Balaji case clarifies role of foreign lawyers and firms

By Vivek Vashi and Nitisha Bishnoi, Bharucha & Partners
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In the case of AK Balaji v Government of India, Madras High Court on 21 February disposed of a writ petition that sought to restrain foreign law firms and lawyers from “illegally” practising in India. The case was a follow-up to Lawyers Collective v Ashurst, in which Bombay High Court held that the practise of all law by foreign firms in India was illegal, whether the matter was litigious or non-litigious.

The order in AK Balaji, which has been treated as neither a victory nor a defeat, has paved the way for some clarity on what foreign law firms can and cannot do in India.

Vivek Vashi Bharucha & Partners
Vivek Vashi
Bharucha & Partners

Crux of the petition

By the writ, AK Balaji contended as follows:

(a) Foreign law firms (without establishing any liaison office in India) and foreign lawyers – visiting India for the purpose of offering legal advice on foreign laws to their clients, attending arbitrations, conducting seminars, or overseeing legal outsourcing units – violated the provisions of the Advocates Act, 1961, and fundamentally amounted to unfair competition for domestic lawyers. Additionally, the mode of entry adopted by foreign lawyers resulted in immigration law violations as most lawyers visit India using tourist visas.

(b) Foreign law firms and lawyers treat the practise of law as a trade or business while it is a noble profession in India. Foreign law firms’ presence through legal process outsourcing units with back-end offices in India, which are not confined to back-end activities but also provide legal services in India, also violated provisions of the Advocates Act.

(c) The entry of foreign law firms should not be entertained without reciprocal arrangements with their home countries. Foreign law firms should not be allowed to exploit the Indian legal market without opening up their domestic markets to Indian lawyers.

Ruling of the court

Madras High Court held that barring foreign firms and lawyers from working in India would be against the national interest and would be a step backward. The judgment clarifies the present position in respect of the following issues:

Advice on foreign law/diverse international legal issues, while temporarily in India: Foreign law firms and lawyers can practise the profession of law in India, either on the litigation or non-litigation side, if they fulfil the requirements of the Advocates Act and the Bar Council of India (BCI) Rules. Foreign law firms and lawyers can 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 international legal issues.

Conducting international commercial arbitrations: Having regard to the aim and object of the international commercial arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers are allowed to attend and hold or conduct arbitration proceedings in respect of disputes arising out of contracts relating to international commercial arbitration.

Consultancy/support services: Consultancy and support services provided by companies in the field of protection and management of intellectual, business and industrial proprietary rights, and market surveys, research and publication of reports, journals, etc., without rendering any legal service or appearing before courts or tribunals, including advice in the form of opinion, is not considered as practising law in India. Business process outsourcing companies and legal process outsourcing units are permitted to function in India as they do not violate the Advocates Act or the BCI Rules but they cannot render legal advice to clients in India.

Conclusion

A judgment barring foreign law firms or lawyers from practising in India or advising their clients on foreign law would have resulted in a patently incongruous situation in which only Indian citizens enrolled as advocates under the Advocates Act could practise foreign law, when foreign laws are not taught at graduate level in Indian law schools, except for comparative law courses at the Master’s level. Such a state of affairs would have led to absurd and dangerous propositions and would have been a step backward when India is opening up as a destination for certain kinds of cases and as a preferred seat for arbitration in international commercial arbitrations.

The court’s ruling brings clarity to the role of lawyers registered overseas with respect to the practise of law in India and has taken a step forward from the ruling in the Lawyers Collective case. At the same time, the judgment has opened up a plethora of questions regarding what is “fly-in and fly-out” basis, the “best friends” relationship between foreign and Indian law firms, etc., which still remain unanswered.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners where Nitisha Bishnoi is an associate.

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