By Justice Bhanwar Singh and Dr NK Bahl
In a move of far-reaching consequences for Indian lawyers, the Bar Council of India (BCI) allowed foreign lawyers and law firms to practice in India. Though they cannot appear in courts, they can advise clients on foreign law and do corporate transactions. Before discussing the pros and cons of this move, it is important to understand the legal scenario in India first.
Practicing law, no doubt, is a noble, dignified and aristocratic profession. Clearing the All India Bar Examination conducted by BCI is also essential for practicing law in India. Every advocate whose name is entered in the state roll shall be entitled to practice in all courts, including the Supreme Court. However, any court or authority may permit any person not enrolled as an advocate to appear before him in any particular case. During the British regime, even non-law graduates were authorised to work as vakils in district courts.
After registration with any state Bar Council, an advocate can start practice in that state, but he has to clear the All India Bar Examination within two years from the date of registration at the state Bar Council.
But, in a departure from all this, the Supreme Court, in BCI vs A.K. Balaji and Others, held that foreign law firms and foreign lawyers can practise in India, but cannot appear before courts, tribunals or other statutory or regulatory authorities here. They also cannot set up offices and practice in India. However, they can give advice to Indian clients on “fly in and fly out” on a casual and temporary basis. For this too, they have to observe a code of conduct.
It was also held that “practice” of law includes litigation as well as non-litigation and practice by foreign law firms and foreign lawyers is not permissible without fulfilling the requirements of the Advocates Act, 1961, and Bar Council of India Rules. It was also held that BPO companies provide a wide range of customised and integrated services and functions to their customers like word processing, secretarial support, transcription services, proof reading services, travel desk support services, etc. If, in pith and substance, these services amount to “practice”, the provisions of the Advocates Act, 1961, will apply and foreign firms and lawyers will not be allowed to do so. This will be decided on a case to case basis.
It was also held by the Supreme Court that there was no absolute right of the foreign lawyer to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration. If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, 1996, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of international commercial arbitration in view of Sections 32 and 33 of the Advocates Act, 1961. However, they will be governed by the code of conduct applicable to the legal profession in India. The Bar Council of India or the Union of India is at liberty to frame rules in this respect.
Recently, the Bar Council of India decided to allow foreign lawyers and firms to practice in India in the field of foreign laws and international issues in non-litigious matters. Thus, the gates for overseas players will be open to practice in India. This is being done on a reciprocal basis. The registration of a foreign lawyer or firm shall be done for five years, which can be renewed within six months before expiry of the validity period of five years.
The Bar Council of India Rules for Registration and Regulation of Foreign lawyers and Foreign Law Firms in India, 2022, were notified on March 10, 2023. These rules, as a subordinate legislation, have the sanctity of law. These rules are framed under Section 49 of the Advocates Act, 1961, which is the principal legislation.
Once foreign lawyers and firms are allowed to enter, through the “power of attorney” they can plead and argue in any court in India on behalf of the person giving the power of attorney. Similarly, a “brief holder” on behalf of an advocate can argue in any court of law and foreigners will not be an exception to it. If a foreigner himself is involved in any case in India, he can plead and argue in person with the permission of the court without engaging an Indian lawyer. It is an open secret that British lawyers whose mother tongue is English will overawe most Indian lawyers working in the Supreme Court and High Courts with great aplomb.
While litigation officially starts at the doorstep of courts, it is always triggered in the office of an advocate or corporate legal firm where the foundation of the case is laid by drafting. The first stage of litigation begins when a lawyer sends advance notice to the opposite party. For example, two months’ advance notice has to be given to the central or state government or a public officer under Section 80 of the Code of Civil Procedure, 1908, or a notice has to be given to a tenant terminating his tenancy under Section 106 of the Transfer of Property Act, 1882, before filing of a suit for rent and ejection in a competent court of law.
This preliminary work can be done by anyone, including a foreign lawyer. This is at the pre-litigation stage where appearance in the court is not immediately required. This is the preparatory stage which entails fees to be paid. Interestingly, disputes between parties are often settled in pre-litigation meetings.
The drafting of plaints, written statements, affidavits, various deeds such as sale deed, gift deed, lease deeds, acquisition deeds, intellectual property rights sharing deeds between author and publisher, arbitration agreements, amalgamation documents of companies, insolvency petitions, contracts between various contractors, banking documents for mortgage in granting loans, etc., do not require appearance in courts. They can be prepared by foreign lawyers or firms, giving direct competition to practicing lawyers in India and thereby jeopardising their interests.
Similarly, if anyone wants to file his return under RERA, GST or Income Tax Act, 1961, he can get it prepared through a foreign lawyer or firm and file it himself. This too will affect the practice of Indian lawyers.
A foreign lawyer or legal firm may engage an Indian lawyer to argue in Indian courts, while the rest of the work can be done by foreigners. It will be legal, but is it a step in the right direction vis-à-vis the decision of the Bar Council of India? Indeed, it is a loophole and foreign advocates can take advantage of it, thereby exploiting the average class of lawyers in India.
So how can this be checked when a foreign lawyer or firm is working within BCI rules? Who can stop foreign lawyers from providing legal advice to clients by charging hefty fees? In any case, this arrangement will adversely affect the income of Indian lawyers.
There are other loopholes. How is it possible to check whether foreign lawyers or firms are practicing in foreign law or local Indian law unofficially? Will their income be checked? We do not have any mechanism which can work as a cagey controller looking into the functioning of foreign lawyers and firms. In order to have a foolproof system, access to their bank accounts and time sheet, an ombudsman will be required. The power to make inquiries and surprise inspections of their offices is also to be regulated by law, which is yet to be enacted by Parliament. The Bar Council of India and government have to take steps in this direction.
The Bar Council of India has permitted the entry of foreign lawyers and law firms in a restricted, controlled and regulated manner with a rider of reciprocity. Lawyers groomed in India will be at liberty to move to the reciprocal countries for practicing in foreign lands. This will require a mutual international treaty between such countries.
It is felt that more and more Indians will opt to go abroad for better earnings, facilities, feasibility, identity, opportunities and better law and order than foreigners coming to India. Will it give a boost to domestic internships and consequently, lead to opportunities for job placements? Will this not amount to brain drain from our country?
—Justice Bhanwar Singh is a former judge of the Allahabad High Court and is presently professor of law at DME. Professor NK Bahl is former District Judge & Sessions Judge, UP, and teaching law at JEMTEC School of Law, Greater Noida