Opinion » Lead

Updated: March 21, 2013 00:18 IST

Restrict foreign access to the Bar

  • Anil Divan
Comment (15)   ·   print   ·   T  T  

A court monitored mechanism for a level-playing field should be set up before international firms are allowed to enter the legal services sector in India

“The Economic Survey has strongly batted for the removal of the restrictions on foreign direct investment (FDI) in legal and accountancy services” (The Hindu, February 28, 2013). Opening up the legal services sector for foreign lawyers is being debated for over 18 years. Predominantly, foreign law firms want to practise as consultants (FLCs) and not in court. Government apathy, unthinking bureaucratic support to foreign law firms, total disconnect with the legal profession, absence of national policy objectives and dubious behaviour by foreign law firms in the past have clouded the whole issue.

Delhi Bar Council challenge

In 1994, Michael Fysh QC appeared before the Delhi High Court to argue a case representing a multi-national company. An objection was taken by the Bar Council of Delhi challenging his right to appear. This incident catapulted the controversy nationally.

The Bar Association of India (BAI), the premier voluntary association of lawyers functioning for over 50 years, immediately reacted as far back as October 5, 1994. A resolution for setting up a Task Force and a High Powered Committee was suggested. The plea fell on deaf ears.

The Bar Council of India consistently passed several resolutions between 2002 and 2007 opposing the opening up of the Indian legal profession to foreign lawyers or foreign law firms while emphasising the absence of specific proposals by the Central government, and has recorded a desire to continue a dialogue and interaction with the Government of India.

The General Agreement on Trade and Services (GATS) emphasises the right of members to regulate trade and services. Briefly, the core concepts of GATS are non-discriminatory and equality of treatment of all members. In an Annex on Movement of Natural Persons, an exception is carved out offering a clear impediment to Indian professionals working abroad.

Bombay litigation

Three large international law firms viz. White & Case, Chadbourne & Parke and Ashurst Morris Crisp applied to the Foreign Investment Promotion Board (FIPB) for starting branches in India. Their applications were rejected.

Thereafter, they successfully applied under the (now repealed) Foreign Exchange Regulation Act 1973 (FERA) for a licence or permission to open a liaison office under Section 29 for “carrying on any activity of a trading, commercial or industrial nature.” They surprisingly did not apply under Section 30 “to practise a profession or occupation.”

A disingenuous stand by high-ranking professional firms through a dubious route. They leveraged their position by employing the kin of powerful serving and retired bureaucrats. The Indian Express was more to the point — “The first set of clearances was granted after a delegation of foreign law firms, under the leadership of the son of the Union Minister of Law, met officials of the RBI.”

An NGO called ‘Lawyers Collective’ filed and succeeded in a public interest litigation (PIL) in the Bombay High Court challenging these permissions.

The legal profession and the public owe a debt of gratitude to the crusading and dedicated efforts of Indira Jaising, Anand Grover and, later, Chander Uday Singh representing the “Lawyers Collective” which exposed the attempt of the foreign law firms to gain a backdoor entry with government support in the lucrative legal services sector bypassing the Advocates Act.

Most countries, including Australia, Hong Kong and South Korea, prohibit foreign law firms from practising domestic law and also provide for registration under strict regulations for practising foreign or international law.

A case that is referred to in the Bombay judgment arose in the New York Court of Appeals. One Lorenzo Roel started practising Mexican law in New York and contended that as his practice was restricted to Mexican law, he did not practise law in New York. This contention was rejected. The Court held: “… Whether a person gives advice as to New York law, Federal law, the law of a sister State, or the law of a foreign country, he is giving legal advice …”

In the final judgment (Swatanter Kumar CJ and J.P. Devadhar J.) delivered on December 16, 2009, the prima facie view expressed at the interlocutory stage by Chief Justice M.B. Shah and Justice S.H. Kapadia (later CJI) was confirmed. The Bombay High Court held that “the Reserve Bank of India was not justified in granting permission to foreign law firms to open liaison office in India under Section 29 of the Act” and that practising the profession of law under the Advocates Act covered both litigation practice as well as “persons practising in non-litigious matter”.

Nothing could be clearer. Practice of foreign law was covered as non-litigious practice under the Advocates Act. The judgment has not been appealed from and has reached finality, and binds the government.

Madras litigation

Later another petition (PIL) was filed in the Madras High Court by A.K. Balaji. The government contended before the Madras High Court that “the Bar Council of India, which has been established under the Advocates Act, 1961, regulates the advocates who are on the rolls but law firms as such are not required to register themselves before any statutory authority nor do they require any permission to engage in non-litigation practice.”

