Breaking: Foreign Law Firms Case: Supreme Court upholds ‘fly in fly out’; Foreign Law Firms cannot set up offices

Breaking: Foreign Law Firms Case: Supreme Court upholds ‘fly in fly out’; Foreign Law Firms cannot set up offices

Murali Krishnan

The Supreme Court today upheld the Madras High Court and Bombay High Court judgments, with some modifications.

The judgment was rendered by a Bench of Justices AK Goel and UU Lalit in a batch of appeals filed against judgments of Madras and Bombay High Courts.

The Supreme Court held that the foreign law firms with foreign lawyers cannot set up offices in India. However, upholding the Madras High Court judgment, the court allowed foreign lawyers to ‘fly in fly out’ to advise on foreign law but it should be on a temporary casual basis.

The Court also allowed the foreign lawyers to appear in International Commercial Arbitration subject to relevant institutional rules.

The Court framed five questions and answered the same.

1. Whether the expression ‘practice of profession of law’ includes only litigation practice or non-litigation practice also?

Relying on the judgments in Pravin C. Shah v. K.A. Mohd. Ali and Ex. Capt. Harish Uppal v. Union of India, the Court held that ‘practice of law’ includes litigation as well as non litigation. Thus, it held that practice of law includes not only appearance in courts but also giving of opinion, drafting of instruments, participation in conferences involving legal discussion.

2. Whether such practice by foreign law firms or foreign lawyers is permissible without fulfilling the requirements of Advocates Act and the Bar Council of India Rules?

The Court held that the prohibition applicable to any person in India, other than advocate enrolled under the Advocates Act, certainly applies to any foreigner also. Thus, foreign lawyers or law firms cannot practice in India without fulfilling the requirements of Advocates Act and the Bar Council of India Rules.

“Scheme in Chapter-IV of the Advocates Act makes it clear that advocates enrolled with the Bar Council alone are entitled to practice law, except as otherwise provided in any other law. All others can appear only with the permission of the court, authority or person before whom the proceedings are pending. Regulatory mechanism for conduct of advocates applies to non-litigation work also. The prohibition applicable to any person in India, other than advocate enrolled under the Advocates Act, certainly applies to any foreigner also.”

3. Whether there is a bar for the said law firms or lawyers to visit India on ‘fly in and fly out’ basis for giving legal advice regarding foreign law on diverse international legal issues?

The Court held that visit of any foreign lawyer on fly in and fly out basis may amount to practice of law if it is on regular basis. However, a casual visit for giving advice may not be covered by the expression ‘practice’.

Whether a particular visit is casual or frequent so as to amount to practice is a question of fact to be determined from situation to situation, the Court ruled. Bar Council of India or Union of India are at liberty to make appropriate rules in this regard. The Court also turned down the plea that a foreign lawyer is entitled to practice foreign law in India without subjecting himself to the regulatory mechanism of the Bar Council of India Rules. It also held that the Advocates Act applies equally to firms and individuals.

“We do not find any merit in the contention that the Advocates Act does not deal with companies or firms and only individuals. If prohibition applies to an individual, it equally applies to group of individuals or juridical persons.”

4. Whether there is no bar to foreign law firms and lawyers from conducting arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration?

This was an all-important question around which many of the petitioners had argued at length.

Answering this issue, the Court held that there is no absolute right available to a foreign lawyer to conduct arbitration in India. If the matter is governed by particular rules of an institution or if the matter otherwise falls under Section 32 or 33, there is no bar to conduct such proceedings in prescribed manner. If the matter is governed by an international commercial arbitration agreement, conduct of proceedings may fall under Section 32 or 33 read with the provisions of the Arbitration Act.

Even in such cases, Code of Conduct, if any, applicable to the legal profession in India has to be followed. The Court also left it to the Bar Council of India or Central Government to make a specific provision in this regard.

5. The fifth question which the Court considered was whether BPO companies providing integrated services are covered by the Advocates Act or the Bar Council of India rules?

The Court ruled that BPO companies providing range of customized and integrated services and functions to its customers may not violate the provisions of the Advocates Act, only if the activities in pith and substance do not amount to practice of law.

“The manner in which they are styled may not be conclusive. As already explained, if their services do not directly or indirectly amount to practice of law, the Advocates Act may not apply. This is a matter which may have to be dealt with on case to case basis having regard to a fact situation.”

The debate over foreign law firms entering India, had reached the Supreme Court in July 2012 when the Bar Council of India filed an appeal against the Madras High Court judgment.

The Madras High Court, in its judgment dated February 21, 2012, (AK Balaji vs Government of India and others) had held that 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 (Advocates Act) and the Bar Council of India Rules.

However, it had also held that there is no bar either in the Advocates Act or the BCI Rules 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 Court had also held that foreign lawyers cannot be debarred from coming to India and conducting arbitration proceedings in disputes involving international commercial arbitration.

In 2009, the Bombay High Court had held that the RBI was not justified in allowing foreign law firms (in this case White & Case, Chadbourne & Parke, and Ashurst) to open liaison offices in India. It had also held that these foreign law firms could carry on their liaison activities in India only on being enrolled as advocates under the Advocates Act, 1961 and further held that the expression “to practice the profession of law” is wide enough to cover persons practicing in litigious matters as well as persons practicing in non-litigious matters in India.

The Bombay high Court judgment remained unchallenged for six years, until Global Indian Lawyers Association, a society formed with the intention of promoting the global growth of the legal fraternity, moved the Supreme Court in 2015 challenging the same.

