The Supreme Court has asked the Reserve Bank of India not to grant permission to or register foreign law firms to set up liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973, for fighting litigation in the country.
A Bench of Justices R.M. Lodha and Anil R. Dave passed this order after hearing senior counsel M.N. Krishnamani, appearing for the Bar Council of India, which challenged a judgment of the Madras High Court relating to foreign law firms.
The Bench, while issuing notice to the respondents including several foreign law firms, returnable in 10 weeks, clarified that “the expression ‘to practise the profession of law’ under Section 29 of the Advocates Act, 1961, covers the persons practising litigious as well as non-litigious matters; and therefore, to practise in non-litigious matters in India, the foreign law firms, by whatever name called or described, shall be bound to follow the provisions contained in the Advocates Act, 1961.”
Though the High Court held that foreign law firms or foreign lawyers could not practise in India either on the litigation or non-litigation side unless they fulfilled the requirement of the Advocates Act and the Bar Council of India Rules, it said: “There is no bar 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 on foreign law to their clients in India.”
The High Court held that foreign lawyers could not be debarred from coming to India and conducting arbitration proceedings in disputes involving international commercial arbitration. It was against this decision that the BCI filed the appeal, saying the issues relating to practice by foreign lawyers before the Madras High Court were no longer res integra (inadequately examined) as they were comprehensively dealt with by the Bombay High Court in its judgment dated December 16, 2009.
The BCI said since this judgment was not challenged in the Supreme Court, it had attained finality and the RBI would not be justified in granting permission to the foreign law firms to open liaison offices in India under Section 29 of the FERA. Therefore, the Madras High Court ought not to have taken a different view on the settled issue of foreign lawyers who were not enrolled under the Advocates Act.
The BCI said various international law firms had set up their offices in India and were dealing with activities such as mergers, takeovers, acquisitions, amalgamations and arbitrations including various commercial transactions.
It said foreign lawyers, who were coming on visitor visas, were conducting arbitration in Indian hotels and illegally practising law.
In view of the differing judgments given by the two High Courts, the BCI wanted the Supreme Court to clarify the position, quash the impugned judgment and grant an interim stay.
