Foreign law firms should be allowed to practise in India

Far away from Tilak Marg, London’s historical legal centre on Chancery Lane played host as nine UK-based practices, were set to appear before the Supreme Court to argue in favour of the ‘fly-in and fly-out’ rules notarised by the Madras High Court in 2012.

As per the ruling, foreign law firms and solicitors could enter India to practice in the country on a temporary case by case basis otherwise known as ‘fly-in and fly-out’. International lawyers were permitted to act in commercial arbitrations and to have an involvement in legal process outsourcing companies.

However, the Madras High Court’s judgment was successfully challenged by the Bar Council of India (BCI) in the Supreme Court as a result of its recent decision in March 2018 against foreign law firms. The consolation for foreign lawyers remains the same as the current ‘fly-in and fly-out’ rules continue to apply, whereby international lawyers can enter the country to advise Indian clients on international cases.

Arguments for the entry of foreign firms into India would inject a boost to the country’s legal system, especially from an operational point of view. An influx of international best practice would improve standards, and with India increasingly looking to attract global multi-national organisations to operate in its lands, an up to date robust legal system would offer support systems and encourage confidence for international businesses to enter the country.

The legal sector world over has witnessed profound change especially in countries such as the UK, US and elsewhere.  In the US for instance, none of the states requires American citizenship as a necessity to practice law. Similarly, anyone can practice law in England and Wales provided they attain the required local qualifications. This is the primary reason why the US and the UK have attracted the world’s best to practice in their respective countries.  

Opening up the legal sector would mean creating a new avenue of opportunity for the industry in general - with an influx of cross-national interaction. Malaysia liberalised its legal market in 2014, and despite fears in India,  foreign law firms did not flood the market. Malaysia allowed foreign lawyers to practice in its country, either as part of a Qualified Foreign Law Firm (QFLF), International Partnership (IP) or Registration as a Foreign Lawyer. The country continues to allow a ‘fly-in and fly-out’ program, permitting a foreign lawyer to advise and consult a client for a window of 60 calendar days per year.

India in particular will stand to benefit by gaining a much-needed revitalisation of its aging legal market. However, the recent Supreme Court ruling appears to satisfy the sizeable Indian law firms who feared that they would lose their monopoly in the legal market. The judgment would work in favour of these large Indian firms. However, the smaller law firms would be missing out on a potential opportunity for diversification of the Indian legal market that the international firms stand to offer. Boutique firms in the global legal sector are seeing a resurgence in boutique practices, including within India. The operational costs for boutique firms are far smaller, and operationally they have fewer conflicts.

India also aspires to set up a world-class international arbitration centre. For this to materialise and attract foreign cases, the dispute resolution mechanism in the country needs to improve to meet the high standards and expectations.

While the fly-in and fly-out rules restrict the access of foreign law firms, which may especially be preferred by Multi-National Corporations (MNCs), these foreign firms may seek to include offshore mediation as part of their contracts. The prospects of offshore arbitrations in foreign countries such as Singapore and London would also work well in the favour of said MNCs, as they stand to benefit from faster case process periods in comparison with India whereby case settlements are notoriously dragged on for years or even decades. There are also over 30 million pending cases in Indian courts, with these numbers looking as if they will continue to mount pressure on an ageing Indian legal system.   

All of these facts present a valid argument for MNCs and other organisations to seek foreign firms and engage their dispute resolutions at international courts. Therefore it would be inevitable that companies look to international routes, through these legal loopholes, due to the system in India failing to provide sufficient support.

Therefore there must be a better way to protect local firms from international competition, however entirely shutting down the country to foreign partners is not one of them.

A reciprocal arrangement could be a logical arrangement, and if India negotiates a cross-country partnership, it would mean a closer synergy between two legal systems. This would offer the best of both worlds as well as ensuring equal opportunities and avenues for Indian lawyers seeking to expand their jurisdictions. For example, the UK would be a great place to start as both the countries share a common law.  The BCI should therefore seek such a mutually beneficial arrangement as oppose to shutting down the country’s market.       

The author is Managing Partner of Zaiwalla & Co LLP an international law firm. Views expressed are personal.