The apex court granted leave both the appeals – one filed by the BCI, and the other by the Global Indian Lawyers.

Both these matters were then heard together. The case came up for final disposal after the Central government filed an application for early hearing of the matter.

The following was the stand taken by different parties to the case.

Bar Council of India

Senior Advocate CU Singh appeared for the BCI. It was his submission that the Bombay High Court judgment laid down correct law and that the Madras High Court decision insofar as it permitted the two exceptions, was wrong.

It was BCI’s argument that Section 29 of the advocates Act barred ‘fly in fly out’. Exceptions can be made under Section 33 but there has to be a law for the same positively permitting a person, other than an advocate under the Act to practice.

“Fly in and fly out goes against 29 of the Act. But there is provision under the Act for making exception in particular cases in particular courts. Section 33 allows that.  

Section 33 is an exception to Section 29. However, for such an exception, there should be a law positively permitting a person, other than an advocate under the Act, to practice”, submitted Singh.

Central government

Additional Solicitor General Maninder Singh representing the Central government had submitted that that rules need to be framed to deal with the issue and urged BCI to do the same. It was also the Centre’s stand that he would support the stand taken by the BCI till Rules are framed to govern the field.

“I am supporting the BCI till Rules are framed. Till then, the Madras High Court judgment should not be interpreted in a manner which widens the scope of the judgment”, Singh had submitted.

UK Law Firms

Norton Rose is one of the Foreign Law Firms mentioned in the AK Balaji vs. Government of India
Norton Rose is one of the Foreign Law Firms mentioned in the AK Balaji vs. Government of India

Senior Advocate Arvind Datar appearing for six law firm had prayed that the Court should uphold the judgment of the Madras High Court. Datar along with Advocate Rishi Kumar appeared for Clifford Chance LLP, Linklaters LLP, Bird & Bird LLP, Clyde & Co, Ashurst LLP and Eversheds LLP.

Datar’s submissions revolved around the scope of Section 30 and 33 of the Advocates Act, particularly the ambit of the term “practice’’ with special emphasis on International Commercial Arbitration.

It was his case that ‘fly in fly out’ did not fall within the scope of the term practice.

“My argument is “fly in and fly out” will not amount to practice. International Commercial arbitration involves a party who is not Indian and law which may be foreign law. Indian lawyers and retired judge regularly go abroad to Dubai, UK etc to appear for arbitrations. Do they enrol in those jurisdictions? No”

His submission was hinged on the argument that only litigation work or court practice of a lawyer is regulated in India by the Advocates Act.

“As of now, there is no regulatory mechanism for non-litigation work. So, opinions given by CAs, former judges etc. do not fall within ‘practice” of law.”

Enrolment is necessary only for pleading or acting. So, a non-lawyer can give legal opinion. Section 30 is only with respect to court practice. Practice of profession of law means practice in courts.

The interpretation of Section 30 cannot be that nobody can touch anything related to law unless he is lawyer”.

Global Indian Lawyers Association

Advocate Nakul Dewan appearing for Global Indian Lawyers Association had argued that the Advocates Act does not apply to law firms but only applies to individual lawyers. Hence, it was his case that the Bombay High Court judgment, which barred foreign law firms under the Advocates Act was wrong.

Dewan had further contended that Advocates Act does not restrict Indian qualified lawyers from acquiring dual qualification. Dewan also submitted that practice of law under Advocates Act means practice of Indian law.

On the question of how a partnership form can be allowed to set up office in India when individual foreign lawyers are barred, Dewan had submitted that if the restriction mandated by Bombay High Court judgment goes, then the existing structures would play out to determine the question.

“A foreign law firm might then be able to open an office in India with Indian qualified lawyers. However, this judgment has stopped foreign law firms from setting up the office itself”.

It was also Dewan’s submission that foreign lawyers cannot advice on Indian law in India. They can only advice on foreign law of the jurisdiction where he/ she is enrolled.

US based law firms

Senior Advocate Sajan Poovayya appearing for US-based law firms White & Case and Covington & Burling had argued that the Madras High Court judgment has laid down correct law with respect to permission granted for fly in fly out. Interestingly, he had also submitted that the law laid down by Bombay High Court was not wrong and that here was no incongruence between the judgments of the Madras High Court and Bombay High Court.

Poovayya had given illustrations of fly in fly out and how the same was necessary.

“If TATA motors wants to launch a product in say New York. It would require advice on New York Law. TATA would prefer flying in a New York lawyer to India than their whole Board and officials going to New York.”

Poovayya had also argued that fly in fly out would be on mandate of the client and the test for ‘fly in fly out’ would be permanence of establishment.

London Court of International Arbitration

Senior Advocate Dushyant Dave assisted the court with respect to the necessity of allowing foreign lawyer for International Commercial Arbitration.

“The simple reason why there can be no prohibition on International Commercial Arbitration is because it is voluntary mechanism and State has minimal role. A party can engage anybody to plead his case and that person need not be a lawyer. The person representing the party before the arbitral tribunal is called representative and not lawyer.

Further, it was Dave’s contention that since Arbitral tribunal was not bound by the Code of Civil Procedure or Indian Evidence Act, there cannot be prohibitions on such a voluntary mechanism.

The Court had reserved its verdict in the matter on February 2.

You can read Day 1Day 2, Day 3 and Day 4 arguments here.

Read the judgment below. 

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