Supreme Court ruling closes Centre’s options to open up legal sector to foreign players

The Supreme Court’s ruling that the ‘practice of law’, as allowed and regulated in India, includes work on both the litigation side and on non-litigation services means that the Centre may not be able to throw open the legal services sector to overseas players.

Both the present regime and the previous United Progressive Alliance government were considering a proposal to permit foreign law firms in the country to practise law in matters not involving litigation and on a reciprocal basis.

In 2011, the Union Law Ministry had informed the Madras High Court that it was holding consultations with the Bar Council of India to consider amending the Advocates’ Act for the purpose.

It was filing an additional affidavit on a plea by an advocate seeking legal action against 30 foreign law firms that were “illegally practising” in the country.

Lawyers concerned

Sections of the legal fraternity have been opposing the entry of foreign firms for nearly two decades.

There was opposition from bar associations in the country after a committee was set up by the Commerce Ministry to consider opening up legal services in 2005. Lawyers were against the country succumbing to international pressure.

Their main objection was that Indian law firms would not be able to compete with foreign firms and that the latter had greater money power and may control the legal market.

Also, they argued that people could practise law only if they were citizens possessing a law degree from a university in the country and enrolled in the Bar Councils.

Non-litigation market

Foreign law firms, backed by their respective governments, have been asking not for the right to practise in Indian courts, but only for access to the non-litigation market, which has seen an exponential increase after globalisation.

In particular, international commercial arbitration has taken off in a big way.

The government had backed plans to allow foreign firms to appear in international commercial arbitration proceedings to represent overseas clients.

Barring them in the arbitration sector would scupper India’s ambition to be a global arbitration hub, and only help Singapore, London or Paris take over these arbitration opportunities.

The court has recognised only limited access to foreign players in arbitration.

It should be limited to matters governed by an international commercial arbitration agreement.

Even then, the code of conduct applicable to the legal profession in India has to be followed, it has said.

The government was hoping the domestic legal services industry would drop its resistance if the opening up was restricted to non-litigation work.

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Printable version | Aug 12, 2022 8:40:02 pm |