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SC concludes hearing of foreign law firms entry case, reserves judgment

The Supreme Court concluded the four day hearing in the matter concerning the entry of foreign law firms in India. The hearing commenced on 10th January, and continued on 29th January and 31st January, and concluded on 1st February. The matter was heard by the bench comprising of Justices Adarsh Kumar Goel and U U Lalit.

Background:

The case arose as a set of matters, one of which was an appeal against the judgment of the Madras High Court in A.K.Balaji v. Bar Council of India. Balaji was a Writ Petition filed for the issuance of a writ of mandamus to forbear foreign lawyers and foreign law firms from having any legal practice within the territory of India. The main conclusions arrived at by the Madras High Court in its judgment were:

(i) Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfil the requirement of the Advocates Act, 1961 and the Bar Council of India Rules.

(ii) However, there is no bar either in the Act or the Rules for the 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 advise to their clients in India regarding foreign law or their own system of law and on diverse international legal issues.

(iii) 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 relating to international commercial arbitration.

(iv) The B.P.O. Companies providing wide range of customised 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 Advocates Act, 1961 or the Bar Council of India Rules. However, in the event of any complaint made against these B.P.O. Companies violating the provisions of the Act, the Bar Council of India may take appropriate action against such erring companies.”

The main challenge against the judgment was with reference to conclusions (ii) and (iii) above.

The Bombay High Court’s judgment in Lawyers Collective v. BCI and Ors. was also under challenge in one of the matters.

A brief account of the arguments made over the four days are covered below:

Day 1:

Senior Counsel C.U.Singh, appearing on behalf of the Bar Council of India, referred to various provisions of the Advocates Act, 1961 and contended that permitting foreign advocates to provide legal advice on a ‘fly-in-fly-out’ basis was violative of Section 29 of the Act which provides that there shall be only one class of persons who can practice law in India, viz., advocates admitted on the State Bar Council rolls. He also referred to BCI Rules and the American case, NY Lawyers Country Assn (Roel) in support of his contentions.

Singh concluded his stand by saying that “the BCI is not averse to practice of law by foreign lawyers and firms, but the same must be regulated and fall within the four corners of the Advocates’ Act. Even if such practice is on a temporary basis, it must be subject to our regulatory regime.”

Senior Counsel Dushyant Dave appeared on behalf of the London Court of International Arbitration (LCIA). He argued that Indian lawyers participated in commercial arbitration proceedings in Singapore, London etc without the need to acquire any special permissions. If BCI regulated the entry of foreign lawyers in India, Indian lawyers would be similarly affected in other countries.

Additional Solicitor General Maninder Singh asked the BCI to frame rules with regard to the practice of law in India by foreign lawyers and law firms, failing which the Central Government would frame the rules under Section 49A of the Advocates Act. The ASG contended that though Section 24(1)(a) of the Act provides that a person must be a citizen of India to practice as an “advocate”, it does not restrict persons who are not citizens from practising.

Day 2:

On the second day of the hearing, Senior Counsel Arvind P. Datar appearing on behalf of six law firms from the United Kingdom (Clifford Chance, Linklaters, Bird & Bird, Clyde & Co, Ashurst and Evershed) submitted that the Madras High Court’s judgment should be upheld as far as the conclusion regarding the absence of a bar to rendering ‘fly-in-fly-out’ services on a temporaray basis was concerned. Datar told the Bench that at present there was no regulatory mechanism for foreign lawyers engaging in international commercial arbitration and that even Article 220 of the Constitution did not require a retired High Court judge to possess a licence to provide advisory services.

Datar then referred to the provisions of the Arbitration and Conciliation Act, 1996. He referred to cases of international commercial arbitration, including cases where Indian law, procedural or substantive, is not applicable. In response to a query from the bench, he said that in cases of international commercial arbitration, a party may choose an foreign lawyer, and in such a case, it would be “shocking internationally” for the arbitrator to not allow a foreign lawyer.

Datar submitted that the bench would have to decide two points. One was to determine the ambit of the phrase “to practice the profession of law” in Section 29 of the Advocates Act and the second was to interpret the phrase “entitled as of right to practice” in Section 30 of the same Act. He submitted that Section 30 accords a ‘privilege’ to advocates which could not be interpreted as a disability for persons who are not enrolled as advocates.

The discussion then moved to the interpretation of the term ‘practice’, and whether the same would include ‘fly-in and fly-out basis’. Reference was made to the Supreme Court’s judgments in Aswini Kumar Ghosh & Anr. v. Arabinda Bose & Anr., R.K.Anand v. Registrar, Delhi High Court and Pravin C Shah v. KA Mohd Ali.

Following this, Datar moved to the definitions of ‘advocate’, ‘roll’ and ‘state roll’ under Section 2 of the Advocates Act. He referred to Section 29 and 33. The Bench then posed a query as to whether appearance before an arbitral tribunal will be considered ‘practice’. Datar said that it would be, as Sections 29, 30 and 33 are concerned with courts and tribunals and would include arbitral tribunals. However, he submitted that the same would not mean that persons who are not enrolled as advocates will be excluded.

