India must embrace the benefits of an open legal market

The benefits of allowing foreign lawyers and law firms to open offices and practise foreign law in India far outweigh any concerns around such a development, says Shreyas Jayasimha, co-founder of Aarna Law.

“Opening the doors of the domestic legal market to competition from the international market is unavoidable,” he says, “so there should be a sincere attempt to lower the walls of resistance and embrace the situation in order to derive the utmost benefit from it.”

The Bar Council of India (BCI) announced on 10 March that foreign lawyers and foreign law firms could practise in India in the fields of foreign law, diverse international legal issues in non-litigious matters and in international arbitration matters. The announcement came as the BCI promulgated rules for registering and regulating foreign lawyers and law firms in India.

The development, which the BCI had for many years opposed, came after a decade of negotiations and in the immediate aftermath of a meeting between the BCI, the Law Secretary of India and the Law Society of England and Wales in Delhi as part of a four-day trade visit aligned to the Commonwealth Law Conference in Goa.

Under the new rules, foreign lawyers can continue to stay in India for up to 60 days a year for advisory and advocacy purposes – or permanently if they register with the authorities – advising foreign clients on international law in respect of things like contracts and mergers. They may not appear before any tribunal, regulatory authority or other forum with “trappings of a court”, with one exemption: representation of foreign clients before Indian panels in cases of commercial arbitration.

It is hoped that this will enable the smoother management of international arbitration cases by foreign firms, and the accelerated application of best practices, technology, access to experts, and other benefits.

Shreyas Jayasimha says the reforms should encourage foreign direct investment into India as well as the development of the country as a hub for international commercial arbitration because foreign investors will be pleased that their established legal advisers are on the ground.

“Experience and facts show that multinational corporations and foreign commercial entities, in cases of international commercial arbitration, seldom prefer India as a venue for proceedings,” he says. “This is because they have not been allowed to bring in lawyers and law firms from their own countries to advise them, which has made them prefer venues such as London, Singapore or Paris. The new rules should now encourage India as a preferred venue for such proceedings.”

The BCI has been at pains to stress that implementation of the regulations is based on reciprocity of access, meaning that access would only be granted to lawyers from those countries where Indian lawyers are also permitted to practice.

UK barristers, for example, will have short-term rights to provide advisory services and act as advocates in arbitration representation in international arbitrations, similar to the rights that Indian lawyers have had in the UK for many years.

With India’s legal market estimated to be worth approximately US$4bn, the news has been welcomed by the UK’s business law community and professional bodies.

Chris Parsons, chairman of the India practice at Herbert Smith Freehills, described it as a “hugely exciting development for the Indian legal and business communities”, while Taylor Wessing’s Head of India, Laurence Lieberman, said that being able to give foreign law advice to Indian corporates in their time zone was a “very attractive proposition”.

Nick Peacock, Co-Head of India at Bird & Bird, called the news “a development of real significance”, saying it was “consistent with the desire of the Indian government and judiciary to support India’s growth as an arbitration-friendly jurisdiction [which] can benefit from on-the-ground international participation to improve the ecosystem further”.

Ashok Lalwani, Chair of Baker McKenzie’s Global India Group, described the possibilities as “hugely exciting”, adding that his firm would need to “review the Bar Council’s announcement in detail and consider its implications for [us].”

It remains to be seen whether foreign businesses will keep arbitration proceedings in India if they can be represented by their foreign counsel. But if they do, it is hoped that this could boost confidence in India’s legal system and, by extension, its economy.

The BCI announcement has been cautiously welcomed by Indian business lawyers, with many recognising that foreign firms will still have to use local firms for Indian law transactions, opinions, and litigation matters. Another recognised benefit is that senior, dual-qualified Indian lawyers practising with foreign firms overseas will be able to return to India to lead practice initiatives for their foreign firms.

However, some in the domestic profession are concerned that pricing for legal services in India will have to increase significantly to prevent Indian law firms losing their best talent to foreign firms. They argue that the new rules do not address exclusive tie-ups between foreign firms and Indian firms, and they challenge the assertion that market access is reciprocated given the restrictions on Indian lawyers to advertise or promote their practices.

“Although the BCI has attempted to allay the apprehension of the Indian legal fraternity over the recent opening up of the legal services market to foreign law firms and lawyers,” says Shreyas Jayasimha, “some sections of the legal fraternity have decided to make representation to the BCI demanding a level playing field and the need to address inconsistencies and vagueness in the rules.”

In response, the BCI published various clarifications on 19 March, “to avoid any scope for misapprehension and misinformation” (see box below). It argues that the changes will expose Indian law firms to global best practices, which will enable them to deliver superior legal services.

Jayasimha agrees. “Opening up India’s legal practice to foreign lawyers in foreign law cases will help the domestic legal profession grow, which will benefit Indian lawyers. We believe that India’s domestic profession will thrive in response to the injection of new participants, just as Singapore’s has thrived.”

On 31 March, the Society of Indian Law Firms (SILF) sent a representation to the BCI highlighting its concerns over the initiative. Raising issues of regulation, reciprocity and discrimination, it suggested a phased approach to liberalising India’s legal services market.

“The Society of Indian Law Firms has raised objections regarding the notification to the Bar Council of India and we are likely to witness the matter being taken to the Indian Courts,” says Jayasimha.

BCI Clarification on new rules and regulations

  • Allowing foreign lawyers and law firms to advise their clients only regarding foreign laws and international laws.
  • To render advisory work about those laws only for their foreign clients.
  • To function in non-litigation areas only.
  • Not allowing foreign lawyers and law firms to appear in any Court, Tribunal, Board, Statutory or Regulatory Authority or any forum legally entitled for taking evidence on oath or having trappings of a Court.
  • Entry of foreign lawyers only on reciprocal basis (Permitting lawyers of countries where Indian lawyers are also permitted to practice). Reciprocity is the very essence of the BCI Rules.
  • Foreign lawyers to appear for clients in International Commercial Arbitration.
  • BCI rules allowing foreign lawyers and law firms not to be misconstrued to allow any non-lawyers or BPO, etc. To come to India and start practicing in any sphere if it amounts to practice of law as held in Bar Council of India v. A.K. Balaji, (2018) 5 SCC 379.