01/03/2012
Court clarifies legality of foreign lawyers’ activities in India
By Phil Taylor
In a judgment which will be generally welcomed by international law firms, an Indian court has clarified the rules governing foreign lawyers and legal outsourcing companies.
As reported by IBA Global Insight in October 2011, the issue of foreign lawyers operating in India in any way has long divided local practitioners in the country. In 2010, a case was brought to the Chennai High Court naming 31 foreign law firms and claiming that India’s Advocates Act and Bar Council rules allow only properly registered advocates to engage in any kind of legal practice in the country.
The writ claimed that even so-called fly-in/fly-out activities, under which foreign lawyers visit India for short periods to advise clients on foreign law issues, should be outlawed.
On 21 February 2012, the Court issued its judgment in A K Balaji v Government of India, Reserve Bank of India, and Others, finding no bar in Indian law preventing fly-in/fly-out.
The Chennai High Court agreed with an earlier judgment of the Bombay High Court (Lawyers Collective v Reserve Bank of India, Chadbourne, Ashurst, White & Case, and Others (2009)) in which it was held that ‘establishing liaison office in India by the foreign law firm and rendering liaisoning activities in all forms cannot be permitted.' [sic]
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'Fly-in/fly-out' activities have been criticised |
However, the Chennai High Court pointed out that the issue of fly-in/fly-out activities by foreign lawyers ‘was neither raised nor answered by the Bombay High Court’ and went on to find that such activities did not contravene the rules.
Although the judgment has been welcomed in many quarters as clarifying certain doubts raised by the Bombay ruling, it will not assist Indian companies who will have to continue to bear the burden of paying the costs of their foreign legal advisers’ fly-in/fly-out visits.
The ruling also leaves open other significant uncertainties.
‘I think it is a step in the right direction, but there is still uncertainty as to what the practice of law means under the 1961 Advocates Act,’ said Richard Gubbins, a London-based partner of Ashurst who heads the firm’s India practice. ‘Until that Act is amended to reflect modern commercial reality, that uncertainty will remain.’
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‘I think [the judgment] is a step in the right direction, but there is still uncertainty as to what the practice of law means under the 1961 Advocates Act,’
Richard Gubbins
Ashurst
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The Chennai High Court also found that foreign law firms’ taking part in certain activities related to arbitration in India did not constitute practising law in India in any way, and appeared to agree that preventing such activities could have a counterproductive effect on the aim of the Indian government to make the country ‘a hub of international arbitration’. Citing the Supreme Court’s decision delivered only a month earlier in Vodafone v Union of India, the High Court emphasised the vital part that international commercial arbitration could play in India’s overall economic growth.
Meanwhile, legal process outsourcing companies were found generally not to come within the scope of the Advocates Act and Bar Council rules, although the Court made it clear that the Bar Council could take firm action against any of those companies which were found to be practising Indian law.
According to the Bar & Bench website, the Bar Council of India is planning a possible appeal to the Supreme Court on the grounds that the two high court judgments are in conflict. The saga continues.
A copy of the Chennai High Court judgment is now available online.
Phil Taylor is a freelance writer and editor. He can be contacted at phil@phiine.com