New Delhi: The Supreme Court on Tuesday held that foreign law firms and lawyers cannot practise in the country, even as it allowed “casual visits" by foreign lawyers on a “fly in and fly out" basis for rendering legal advice to clients in India.

In the process, a bench comprising justices Adarsh Kumar Goel and U.U. Lalit modified a Madras high court order permitting foreign lawyers and law firms to come to India on a “fly in and fly out" basis for rendering legal services here on offshore laws and 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 (over) whether a foreign lawyer was limiting himself to ‘fly in and fly out’ on (a) casual basis for the purpose of giving legal advice to 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 (BCI)," the bench ruled.

The court said that the BCI or the central government would be “at liberty to make appropriate rules in this regard including extending the code of ethics being applicable" to foreign lawyers and entities.

Referring to the Advocates Act and the Bar Council Rules, the court said, “We uphold 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 practise profession of law in India, either in the litigation or in non-litigation side."

The court clarified that foreign lawyers could not be barred from coming to India for conducting arbitration proceedings in disputes involving international commercial arbitration, but added that they would be subject to the code of conduct applicable to the legal profession in India. Rules of institutional arbitration will apply to them, the court said.

It also modified provisions of the Advocates Act, 1961, debarring foreign lawyers completely from conducting international commercial arbitration in the country. Similarly, it held that BPO companies providing services like word processing, secretarial support, transcription services, and proof-reading services did not come within the purview of the Advocates Act.

The ruling came on an appeal by the Bar Council of India against the 2012 judgment of the Madras high court.

While the ruling does not permit globalization of the legal sector for now, it shifts the onus on the government to do so. Lalit Bhasin, president of the Society of Indian Law Firms (SILF), a body of corporate law firms, said, “India is committed to open up its services sectors under World Trade Organization (WTO), which includes law firms as well. The government has called up from time to time and we have made our representations as well but now the ball is in the government’s court."

V. Lakshmikumaran, managing partner of Lakshikumaran and Sridharan Attorneys, a law firm specializing in international trade matters, said, “We expect that the Bar Council of India and central government will frame appropriate rules for phased entry of law firms and simultaneously ease the restrictions on domestic law firms to provide a level playing field, so that the ultimate benefit percolates to the clients."

The Madras high court ruling of 2012 had said that there was no bar on foreign lawyers, under Indian laws and regulations, visiting India on a “fly in and fly out" basis for rendering legal advice to their clients in India. It was added that foreign lawyers could not be barred from coming to India for conducting arbitration proceedings in disputes involving international commercial arbitration.

On similar lines, the 2009 ruling of the Bombay high court said that foreign law firms/companies or foreign lawyers could not practise law in India either in the litigation or non-litigation side.

In January, the centre told the apex court that the BCI should consider framing rules to open up the legal sector to foreign lawyers and law firms, failing which it would step in to assist the process.

BCI, on its part, showed reservations to opening up the legal field to foreign players. It maintained that although it is not averse to the idea of practice of law by foreign lawyers and firms, it should be based on reciprocity and regulated by the Advocates Act. The “fly in fly out" policy also should be subject to the Indian regulatory framework.

“The ‘fly-in-fly-out’ policy is in violation of the provisions of the Advocates Act, 1961 which provides that there shall be only one class of persons who can practise law in India, i.e., advocates admitted on the state bar council rolls," senior advocate C.U. Singh, appearing for BCI, had said.

It was also BCI’s contention that arbitration must also be subject to BCI regulations, as it was the top regulating body for legal practices in India.

This was opposed by Dushyant Dave, counsel for London Council of Arbitration, who argued that this would result in being a dampener for commercial arbitration. He quoted examples of Indian lawyers participating in commercial arbitration proceedings in other countries like Singapore and the UK without the need to acquire any special permissions.

Arvind Datar, who represented six UK-based law firms, said that as of today, there was no regulatory mechanism under the Advocates Act, 1961 to allow or disallow foreign lawyers/firms as the trend of cross-border, international commercial law had not been anticipated under it.

A copy of Tuesday’s judgment is awaited.

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