However, he said, “reciprocity has to be insisted upon” . “If some country does not allow us, then it may be difficult for us to allow them or for the Bar Council of India to agree to that. But given the opportunity to go and practice abroad, I think this opportunity should never be missed.”The Bar Council of India had been opposing the entry of foreign lawyers into the Indian legal system. However, Khehar said that the body and the Society of Indian Law Firms have now agreed “in principle” with the government’s proposal to gradually open up the legal sector to foreign players.
The CJI said an international exchange of lawyers should be seen as an opportunity to learn. “It is not that we will also not learn when foreign lawyers and firms come to India,” he said. “We will also learn from them. But most of all, this international exchange of lawyers will possibly enthuse the system because once you are exposed to other systems of thinking and working, it is possible for you to advise in your own country and in conferences like this to make suggestions to the government to adopt better measures.”
He added that the Indian legal profession had “possibly become the world’s largest and most influential in the matter of governance” in a period of less than 70 years.
Modi's Government pushing the legal liberlization agenda
Prime Minister Narendra Modi’s Government has been serious about pushing the legal liberalization agenda. Society of Indian Law Firms (Silf) was established in 2000 for this purpose. Many Silf members initially came together to raise their voice against the Bar Council of Delhi for Delhi Law firms listings in an international legal directory. The council claimed this was in violation of the Advocates Act, 1961, lawyer advertising restrictions.
CASE LAW RELATING TO ENTRY OF FOREIGN LAWYERS IN INDIA
In this case, the petitioner, AK Balaji had sought a direction to the Union of India, the RBI, the BCI and the Bar Council of Tamil Nadu to take action against 32 foreign law firms, allegedly practising illegally in India.
The Advocates Act provides that a foreigner may be admitted as an advocate in India, if Indian nationals are permitted to practice law in his/her country, thus satisfying the “principle of reciprocity”. The Madras High Court had agreed that foreign legal experts needed to visit India, to offer advice to their clients on their laws, and there is no specific provision in the Advocates Act to prohibit a foreign lawyer from visiting India for a temporary period to advice his or her clients on foreign law.
The concept of flying in and flying out (FIFO) which gained currency after the High Court’s verdict was a result of this understanding. The Bombay High Court’s verdict predates the Madras high court’s verdict, having been delivered on December 16, 2009. In this case, the RBI had allowed 12 to 14 foreign law firms to open their liaison offices in India. The Bombay High Court had held that such permission could not have been granted as it was contrary to the Advocates Act and the BCI Rules.
Both the Madras High Court and the Supreme Court’s interim order endorse this view, But in the second appeal before the Supreme Court, the Global Indian Lawyers (GIL) group of interveners, has challenged this view. On September 14, 2015, the petitioner before the Bombay High Court, the NGO Lawyers Collective, argued before the Supreme Court that Global Indian Lawyers (GIL) should not be allowed to challenge the Bombay High Court verdict after a gap of six years.
The Lawyers Collective’s senior counsel, CU Singh, pointed out that GIL was not a party before the Bombay High Court, and therefore, the bench should decide the maintainability of its appeal, at the threshold stage. When the BCI, through its senior counsel, MN Krishna Mani sought six weeks time to file a comprehensive reply, GIL’s senior counsel, Arvind P Datar expressed his apprehension that the case might be going into cold storage once again.
The bench, however, accepted Krishna Mani’s suggestion that the BCI may be at liberty to mention if there is any settlement between the BCI and other parties in the meantime. The Union of India’s stand on the issue continued to be uncertain with its counsel seeking more time to submit a response. The UOI had held the view before the Bombay High Court that those practising in non-litigious matters- foreign lawyers claim they are practising non-litigious law- are not governed by the Advocates Act. Yet, the UOI supported the BCI’s stand before the Madras High Court that if foreign law firms were permitted to open their offices in India, Indian lawyers would suffer discrimination.
Reports suggest that the GOI and the BCI may revise their stand on the issue; therefore, the status of the appeals in the Supreme Court will continue to be uncertain till they make their stand clear to the court . Supreme Court on 14 September 2015 decided to grant leave in two appeals against the Madras High Court judgment and the Bombay High Court judgment against foreign law firms.
The Bar Council of India (BCI) is the appellant in the first case and a respondent in the second. In the first case, the appeal is against the Madras High Court’s judgment, delivered on 21 February 2012.
The government has recommended a phased entry for foreign lawyers spread over a period of five to seven years. This process will be enabled by:
- Domestic reforms. These include the removal of restrictions on marketing and advertising of legal services, entering into fee-sharing agreements and using corporate entities like LLPs to practise law. The objective of these reforms is to ensure that domestic lawyers and law firms are able to compete on a level with foreign law firms. Undoubtedly, this will be a crucial and perhaps the most time-consuming phase of the reforms process.
- Opening international arbitration and mediation services to foreign lawyers. Interestingly, this has already been partially dealt with by the Madras High Court in A. K. Balaji Vs Govt of India. Hailed by many as India’s first step towards liberalisation, the decision gave recognition to the right of foreign lawyers to temporarily enter India on a “fly-in and fly-out” basis to conduct arbitrations and advise their clients on the foreign and international law. While the spirit and intention of the decision is laudable, it has failed to address some of the loopholes in the Act (for example, the issues of “reciprocity” and the regulation of the “practice of foreign law”), which is why the current reforms and amendments are extremely important (especially since the decision has already been challenged before the Supreme Court of India). SILF has indicated that it would like to see BCI tackle the issue of reciprocity by signing mutual recognition agreements on legal qualifications with other countries.
- Allowing foreign lawyers to provide non-litigious and advisory services on issues of foreign and international law. Litigation services will continue to remain the exclusive domain of Indian lawyers. Recent reports have suggested that India is likely to follow Singapore’s model of liberalisation by giving access to a limited number of foreign law firms in select areas of law through licenses and joint ventures (with local firms).
Although the nuances of the proposal are still being worked out, BCI and SILF have expressly stated that they will not support foreign direct investment in the legal sector or allow multidisciplinary practices such as E&Y, PWC, Deloitte and KPMG to provide legal services in India.
The Indian legal sector needs to first get its own house in order before it embarks on the process of liberalisation. Unless Indian law firms are well equipped to handle competition from their foreign counterparts, the process of reform may lose support from BCI and SILF, which are the driving forces behind this movement for change.
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