Thursday, February 23, 2012

Foreign Law Firms

The order dated February 21, 2012 issued by a Division Bench of the Madras High Court, in the case of A.K. Balaji v. Government of India, spells out what foreign law firms can and cannot do in India. The court stated the issue in paragraph 44 of the order:

“[W]hether a foreign law firm, without establishing any liaison office in India visiting India for the purpose of offering legal advice to their clients in India on foreign law, is prohibited under the provisions of the Advocates Act. In other words, the question here is, whether a foreign lawyer visiting India for a temporary period to advise his client on foreign law can be barred under the provisions of the Advocates Act.” (emphasis supplied) In a nutshell, the court answered the question in the negative. In other words, foreign law firms can: (1) send their lawyers to India for temporary periods of time, (2) to advise their clients on foreign law, and (3) without establishing a liaison office in India.

What is permitted?
(1) Advice on foreign law/diverse international legal issues, while temporarily in India: “In the light of the scheme of the Act, if a lawyer from a foreign law firm visits India to advice (sic) his client on matters relating to the law which is applicable to their country, for which purpose he ‘flies in and flies out’ of India, there could not be a bar for such services rendered by such foreign law firm/foreign lawyer.” [paragraph 59] The advice could pertain to “foreign law” or to “diverse international legal issues” [paragraph 63(ii)]. This includes taking part in negotiations and settling up documents in India [paragraph 51]. “The corollary would be that such foreign law firm shall not be entitled to do any form of practice of Indian Law either directly or indirectly.” [paragraph 60].

(2) Conducting International Commercial Arbitrations: “[F]oreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.” [paragraph 51, paragraph 63(iii)]

(3) Miscellaneous: “Some of the companies have been carrying on consultancy/support services in the field of protection and management of intellectual, business and industrial proprietary rights, carrying out market surveys and market research and publication of reports, journals, etc. without rendering any legal service, including advice in the form of opinion, but they do not appear before any courts or tribunals anywhere in India. Such activities cannot at all be considered as practising law in India.” (emphasis supplied) [paragraph 51]

In short, it appears, for example, that foreign transactional lawyers can visit India temporarily and negotiate/draft share purchase agreements, or work as international counsel for securities offerings.
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