Section 29, 30, and 33 of the Advocates Act.
- Foreign lawyers are barred from appearing before Indian courts and tribunals, and cannot provide legal advice relating to any case filed before them.
- Foreign lawyers are allowed to hire Indian lawyers or form a partnership with them.
- A registration fee of $25,000 for individuals and $50,000 for partnership firms are required to be paid.
- Individuals are required to pay a renewal fee of $10,000 and partnership firms have to pay $20,000.
- Foreign lawyers are allowed to participate in international arbitration in India.
- Foreign lawyers are required to pay a security deposit to practice in India. This amount is refundable.
- Foreign lawyers are only registered on a reciprocal basis.
- The ethics and code of conduct applicable to Indian lawyers are also applicable to foreign lawyers.
Arguments in favour of entry of foreign law firms in India
When it comes to the arguments in favour of allowing entry of foreign firms in India, it has been pointed out that the Advocates’ Act, 1961 and the BCI Rules do not prevent foreign law firms or foreign lawyers from visiting India for an interim period on a fly-in and fly-out basis and providing advice to their clients in India. The entry is only allowed when the lawyer or law firms require to advice their clients on a foreign legal system or an international legal issue.
It is believed by many that a global exchange of lawyers will reform the judicial system of countries. Entry of foreign lawyers and law firms may prove to be a boon for Indian judiciary and help in reducing the pendency of legal matters relating to foreign lawyers and international disputes.
It is also argued that entry of foreign law firms in India will lead to a transfer of knowledge, and a relay in expertise on international laws between Indian lawyers and foreign lawyers. Entry of foreign law firms and lawyers is also believed to create more job opportunities at domestic level as foreign law firms would require local manpower to set up their offices in India.
Arguments against of entry of foreign law firms in India
The primary argument against the entry of foreign law firms in India is that it may take away business opportunities from the local law firms and lawyers. It is argued that entry of foreign entities tend to hit the domestic industries and the legal profession would not be any different.
Another argument against permitting law firms in India is the difference in legal training and education between India and other countries. This difference can affect the employment opportunities for law graduates and lawyer who’ve just begun their practice.
The legal profession in India is going through a multi-dimensional shift, with the advent of legal technology and the dissension over the inclusion of foreign entities into the mix. The debate over the entry of foreign law firms and lawyers is convoluted as the decision by various Indian courts on the matter, the existing rules, and views of legal fraternity are highly contradictory.
When on one hand India exhibits the ability to become the legal hub of the world, the increasing trends in de-globalization on the other hand, makes it a safe bet to bar the entry of foreign entities in India.