Introduction

The global discussion over the long awaited debate on whether foreign law firms and foreign lawyers can practice the profession of law in India was finally adjudicated by the Supreme Court of India on 13 March 2018 while deciding the appeals arising out of the decisions of the Madras High Court and the Bombay High Court in Bar Council of Indian v A.K. Balaji and Others.1

In recent years, the Executive, Legislature and Judiciary in India have been working together to craft Indian laws and policies more in sync with international arbitration law and practice, thus making clear India’s pro-arbitration approach that is cemented by the development of the International Arbitration Centres in the country. An International Arbitration Centre was recently inaugurated in the city of Mumbai in the State of Maharashtra (in 2016),2 and the Indian Government set-up a High Level Committee to review the institutionalization of arbitration mechanism in India (in 2017),3 in furtherance of its commitment to speedy resolution of commercial disputes and to make India a hub of robust alternative dispute resolution.

The New Delhi International Arbitration Centre Bill, which proposes to establish an autonomous and independent institution for better management of arbitration in India, was introduced in January 2018 before the Indian Parliament.4 Additionally, amendments are proposed in the Arbitration and Conciliation Act, 1996 (‘2015 Amendment Act’) for the establishment of an ‘Arbitration Council of India’ which will grade arbitration institutions and accredit arbitrators by laying down norms, and take all such steps to promote and encourage arbitration, conciliation, mediation and other ADR mechanisms.

India, being a signatory to the General Agreement on Trade in Services (‘GATS’),5 has opened gates for many international business establishments based in different parts of the world to come and set-up their own respective businesses in India. Conversely, even a large number of Indian companies have reached out to foreign destinations by mergers, acquisitions or direct investments.6

As the economic centre of gravity and cross border transactions move towards Asia and India, there will be a consequential rise in the disputes from the region. This will result in the application of foreign laws to such transactions, for which legal advice from foreign lawyers would be sought.

One important issue is thus the requirement for allowing participation of foreign lawyers in matters involving international disputes seated in India. There have been extensive debates at the parliamentary level as well as in the Law Commission of India,7 as reciprocity becomes an important policy matter to be decided by the Indian Government.

Under the current Indian legal framework, the Advocates Act (1961) regulates the practice of law and is intended to apply to: (1) persons practicing the profession of law in any part of the country; and (2) persons practicing the profession of law in any Court including the Supreme Court of India.8 Strictly speaking, the Advocates Act is intended to apply not only to the persons practising before the Indian courts but also to those practising in non-litigious (advisory) matters outside the Court. Thus, understanding the need to review the Advocates Act, the Supreme Court referred to the Law Commission of India asking it to go into all relevant aspects relating to regulation of the legal profession.9 Consequently, the Law Commission submitted its recommendations for revamping the Advocates Act and recognizes that seeking legal advice of foreign lawyers on questions of foreign law cannot be considered as inappropriate; especially, in light of the growing international commercial arbitration in India.10 Furthermore, in an Indian-seated international commercial arbitration under the Arbitration Act, wherein the contract is governed by foreign law, the non-Indian party is bound to seek assistance from lawyers of its own country on the contract and the subject-matter of the dispute.11

Bombay High Court’s decision: Foreign lawyers not entitled to practice law in India

From 1993 to 1995, foreign law firms applied to the Reserve Bank of India (RBI) seeking permission to open their liaison offices in India. The RBI granted permission to these foreign law firms, but for the limited purpose of compliance under the foreign exchange laws in India. Such permission was not to be construed as a regularization, condonation or validation of any irregularities, contraventions or other lapses under any other law in India. This permission granted to the foreign law firms was challenged before the High Court of Bombay. In 2010, the High Court of Bombay in Lawyers’ Collective v Bar Council of India & Ors. held that the ‘practice of law’ would cover both litigious and non-litigious (advisory) practice.12 On that basis, it was held that foreign lawyers not enrolled as advocates under the provisions of the Advocates Act would not be entitled to practice law in India. The Bombay High Court laid down these principles while addressing questions as to whether practicing on the non-litigious side is in the nature of business liaison under the erstwhile Indian Foreign Exchange Regulation Act (1973).13

It must be noted that Bombay High Court’s decision was limited to foreign law firms opening liaison offices in India and it did not address the issue of whether foreign lawyers can practice foreign law in India.