This is directly contrary to the Bombay judgment which is binding on the government. The Madras High Court while following the Bombay judgment surprisingly deviated from it and made several concessions to the benefit of foreign lawyers which were vigorously supported by the governmental authorities. The Bar Council of India has appealed to the Supreme Court. By an interlocutory order, the Court has only permitted foreign lawyers to visit India for a temporary period on a “fly-in and fly-out” basis for the purposes of giving legal advice to their clients in India regarding foreign laws. In the absence of strict monitoring, this exception is likely to cause grave abuse.

The Law Commission of India, in a working paper in 1999, raised pertinent issues and concerns while recommending amendments to the Advocates Act to prepare a level-playing field for Indian lawyers.

Government apathy and opacity

On September 20, 2004, the U.K.-India Joint Declaration was made in London. The U.K.-India Joint Economic and Trade Committee (JETCO) was set up to provide recommendations on the possibility of opening up legal services in India. It appears that reports were made by the two teams but they are not in the public domain. It is understood that during the JETCO meetings, some Indian delegates were unequivocally informed by the U.K. team that they would emasculate Indian firms and pick and choose the attorneys from Indian firms so as to destroy capabilities and create their own strengths. U.K. firms had no interest in joint ventures with Indian firms which could help assimilate new technologies and know-how and training. It is however gathered that thereafter no significant progress has been made.

The Society of Indian Law Firms (SILF), which consists of firms which specialise in Joint Ventures, international arbitrations and transactional practice, had this to say: “The demand for opening legal services sector in India does not come from Indian business or Indian profession or even foreign multinational companies. Strangely the demand comes from foreign lawyers and particularly those from the U.K. … The problem is that in India the legal profession is not a business and it is not up for sale.”

It is time a resolution to this contentious issue was arrived at. The ball lies in the government’s court. It must start a frank and meaningful dialogue by publishing a position paper containing the national objectives and a proposed mechanism.

In sum, reciprocity, transparency and accountability of foreign lawyers with strict court-monitored mechanism of disciplinary control (one cannot trust the executive in view of its consistent support to foreign law firms) and a level-playing field are essential to be put in place by law. Our law firms should not be eliminated in India as has happened in the accountancy sector but should grow nationally and internationally. A modus vivendi between the legal profession and the authorities is a precondition for fashioning a meaningful mechanism. Foreign Legal Consultants (FLCs) and foreign lawyers being permitted to enter the legal services sector in India without these safeguards would be unacceptable, inopportune and contrary to national interest.

(Anil Divan is president, Bar Association of India.

More In: Lead | Opinion

Reports of foreign law firms foray into indian legal services would adversely affect country are unfuounded. Rather it provides collage talent pool, new law experts, and broad fee spectrum to legal advice seekers. Furthermore, it allows for the healthy competition among lawyers community and effective legal advisor irrespective of nationality would eventually thrive.

from:  santhosh k
Posted on: Mar 21, 2013 at 23:27 IST

Maybe the Bar Council is afraid that foreign lawyers may do a better /
faster job in the ever stagnant Indian legal system and thereby inhibit
Indian lawyers from bilking the common man?
Competition is the only driving force that will motivate some folks.

from:  Vik Sundaram
Posted on: Mar 21, 2013 at 22:44 IST

They should be welcome with red carpet.Suggest that a Mauritius type
route should be found for them.They will bring greater depth to role of
money in judicial dispensation

from:  Kailash Singh
Posted on: Mar 21, 2013 at 20:05 IST

Lets face the truth! Professions related to law has lost its shine and respect. A profession which was considered as one of the top in the country during the 50's and 60's, has been reduced to the profession of "drop outs". The change is very much visible in grass roots where one can find law college students behaving really violent in public equal to politicians something we don't find among engineering students. This is the result when there is no proper competition and when a profession is practiced by people with low esteem and zero ambition. Even though the author is right in pointing out other countries where "outsiders" are not allowed to practice law, at the same time he "FAILS" to talk about remedial measures required to improve the standard of practicing lawyers and students. We still have lawyers who think of making money by running the case for 20 years. Is this the standard he wants to maintain??

from:  John
Posted on: Mar 21, 2013 at 18:51 IST

The standards of the legal profession in India has fallen precipitously, esp. in TN. Few choose law as their first choice; most students join BL because they didn't get admission elsewhere. The "discipline" they exhibit when they study continues to be exhibited with "embellishments" when they join the Bar (e.g., Feb. 19, 2009). The standards of judges picked from this pool is there for all to see. The irony is that once the Madras High Court was a crown jewel in our legal system. The possibility of getting competent lawyers if foreigners are allowed to practice will fill the big void that exists today. Having said that, this is only one half of the story. If these competent lawyers have to appear before corrupt and incompetent judges, that will not get us anywhere. Can these good foreign lawyers become judges as well? Radical, maybe, but a badly needed step. The blasts in the US that took around the same time as the B'bay blasts were decided by their Courts within a year of that event!

