The Hon’ble Madras High Court (“MHC”) on January 21, 2012 disposed of a writ petition seeking a permanent ban on foreign firms and foreign lawyers allegedly practicing in India and forbearing them from having any legal practice either on the litigation-side or in the field of non-litigation and commercial transactions, in any manner within the territory of India. The petitioner impleaded 31 foreign law firms along with the Law Department, Home Department, Finance Department, Department of External Affairs, Income-tax Department, the Reserve Bank of India and a few bar councils in the array of respondents, who argued the matter extensively before the MHC.
The petitioner relied heavily on the decision of the Hon’ble Bombay High Court (“BHC”) in the case of Lawyers Collective Vs. Bar Council of India, 2010 (112) Bom LR 32 wherein it was held that establishing a liaison office in India by a foreign law firm and rendering liaison activities in all forms is not permissible since such activities are in contravention of the Advocates Act, 1961 (the “Act”) and the Bar Council of India Rules (the “Rules”). The MHC, while agreeing with the above decision, went on to allow foreign lawyers and law firms to do business in India on a “fly in and fly out” basis, so long as they advise on foreign laws and not the Indian laws.
The MHC observed that if foreign law firms are not allowed to take part in negotiations and conduct arbitrations in India, not only will it have a counter-productive effect on the Government’s aim to make India the hub of International arbitration, it will also be against public interest. Taking que from the recent Supreme Court judgment in Vodafone International Holdings BV Vs, Union of India SLP(C) No. 26529 of 2010, the MHC observed that International commercial arbitration will play a pivotal role in the overall economic growth of India and thereby restricting foreign lawyers and firms will not be beneficial.
Summarizing its observations in the matter, the MHC has concluded as follows:
· Foreign lawyers or law firms cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfill the requirements of the Act or the Rules;
· However, there is no bar either in the Act or the Rules for 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;
· Moreover, having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract related to international commercial arbitration; and
· The BPO companies providing wide range of customized and integrated services and functions to its customers like word-processing, secretarial support, transcription services, proof-reading services, travel desk support services, etc. do not come within the purview of the Act and Rules. However, in the event of any complaint made against these BPO companies violating the provisions of the Act, the Bar Council of India may take appropriate actions against such erring companies.
The judgment brings a sigh of relief to a number of foreign law firms made party to the petition, as also to many more who would have suffered from any adverse observations even without being impleaded in the petition. Following the judgment, a number of Indian law firms having good working and referral relationships with foreign law firms are a happier lot.
The reactions however suggest that unlike the BHC judgment, this judgment may be challenged before the Supreme Court. If that happens, the foreign law firms may have won the battle but the war is far from over.