Madras High Court’s decision: Foreign lawyers can practice foreign law in India on ‘fly in and fly out’ basis

The High Court of Madras in A.K. Balaji v The Government of India took a view in favour of foreign lawyers practicing in India in view of the principle of reciprocity.14 It was contended before the High Court of Madras that since foreign law firms do not have any office in India and do not advise on Indian laws, they do not require enrolment under the Advocates Act. Placing reliance on the principle of reciprocity, it was also pointed out that Indian lawyers are permitted to advise on Indian law in any country around the world. It was also highlighted that foreign lawyers qualify and are supervised by governing bodies in their respective countries and the absence of regulation by Bar Council of India may not be considered as a valid ground to prohibit foreign lawyers.

Accepting these contentions, the Madras High Court held that foreign lawyers are permitted to visit India for a temporary period on a ‘fly in and fly out basis’ for rendering legal advice on foreign law, on their own system of law, and on diverse international legal issues, as well as to participate and conduct arbitration proceedings in India in respect of disputes arising out of a contract relating to international commercial arbitration.15

Supreme Court’s decision: Foreign lawyers can visit India for temporary period on a ‘fly in and fly out’ basis

Due to the above divergence in the opinion of the High Courts, the Supreme Court of India finally settled the matter on 13 March 2018 in Bar Council of Indian v A.K. Balaji and Others while deciding the appeals arising out of the decisions of the Madras High Court and the Bombay High Court.

The Indian Supreme Court upheld the decisions of both the High Courts in part. The judgment of the Bombay High Court – to the effect that foreign law firms and companies or foreign lawyers cannot practice profession of law in India either in the litigation or in the non-litigation side – was upheld. At the same time, following Madras High Court, the Supreme Court recognized that there was no bar for the foreign law firms or foreign lawyers to visit India for a temporary period on a ‘fly in and fly out’ basis for the purpose of giving legal advice to their clients in India regarding foreign law, their own system of law and diverse international legal issues. It held that the expression ‘fly in and fly out’ will only cover a casual visit not amounting to ‘practice’. It further held that visit of any foreign lawyer on ‘fly in and fly out’ basis may amount to ‘practice of law’ if it is on regular basis. The Court did not specify the duration of the visit or any ceiling as to when a casual visit would cross the threshold and become impermissible.

In view of above, we uphold the view of the Bombay High Court and Madras High Court in para 63 (i) of the judgment to the effect that foreign law firms/companies or foreign lawyers cannot practice profession of law in India either in the litigation or in non-litigation side. We, however, modify the direction of the Madras 50 High Court in Para 63 (ii) that there was no bar for the foreign law firms or foreign lawyers to visit India for a temporary period on a ‘fly in and fly out’ basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. We hold that the expression ‘fly in and fly out’ will only cover a casual visit not amounting to "practice". In case of a dispute whether a foreign lawyer was limiting himself to ‘fly in and fly out’ on casual basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues or whether in substance he was doing practice which is prohibited can be determined by the Bar Council of India.16

The Supreme Court also held that the same is applicable equally to carrying of arbitral proceedings in India: if rules of the institutional arbitration, where applicable, permit the same, foreign lawyers can conduct arbitral proceedings on a ‘fly in and fly out’ basis in an Indian seated arbitration; they will however be governed by the code of conduct applicable to the legal profession in India.17 For instance, according to Article 26(4) of the ICC Rules of Arbitration, ‘the parties may appear in person or through duly authorized representatives’ in hearings before the arbitral tribunal, even if they are foreign lawyers. Thus, parties in an ICC Arbitration can choose from both Indian or non-Indian lawyers. However, in light of the present judgment of the Supreme Court of India, if they are foreign lawyers, they: (a) would be able to visit India on a temporary ‘fly in or fly out’ basis; and (b) would only be able to advise or represent the parties on issues of foreign law and not on Indian law.