from:  V. Vanamali
Posted on: Mar 21, 2013 at 17:19 IST

The article does not shed any light on the adverse effects on National
interests. While the author may feel differently , there seems to be no
harm in allowing foreign lawyers to practice Indian law. It seems that
it is an attempt by the Society of Indian Law Firms (SILF)to stifle
impending competition.

from:  Rohit Mishra
Posted on: Mar 21, 2013 at 16:35 IST

Very good points. Now if at all the government want to allow foreign lawyers to practice let it be with countries that allow Indian lawyers to practice in their countries.

from:  Ron
Posted on: Mar 21, 2013 at 14:48 IST

Mr. Divan mostly cites prior cases, without presenting a well reasoned
argument. This is typical of the legal profession in India. It betrays a
bookish training with a lack of intellectual rigour and mental energy.
This is why the entrenched lawyers are so afraid of more organized
competition from outside. This article is nothing but a circularly
reasoned protectionist argument.

from:  Amit S
Posted on: Mar 21, 2013 at 14:13 IST

Proprietors of large Indian law firms have effectively organised themselves to do all that it takes to stall the entry of foreign law firms into the country. The vast majority of firms whcih rule the Indian legal services market are family owned and controlled. They will do everything to ensure that their fiefdoms are secured and that they are handed down to their progeny. What foreign law firms will ensure in addition to providing clients with world class services, is for a competncy based system to be established that will provide opprotunities for young lawyers without credit for their lineage. This sadly is objectionable to these large firms and seemingly also to the indivduals who have benefited and continue to benefit from them.

from:  vivek sood
Posted on: Mar 21, 2013 at 13:31 IST

If foreign professionals can work in India in engineering, medical,
business management, software, S & T, etc then what harm will be done if
they are allowed to work in legal and accounting fields. this author's
views are those of the 'closed shop' mentality who try to protect
themselves from serious competition. in these globalised times, this is
unacceptable and unfair to Indian litigants and others who want to use
foreign legal firms.

from:  K.R.Athiyaman
Posted on: Mar 21, 2013 at 12:46 IST

A very lopsided view and that too only to save the lethargy of Indian lawyers/firms. Indians firms cannot compete with foreign firms then why should citizens of the nation should pay for this? Indian lawyers have been lethargic and unprofessional in their approach to this profession and they still use 20th century techniques and methodologies. They are afraid of any real competition. This is same as FDI where middleman who gives low price to farmers and high price to customers to make heavy cash for himself.

from:  brij Singh
Posted on: Mar 21, 2013 at 11:53 IST

The author does everything but state why exactly foreign law firms
/ lawyers should not be permitted to function in India!
What is the case for keeping them away? Are Indian lawyers afraid
of competition?

from:  Nerus
Posted on: Mar 21, 2013 at 11:23 IST

The only sentence in this entire article worth reading is the last one -
"Anil Divan is president, Bar Association of India."

Take home message: The head of a cartel argues for a continuation of
monopoly privileges and a restriction of competition.

from:  Nikhil
Posted on: Mar 21, 2013 at 10:29 IST

How self-serving this is, coming from the member of the Indian Bar Association?

After all, it is fair game for asking FDI in all other fields -- including education, pharmas, hospitals, insurance and banking industries, fashion and cosmetics, even Bollywood.

What is sacrosanct about the India's Legal Service Industries? When is the last time the Indian legal system has helped ordinary citizens? Why is that lakhs of cases are pending in front of India's High courts -- I am not talking about lower courts?

India media -- print media in particular -- wants to protect its turf while pleading for liberalization for everybody else.

FDIs do not want to come in only because the Indian Free Market is a market nor is it free. They see an opportunity to exploit the Indian consumers as the Desk variety has been doing for decades.

Kollengode S Venkataraman

from:  Kollengode S Venkataraman
Posted on: Mar 21, 2013 at 10:07 IST

Here is a question to Mr. Anil Divan. What is the harm to the general public in allowing foreign attorneys to practice in India if they are engaged by private litigants willing to pay for their services out of their own pockets? Why should the man in the street be worried? If there objections to foreigners bringing their expertise or capital to India in every single field, why should foreigners allow our professionals to trade in their countries? Are we not in the 21st Century when our software giants are bringing in billions of US Dollars every year, and medical tourism is extracting more billions from dozens of foreign countries?

from:  Mukundagiri Sadagopan
Posted on: Mar 21, 2013 at 06:02 IST
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