In a U-turn, the Bar Council of India (BCI) has allowed foreign lawyers and law firms to practice foreign law, international arbitration matters and international legal issues in non-litigious matters in India on the principle of reciprocity.
The BCI, which had earlier opposed the move, notified the rules, saying foreign lawyers or firms will be allowed to practice on transactional or corporate work such as joint ventures, mergers and acquisitions, intellectual property matters and other related matters on a reciprocal basis. However, they will not be allowed to appear in Indian courts, tribunals or regulatory authorities nor permitted to advise on real estate matters.
While the foreign lawyers and law firms will not be subject to disciplinary proceedings by the BCI, their registration can be cancelled under these rules in case of substantive misconduct.
The BCI has said that opening up of law practice in India to foreign lawyers would go a long way in helping the legal profession grow in India.
“The standards of Indian lawyers in proficiency in law is comparable with the international standards and the legal fraternity in India is not likely to suffer any disadvantage in case law practice in India is opened up to foreign lawyers in a restricted and regulated manner on the principle of reciprocity. These rules will also help address the concerns about the flow of foreign direct investment in the country and make India a hub of international commercial arbitration,” it said in a notification on March 10.
Foreign lawyers who do not want to practice law in India under the new rules can continue to advice on a “fly-in and fly-out” basis, provided that such a practice does not exceed 60 days in any 12-month period.
“Foreign investors looking to invest in India will derive more comfort if their law firms are on the ground in India. It will also open up the market for senior, dual qualified Indian lawyers, who will be able to come back to India and lead the foreign law practice initiatives for their foreign law firms,” said Akhil Hirani, managing partner, Majmudar & Partners.
“Foreign law firms, which were earlier permitted to conduct transactional work on a fly-in fly-out basis, can now open up law offices after registration, operate throughout the year and practice law (in selected areas) in India. This will foster reciprocity, competition as well as open up new horizons for domestic lawyers to access territories which were previously uncharted,” added Shreeyash U Lalit, Advocate, Supreme Court of India.
Notably, a 2018 Supreme Court judgment had said that foreign law firms and lawyers cannot practice law in India, either in the litigation or non-litigation side, and had restricted them from setting up offices in India.
“The notification seeks to regulate the entry of foreign lawyers in India for the first time. The drafting could have been clearer, but it appears that the definition goes beyond the definition in the Arbitration Act. The Council will need to be vigilant to ensure that there is no lax interpretation which will defeat the purpose behind the regulations,” said Suhail Nathani, managing partner, Economic Laws Practice.
According to Hirani, there would be limited impact on Indian law firms as foreign clients and lawyers would still need to take the services of India lawyers for Indian law transactions, opinions and litigation matters.
“I don’t see any overnight mushrooming of foreign law firms or lawyers in the country because of the need for the Council to first ascertain reciprocity with the concerned foreign country. Effectively, this may require amendment in the rules of the corresponding foreign country for these regulations to be actually implemented,” said Rohit Jain, managing partner, Singhania & Co.
Reciprocity implies a foreign lawyer will be allowed to practice foreign law in India only if Indian advocates are allowed to practice in the jurisdiction of the foreign lawyer. This will benefit lawyers from jurisdictions such as England and Wales, which have already granted reciprocity to Indian advocates, said experts. Jain believes that the industry might witness consolidation or acquisition of mid-sized and smaller firms in the long run. “Hundred per cent FDI is allowed in the services sector. My preliminary view is that foreign firms should be able to buy domestic firms, in the corporate and arbitration practices at least,” he said.