Further, the Supreme Court of India held that consultancy and support services companies, which provide a wide range of customized and integrated services (word processing, secretarial support, transcription services etc.) do not come within the purview of the Advocates Act or the Rules of the Bar Council of India. The Supreme Court further held that a mere label of such services or manner in which they are styled cannot be treated as conclusive, and if in pith and substance the services amount to practice of law, the provisions of the Advocates Act will apply and foreign law firms or foreign lawyers will not be allowed to conduct such services.18 Conversely, it would be reasonable to assert that these services would still be permissible if the pith and substance of these services do not amount to the practice of law.

Conclusion

With the 2015 Amendment Act, the Law Commission of India, several representative bodies of trade and industry, and experts in the field of arbitration proposed to make legislation more responsive to contemporary requirements. While doing so, it was recognized that the economic reforms in India may not fully become effective if the law dealing with settlement of both domestic and international commercial disputes remains out of tune with such reforms.

When there is liberalization of economic policies, opening doors to foreign investments, disputes and differences are bound to arise in such international contracts. In a binding arbitration agreement where one of the contracting parties is non-Indian, substantive law is non-Indian, and India is the seat and/or venue of arbitration, it is natural for the non-Indian party to seek assistance of its own solicitors or lawyers to advise it on the impact of the laws of its country. Consequently, foreign lawyers may accompany their clients to visit India for the purpose of such arbitration. If a party to an international commercial arbitration engages a foreign lawyer and if such lawyer comes to India to advise its clients on foreign law, such a foreign lawyer would not be prohibited to advise its clients while being physically present in India in the course of an international commercial transaction or arbitration.

The Supreme Court’s decision seems just and fair in view of the absence of any legislation with regards to foreign lawyers practising or acting in India. In fact, the same has been recognized by the Supreme Court as it has directed the Bar Council of India, which is the rule making body on the present subject-matter, to formulate rules and regulations in this regard.19


1
Bar Council of India v A.K. Balaji and Others, Civil Appeal Nos.7875-7879, 7170 and 8028 of 2015, available at https://supremecourtofindia.nic.in/supremecourt/2012/13890/13890_2012_Judgement_13-Mar-2018.pdf

2
http://mcia.org.in/

3
The Report of the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India is available at http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf

4
http://www.prsindia.org/billtrack/the-new-delhi-international-arbitration-centre-bill-2018-5036/

5
https://www.wto.org/english/thewto_e/gattmem_e.htm

6
See for instance, India’s revised BIT as adopted in 2015 (http://pib.nic.in/newsite/PrintRelease.aspx?relid=133411). India has also emerged as one of the strongest performers in the deal-street across the world in mergers and acquisitions, for which the deal volume in India increased 14 percent to 1,022 transactions, worth US$ 46.8 billion, in 2017 (https://www.ibef.org/archives/detail/b3ZlcnZpZXcmMzc5NDkmNTk4).

7
Mahipal Singh Rana v State of Uttar Pradesh, (2016) 8 SCC 335; Report No. 266 of the Law Commission of India, ‘The Advocates Act, 1961 (Regulation of Legal Profession)’ March 2017; https://drive.google.com/file/d/0BzXilfcxe7yuMmdQX0g3QXBBQmM/view

8
Statement of Objects and Reasons, The Advocates Act, 1961 (India), available at http://www.barcouncilofindia.org/wp-content/uploads/2010/05/Advocates-Act1961.pdf.

9
Mahipal Singh Rana v State of Uttar Pradesh, (2016) 8 SCC 335.

10
266th Report of the Indian Law Commission, available at http://lawcommissionofindia.nic.in/reports/Report266.pdf

11
Ibid. para 14.

12
2010 (2) Mah LJ 726

13
Ibid. para. 60 https://www.rbi.org.in/scripts/ECMUserView.aspx?CatID=12&Id=21

14
AIR 2012 Mad 124

15
Ibid. para. 63

16
Supra n.1, para. 44

17
Ibid. para. 45

18
Ibid. para. 46

19
Ibid. paras. 42, 44