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Synopsis

India had a chequered history of allowing foreign lawyers to practice in India. The main obstacle is represented under the traditional view that the legal profession is not a commercial activity and should not leaven into a commercial competition. The legal profession is also predominantly national in character because of the jurisdiction-based applicability of laws and legal education. However, the legal sector has experienced steadfast growth as a result of emerging fields of practice and an increase in international trade and cross-border transactions.

The government has been toying with the idea of opening up legal services in line with our WTO obligations for well over two decades. There was a conscious pause to the process since even the most prominent domestic firms had less than a hundred lawyers, and the Indian economy was coming out of a socialist model. With the interference of the courts over time, limited exceptions were carved out to allow foreign lawyers to visit India for a temporary period on a “fly in and fly out basis” for advising their clients in India on foreign law; and to conduct arbitration proceedings in case of international commercial arbitration. However, much uncertainty loomed as there were no regulations in place.

The Bar Council of India (“BCI”) has recently notified the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (the “Rules”) on March 10, 2023, bringing a ray of hope towards ending this stalemate. The new Rules represent a major reform of our legal landscape. India has finally fulfilled its long-standing promise to open up legal services to foreign lawyers (practicing foreign law) on a reciprocal basis. There is already an understandable buzz amongst younger lawyers and indeed law students at the prospects ahead. We have seen how an allied profession (chartered accountants) was entirely reshaped over a couple of decades after the entry of the ‘Big Four’ accounting firms.

The Rules recognize the dynamic changes in the legal fraternity and markets and the fast-paced growth of international trade and commerce which necessitated this move. Some Indian firms have set up representative offices in foreign jurisdictions as well. This coupled with the liberalization of legal markets to Indians across the globe and recent talks with the Law Society of England & Wales and Government delegates of the U.K. is likely to have stimulated the decision for India to allow foreign lawyers and law firms entry on a reciprocal basis. Thus, the Indian legal landscape may well end up resembling Germany or Japan with major national (with many foreign qualified lawyers in them) as well as international firms. This would be a win-win for clients and lawyers.

The BCI has hedged its bets however by building in certain protections including a significant carveout in the Rules. Presently, only non-litigious matters can be practiced by registered foreign lawyers/law firms, such as transactional work /corporate work viz. joint ventures, mergers, and acquisitions, intellectual property matters, drafting of contracts, and other related matters. There is an express bar on appearing before any courts, tribunals, or other statutory or regulatory authorities and from being involved in any work pertaining to the conveyancing of property, title investigation, and other similar works. This is possibly to preserve the public role played by the litigation bar in India which is intertwined as ‘officers of the court’, charged with protecting our constitutional freedoms, similar to that of “barristers” in England and Wales and bengoshi in Japan, which is in line with the national/domestic character of litigation, with the exception of international arbitration.

While foreign law firms/lawyers are allowed to conduct arbitration proceedings, there appears to be a modicum of ambiguity in the Rules. The Rules seem to suggest that a foreign practitioner can represent in Indian-seated international arbitration, but only on behalf of a party that is situated in a foreign country. The Rules are ambiguous to the extent of representing an Indian party in an Indian-seated international commercial arbitration, even if the same involves foreign law, which may be completely unintentional and possibly an oversight. In fact, even the existing ‘fly in and fly out' model recognized foreign lawyers in conducting international arbitration.

Reciprocity is one of the quintessential elements behind this decision. To ring-fence the desired outcome of boosting Indian lawyers in foreign countries, safeguards have been placed allowing the BCI to uphold the principle of reciprocity – by limiting the registrations in case of disproportionate representation of Indian lawyers in a foreign country; or revoking the license in case of discriminatory practices against Indian lawyers. How this will work in practice remains to be seen especially given the scarcity of compliance resources at the disposal of the BCI and the lack of an effective fact-finding mechanism in place.

The Rules also bring a gamut of requirements and permissions to be taken from the respective countries and the BCI. For now one may safely say that in addition to ‘fly in fly out’ foreign lawyering (which has also been reaffirmed in the Rules), it is also now possible to have boots on the ground. With the globally harmonized nature of deal documentation, domestic transaction lawyers may feel that their clients and colleagues are at risk and could well seek to rely on the broadest meaning of the restriction in the Rules that a dual qualified lawyer working in a registered foreign law firm shall have no advantage/right of being an Advocate enrolled in India.

While practical ramifications are yet to be seen in the near future, this is certainly a step forward toward liberalizing the legal profession in India and has the potential of attracting foreign investment and help India inch towards being recognized as an international hub for legal practice be it in international arbitration or non-litigious practices. One is optimistic that the new Rules are well thought out to balance the interests of the Indian legal fraternity while allowing Indian and foreign firms to compete on a ‘level playing field’. With the entry barriers being seemingly lifted, one can expect a free flow of interactions, exchange of ideas, knowledge, and cultural diversification, allowing each to adopt best practices from across the world. While there may be some concerns and ambiguities in the nascent stages, we hope that the BCI in consultation with the Government of India and the legal community will work towards making these Rules more robust in the coming times.

(Avimukt Dar is a founding partner & Amit Jajoo is a partner at IndusLaw. Views expressed are personal.)