In a pathbreaking development in the legal arena, the Bar Council of India (BCI) has permitted foreign lawyers and foreign law firms to practice foreign law in India on a reciprocal basis. Vide a notification dated 10th March, 2023, the BCI has notified the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (Rules) with a view to open up law practice in India to foreign lawyers which would go a long way in helping the legal domain grow in India, and will be beneficial to the lawyers in India as well.
Historically, there has been a pushback from the domestic legal fraternity due to a lack of a level-playing field with their foreign counterparts. The idea of opening up the legal services market to foreign firms and individuals was met with strong opposition from the legal fraternity and subsequently, from the BCI and non-statutory bodies. Under the Advocates Act, 1961, a foreigner is not entitled to practice law in view of the restrictions contained under the said Act. However, under the guise of different entities, foreign lawyers/ law firms were practicing the profession of law in India in violation of the Act. Writ petitions were filed before the Hon’ble Madras High Court (AK Balaji v. Government of India) and Hon’ble Bombay High Court (Lawyers Collective v. Bar Council of India), seeking restrictions on such practices. In 2018, the Hon’ble Supreme Court, in Bar Council of India v. AK Balaji & Ors, passed a landmark judgment, putting to rest some of the major issues concerning the entry of foreign lawyers and law firms in India. It held that foreign law firms/companies and foreign lawyers cannot practice Indian law in India either in relation to litigation or non-litigation matters. The judgment however carved out an exception permitting such firms/lawyers to visit India on a ‘fly in and fly out’ basis to render legal advice regarding foreign law, since it would not be covered as ‘practice’ under the Advocates Act, 1961.
In the backdrop of the aforesaid, flourishing of Indian trade and business in international arena and recent talks with the Law Society of England & Wales and Government delegates of the U.K, the BCI decided it is time to open practice for foreign lawyers/ law firms. By taking an all-inclusive view, the BCI has noted that this process will be restricted, well-controlled and regulated in order to ensure that it is not disadvantageous to the legal fraternity in India. While prescribing the eligibility criteria for practicing law in India, the Rules also lists down the matters which is allowed to be handled by foreign lawyers/ law firms.
The Rules provide that foreign lawyers/ law firms can practice in non-litigious matters (this includes practice on transactional work, advisory work, corporate work such as joint ventures, mergers and acquisitions, intellectual property rights, drafting of contracts and other related matters, each on a reciprocal basis) and diverse international legal issues. However, it has been made clear that foreign lawyers/ law firms shall not be permitted to (a) appear before any courts, tribunals or other statutory or regulatory authorities; or (b) be involved in any work pertaining to the conveyancing of property, title investigation or similar work.
According to the Rules, foreign lawyers/ law firms that propose to practice law in India are required to obtain prior registration from the BCI under these Rules, and the primary qualification for them to apply for registration in India is that they have the ‘right to practice law’ in their foreign country of primary qualification. However, the Rules lay down one exception where foreign lawyers do not need to register with the BCI, which is if foreign lawyers practice law on a ‘fly in and fly out basis’ and (a) provide legal advice to Indian clients on foreign law and on diverse international legal issues, (b) the Indian client procured such advice from a foreign country, (c) the foreign lawyer does not maintain an office in India for the purpose of such practice, and (d) such practice in India does not exceed 60 days in any period of 12 months, whether in one visit or multiple visits to India. It is pertinent to note that for an application seeking registration, a key determining factor is the principle of reciprocity and the BCI has the discretion to refuse registration of a foreign lawyer/law firm if it believes that the number of foreign lawyers/ law firms from a particular foreign country will become disproportionate to the number of Indian lawyers/ law firms allowed to practice in a such foreign country, so as to protect the interest of Indian law firms / lawyers.
The BCI’s move is definitely a step in the right direction that will open up cross-border deal pipelines for global law firms and the Indian legal fraternity will benefit from exposure to best international practices. This will not only address concerns about the flow of foreign direct investment into the country and make India a hub of international commercial arbitration but will also provide foreign companies and investors some jurisdictional comfort. The Rules contain sufficient safeguards to ensure that foreign law firms do not establish dominancy in India by limiting their days of travel in India and restrictions on practising Indian law. The development would enhance the standards of law practice in India, create opportunities for collaboration and tie-ups, make the Indian legal market more competitive and thereby, offer greater value proposition to the Indian and global corporations.
However, upon a careful analysis of the Rules, there are certain challenges which needs to be addressed:
The Rules do not specifically define the areas of practice for foreign lawyers.
The Rules are silent on whether exclusive alliances are permitted between Indian law firms and foreign lawyers with each entity practicing their respective laws and whether foreign law firms would indirectly or in a surrogate manner practice Indian laws.
The concept of reciprocity may have certain challenges since few countries may allow Indian firms to operate on a larger gamut of services but in turn India will provide foreign firms to render only specified exhaustive services. Further, it will require assessment of how other nations treat Indian lawyers in their jurisdiction and a similar amendment in the rules of the corresponding foreign country.
The registration procedure and the requirement of several documents as stipulated in the Rules seems to be quite cumbersome and the Rules do not provide timeline within which the application of registration may be dealt with, cleared, approved, or declined.
The Rules are inconsistent with the Advocates Act, 1961 and the Hon’ble Supreme Court’s judgment in the case of Bar Council of India v. A.K. Balaji. The BCI Rules cannot overrule or override the judgment passed by the Supreme Court. In order to address this issue, the Advocates Act needs to be amended and if not, the Rules will need to be revised since both the Advocates Act and the Supreme Court judgment provides that only Indian citizens can practice law in India.
The opening of legal services sector may leave the Indian lawyers/ law firms in a disadvantageous position while competing with foreign counterparts considering the restrictions entailed in the Advocates Act. For instance, Indian law firms have restrictions on marketing, advertising, maintaining websites etc., partnership is the only form of collective legal practice for Indian law firms, and many more.
Addressing these concerns and ambiguities would ensure that there is a smooth transition with respect to foreign lawyers. In entirety, the Rules are a long-awaited progressive move and will be a game changer for Indian lawyers. The entry of foreign law firms will change the landscape for law firms in India and would support the country in a big way in a global context, particularly international trade and commerce. It is imperative to strike a balance between opening up the legal market and protecting the interests of Indian lawyers and litigants, and the same can only be achieved by careful regulation and enforcement of the existing rules. Hopefully, the BCI in consultation with the Government of India and the legal community will work towards making these Rules more robust in the coming times. Disclaimer: The information, views and opinions expressed herein are those of the author alone and do not, in any way, reflect the views of HSA Advocates.
Authored by Akriti Shikha, Senior Associate at HSA Advocates