In a verdict at variance the government’s intent to open up the legal services sector, the Supreme Court on Tuesday held that foreign law firms cannot “practise” or open offices in the country, but allowed foreign lawyers to visit India on a “fly in and fly out” basis for rendering legal advice to their clients on foreign law. Analysts feel the SC’s decision could dampen India’s prospects of foreign investments as availability of quality legal service is what large and sophisticated investors would look forward to. If it wants to surmount the hurdle, the government has no option but to legislate. The apex court, however, permitted foreign lawyers to conduct arbitration proceedings in disputes involving international commercial arbitration, after following the code of conduct applicable to the legal profession in India. Prime Minister Narendra Modi had earlier spoken of India emerging as a global arbitration hub — in fact, a high-level committee headed by justice BN Srikrishna in its report submitted to the government in August last year suggested a clutch of steps to improve the overall quality and performance of arbitral institutions in India and to promote the standing of the country as preferred seat of arbitration.
“Fly in and fly out will only cover a casual visit not amounting to practise,” a bench comprising justices AK Goel and UU Lalit said, clarifying that such visits must not amount to advocacy (which also comes under the definition of “practice of law”) under the Advocates Act, 1961. It directed both the Bar Council of India (BCI), the top body that regulates the legal practice in the country — it has practically opposed opening up of the sector — and the Centre to frame “appropriate rules in this regard, including extending Code of Ethics to the foreign lawyers” rendering legal advice here. The SC held that the prohibition (on practising law) applicable to any person in India other than an advocate enrolled under the Advocates Act certainly applies to any foreigner also. So foreign lawyers or law firms cannot practise in India without fulfilling the requirements of Advocates Act and the BCI rules. Upholding the the Madras and and Bombay High Courts’ judgments with certain modifications, the SC bench defined ‘practise of law’ to include litigation as well as non-litigation; not only appearance in courts but also giving of opinion, drafting of instruments, participation in conferences involving legal discussion amount to practise, the top court clarified. The top court rejected the plea that a foreign lawyer is entitled to practice foreign law in India without subjecting himself to the regulatory mechanism of the BCI rules. The Advocates Act applies equally to firms and individuals, the judgment stated.
Justice Goel, writing for the bench, said BPOs, LPOs, etc providing range of customised and integrated services and functions to its customers would not be allowed to provide services which, in pitch and substance, amount to advocacy, but they can render all other services. Welcoming the judgment, the Society of Indian Law Firms president Lalit Bhasin said that “the apex court’s judgment is correct as it has interpreted the law. It couldn’t have legislated or fixed the terms and conditions for entry of foreign lawyers. We wanted the entry of foreign lawyers in a phased and regulated manner… Even the government is committed to open up its legal sector.” However, senior advocate Dushyant Dave, who represented the London Court of International Arbitration, told FE that “it is a setback for the nation which wants to be part of globalisation and yet its SC prevents legal service sector to be opened up. Who will invest billions and technology in India if they can’t get their own people to legally advise them on routine basis? Fly in and out is no solution. Countries like China have opened up too. The SC should have taken a more pragmatic approach.”
The SC judgment came on a batch of appeals and cross-appeals led by BCI challenging the conflicting judgments by the Madras High Court and the Bombay High Court on entry of foreign law firms. The BCI had opposed any move to allow foreign firms in India. It argued that foreign lawyers cannot be allowed even to chip in for seminars and conferences.
* Additional solicitor general Maninder Singh, representing the government, had submitted that that rules need to be framed to deal with the issue and had urged BCI to do the same.