Datar then read out relevant portions of the impugned judgment of the Madras High Court which referred to the judgment of the Bombay High Court in Lawyers Collective v. BCI and Ors. The Court then enquired whether an Indian lawyer can practice Indian law in America. Datar replied that one could, though not in courts.

Day 3:

On Day 3, Advocate Nakul Dewan made his submissions, appearing on behalf of the Global Indian Lawyers Association. He informed the Court that the Association was challenging the 2009 Bombay High Court judgment in Lawyers Collective v. BCI and Ors., to the extent that it forbade foreign law firms from establishing liaison offices in India, unless enrolled under the Advocates Act.

Dewan argued that the Advocates Act did not apply to law firms but only to individual lawyers. He also contended that the Advocates Act did not prohibit an Indian qualified lawyer from acquiring dual qualification. His next submission was that the provision of reciprocity under Sections 24 and 47 of the Advocates Act was based only on the ground of citizenship and lastly, that “to practice the profession of law” under Sections 29, 30 and 33 of the Advocates Act is only with regard to Indian law.

The Bench questioned Dewan as to how a group of individuals, i.e., a firm, may be allowed to practice, when individuals weren’t. Dewan said that the Bombay High Court judgment has stopped foreign law firms from setting up offices in India, even if it was with Indian qualified lawyers.

Day 4:

Nakul Dewan continued his submisions on the fourth day. The Bench enquired whether an Indian Advocate could partner with an foreign lawyer. Dewan referred to the BCI rules which reads, “An advocate shall not enter into a partnership or any other arrangement for sharing remuneration with any person or legal practitioner who is not an advocate.”

The Bench asked how cases of professional misconduct against foreign lawyers could be handled. Dewan responded that Section 36 of the Advocates Act gives BCI the power to discipline lawyers whose name is not entered in any state roll. Dewan concluded his arguments by stating that, under Section 24 and 47 of the Advocates Act, a foreign lawyer cannot be prohibited from enrolling in India if a qualified Indian lawyer is allowed to practice in the concerned country, on the principle of reciprocity.

Senior Counsel Sajan Poovayya then made his submissions on behalf of US based law firms White & Case and Covington & Burling. He submitted that there was no incongruity between the judgments of the Madras High Court and the Bombay High Court. He submitted that foreign lawyers coming to India to advise on foreign law are not barred.

He submitted that the ‘fly-in-and-fly-out’ service applies only to advice. Foreign lawyers cannot appear before a court in India, except with the leave of the Court as conceived by Section 32 of the Advocates Act. The Bench asked him what was the difference between ‘practice’ and ‘fly in and fly out’, whether a person coming every week would be considered to be ‘fly in and fly out’. Poovayya responded that if a foreign lawyer has no permanent office in India and works on a mandate from a hotel room, he will be considered as ‘fly-in-and-fly-out’.

Poovayya contended that in international commercial arbitrations, the arbitrator could even be an engineer. There is no restriction on non-lawyers to appear before arbitral tribunals. Therefore, foreign lawyers should not be restricted from appearing in international commercial arbitrations.

Arvind Datar then continued his submissions. He contended that when the Advocates Act was enacted, the only tribunals which existed were Income Tax and Sales Tribunals and therefore, the word ‘tribunal’ in Section 30 would mean a judicial tribunal and not a private tribunal.

Senior counsel Guru Krishnakumar appeared for Freehills, Australia and Norton Rose. He contended that with changing times, changed scenario will have to be considered. He submitted that the madras High Court took these things into consideration when it allowed fly-in-and-fly-out.

Dushyant Dave was representing LCIA in a case which was filed challenging the use of the word ‘Court’ in LCIA’s name. However, the matter had become infructuous as the LCIA had ceased its India operations. He however submitted his contentions in favour of allowing foreign lawyers in international commercial arbitrations. He said that a party could engage anyone to plead his case, not necessarily a lawyer. He contended that it was a voluntary mechanism and was not bound by the CPC or the Evidence Act. However, in cases of professional misconduct, the Bar Council of the concerned country will take action against the erring lawyer.

C.U.Singh responded to the arguments made by the foreign law firms. The Bench asked him how retired High Court and Supreme Court judges could go for arbitrations and provide legal opinions, if only lawyers could practice. Singh submitted that they are members of the legal fraternity and can revive their Sanad at any time.

Singh then referred to the differences in the regulatory systems of different countries. In India, solicitation and advertisement is prohibited whereas the same is not the case in other countries like the USA. In fact, in the United Kingdom, Scottish and Irish lawyers are required to take permission to practice in England and Wales.

He submitted that with the coming of international CA firms gradually disappeared and a similar state will be reached by Indian law firms.

The Court sat until 5.30 pm yesterday to conclude the hearing. The Bench granted one week to the parties to file supplementary written submissions and reserved its judgment.

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