Foreign law firm remain prohibited from setting up permanent offices in India.
For years now India has been talking about finally opening up its legal market to foreign law firms. On 13 March the Supreme Court of India ruled that this would still not be allowed. Foreign law firms however will be allowed to give legal advice to their clients on foreign laws. The Supreme Court also ruled that Business Process Outsourcing companies working on legal services can operate in India as they don't have to operate under the ambit of the Advocates Act. And it also ruled that foreign law firms can fly in and fly out of the country to give legal advice, but they can't be allowed to set up permanent offices in the country.
The Indian judiciary has been grappling with the question of whether to permit foreign lawyers to practice in India for more than two decades. The original dispute started more than 20 years ago when licences were granted to foreign firms such as White & Case and Ashurst to set up offices in India. At some point the Bombay High Court ruled that foreign law firm should not set up offices. However the question as to whether foreign lawyers practicing foreign law in India without a physical office was unresolved. In a now famous case, petitioner, AK Balaji had sought a direction to the Union of India, the RBI, the BCI and the Bar Council of Tamil Nadu to take action against 32 foreign law firms, allegedly practicing illegally in India. In 2012 the Madras High Court ruled in favor of the ‘fly-in, fly-out’ arrangement for foreign lawyers to visit clients in India in 2012 which was reaffirmed by the Supreme Court. This was appealed by the Bar Council of India. Ashurst, Bird & Bird, Clifford Chance, Herbert Smith Freehills, Linklaters, Norton Rose Fulbright, among others gave evidence at the time.
Interestingly, last year in January, the ministry of commerce and industry on January 3 amended a rule allowing foreign law firms to set up offices and advise clients from Indian Special Economic Zones (SEZs). Before that, India did not permit multinational law firms to operate in the country. Indian law firms were also not allowed to operate from any of the SEZs. Last year's amendment however was made by the commerce ministry, while whether to allow a foreign law firm in India is a purview of ministry of law and justice.
To be continued...