Indian law students are reporting for JURIST on law-related developments in and affecting India. This dispatch is from Samar Veer, a third-year law student at National Law University, Delhi.
In a major departure from longstanding policy, the Bar Council of India (BCI) last week issued a notification permitting foreign law firms and foreign lawyers to advise clients on broad foreign law and international arbitration issues. Such practice in these diverse areas will be permitted based on reciprocity, meaning only the lawyers belonging to nations that allow Indian lawyers to practice in their jurisdictions will be allowed to practice in India. Notably, the new Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 allow foreign firms to enter into partnerships with Indian law firms, effectively allowing foreign firms to set up their offices in India.
The purported aim of this move is to improve Foreign Direct Investment (FDI) cash flows into the country and turn India into “a hub of international commercial arbitration”. However, the opening-up of the Indian legal sector is being done gradually and foreign lawyers and firms are not allowed to appear in Indian courts and judicial tribunals. They are only allowed work on non-litigious matters under some corporate matters on a reciprocal basis.
The Rules also express a keen interest by the Bar Council of India in collaborating with the Law Society of England and Wales and the Government of the United Kingdom regarding reciprocal practice by either nation’s lawyers and firms in the other’s jurisdiction. The products emerging from the discussions between these entities are described in brief within the Rules. The Bar Council of India has expressed its desire to examine the UK Government’s claims of having permitted Indian lawyers to advise and set up shop in their jurisdiction and respond accordingly with reciprocal permissions of its own, as a part of existing trade negotiations between the two countries.
Unsurprisingly, it is also made abundantly clear under Section 3 of the Rules that no foreign lawyers or firms may be allowed to set up their practice and do any kind of work unless they undergo mandatory registration with the Secretary of the Bar Council of India. The Rules set out a registration fee of $25,000 and $50,000 for foreign lawyers and foreign law firms (including limited liability partnerships, companies and private limited partnerships), respectively.
These mandatory registration rules do not apply to foreign lawyers who tender advice on a ‘fly in-fly out’ basis, however. The provision in the Rules draws from the verdict delivered by the Madras High Court in Bar Council of India vs. AK Balaji, 2018. The aforementioned Rules have also been framed in the backdrop of this verdict, which gave the Bar Council powers to frame rules regarding foreign attorneys and firms.
Interestingly, the Rules initially prompted some confusion. The primary source of this was not regarding the provision of services by foreign entities and lawyers, but rather who might avail themselves of these services. Further, there was some puzzlement about the areas they could practice in. Both of these were clarified via a press release (issued under Rule 8[2] of these Rules that allows the Bar Council to provide clarity) this past Sunday, March 19th. This press release indicated that advice only on international and foreign law could be given by such practitioners, and such advice may be tendered to foreign clients only. A notable exception is carved out for international arbitration, where “matters of foreign law may or may not be involved”, as per Rule 8(2) (ii). The Bar Council assured that it intends to protect career opportunities for Indian advocates and requested the earnest welcoming of these rules in the “national interest.”
But significant restrictions still remain. As previously mentioned, the Bar Council has clarified that the opening of the Indian legal market is to be done in a controlled and regulated manner. Foreigners are still not permitted to do any work pertaining to the conveyancing of property, title investigations or other similar work, as mentioned in the Rules. Only work on intellectual property matters, mergers and acquisitions, joint ventures, contract drafting, etc. is allowed, and even that is based on the principle of reciprocity.
The issuing of these Rules is a watershed moment in the development of the rapidly expanding Indian legal services sector. The Bar Council had long been against allowing such practice into India, for fear of endangering the interests of Indian practitioners and firms. However, unflinching protectionism without openness to adaptability has almost always proven to do more harm than good in the long run, especially in an age of global economic integration. Adopting the myopic objective of “protecting” Indian firms and practitioners would have had the probable effect of engineering a significant detriment to the expansion of the legal services market, and even major players in the Indian legal market. As acknowledged by the BCI itself, the level of skill possessed by Indian lawyers is certainly on par with the level of expertise and in-depth understanding foreign attorneys have. The quality of advice tendered by Indian lawyers is only bound to improve as they exchange practices, knowledge and methodology with the most skilled practitioners in the world from nations like the UK and US.
Even in the face of global economic woes, the Indian economy has proved resilient. This is true to perhaps an even greater degree for the Indian legal services sector, which continues to remain highly competitive and ever-expanding. Despite the considerable restrictions, this move is quite likely to create some rather intriguing and dynamic interactions. For instance, we may witness the tying-up of smaller law firms with global giants in an effort to remain competitive. The change in stance by the Bar Council is almost certain to do two things: lead to greater engagement by Indian talent with global law firms; and make the Indian market remarkably competitive in the coming years. Owing to the aforementioned restrictions, the tight grip of Indian legal behemoths over the market is likely to persist, but with the added significant change of an exponentially more competitive landscape, along with potentially increased legal fees to match competitive market rates that firms in more developed jurisdictions charge, and what they will possibly charge here.
Further, the BCI’s desire to emulate the notable success stories of arbitration hubs like London and Singapore is admirable, but the work has only just begun. A fortnightly explosion of foreign law firm offices in India is not something one must hold their breath for.
The biggest beneficiaries of these reforms are perhaps those who plan to make a career in law over the next decade. The gleaming promises to budding lawyers are quite obvious: greater international exposure, potentially increased fees for work, getting to advise on a greater range of matters, and, most importantly, a widened pool of options, among other things.
However, we are still in the nascent stage of the Indian legal market’s liberalisation, with exciting possibilities galore and much work ahead. What remains to be seen, is whether the BCI chooses to further ease its policies in the coming years.
At any rate, the future promises to be eventful.
