Foreign Law Firms Cannot Set up Office In India, Can Advice Clients On ‘Fly in and Fly Out’: Supreme Court [Read Judgment]

Foreign Law Firms

In a significant ruling, the Supreme Court of India has ruled that foreign law firms cannot set up offices in India or practice in Indian Courts.

A two-judge bench comprising of Justice Adarsh Kumar Goel and Justice U.U Lalit has upheld the judgments of Madras and Bombay High Courts.

While upholding the High Courts Judgments, the Court has answered the issued categorically and observed that “practising of law includes not the only appearance in courts but also giving of opinion, drafting of instruments, participation in conferences involving legal discussion. These are parts of non-litigation practice which is part of the practice of law. The 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 the conduct of advocates applies to non-litigation work also. The prohibition applies to any person in India, other than advocate enrolled under the Advocates Act, certainly applies to any foreigner also”.

“Visit of any foreign lawyer on the fly in and fly out basis may amount to the practice of law if it is on regular basis. 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. Bar Council of India or Union of India is at liberty to make appropriate rules in this regard. We may, however, make it clear that the contention that the Advocates Act applies only if a person is practising Indian law cannot be accepted. Conversely, 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 can also be not accepted. 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 the group of individuals or juridical persons”, the bench said.

“It is not possible to hold that there is absolutely no bar to a foreign lawyer for conducting arbitrations 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 the prescribed manner. If the matter is governed by an international commercial arbitration agreement, the 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. It is for the Bar Council of India or Central Government to make a specific provision in this regard if considered appropriate”.

“The BPO companies providing the 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 the 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 the practice of law, the Advocates Act may not apply. This is a matter which may have to be dealt with on the case by case basis having regard to a fact situation” the bench also added.

While upholding the view of the Bombay High Court and Madras High Court in para 63 (i) of the judgment to the effect that foreign law firms/companies or foreign lawyers cannot practice the profession of law in India either in the litigation or in nonlitigation side.

The Court, however, modify the direction of the Madras High Court in Para 63(ii) that there was no bar for the 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 to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. We hold that the expression “fly in and fly out” will only cover a casual visit not amounting to “practice”.

In case of a dispute whether a foreign lawyer was limiting himself to “fly in and fly out” on casual basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues or whether in substance he was doing practice which is prohibited can be determined by the Bar Council of India. However, the Bar Council of India or Union of India will be at liberty to make appropriate Rules in this regard including extending Code of Ethics being applicable even to such cases.

The Court also modified the direction in Para 63 (iii) that foreign lawyers cannot be debarred from coming to India to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.

The two-judge bench held that there is 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, 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. However, they will be governed by the code of conduct applicable to the legal profession in India. Bar Council of India or the Union of India is at liberty to frame rules in this regard.

Concluding the Judgment, the Court also observed that, “the expression “fly in and fly out” will only cover a casual visit not amounting to “practice”. In case of a dispute whether a foreign lawyer was limiting himself to “fly in and fly out” on casual basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues or whether in substance he was doing practice which is prohibited can be determined by the Bar Council of India. However, the Bar Council of India or Union of India will be at liberty to make appropriate Rules in this regard including extending Code of Ethics being applicable even to such cases”.

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