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Why India’s ‘fly-in, fly-out’ judgment leaves much to be desired

Samridh Bhardwaj, managing associate in Remfry & Sagar’s corporate team, breaks down the Supreme Court of India’s latest much-talked-about decision

Why is this latest Supreme Court ruling so important for the legal market?

Globalisation has necessitated cross-border transactions with diverse commercial objectives. Multinational commerce requires private parties to deliberate on cross-jurisdictional legal issues which in turn require reliance on legal service providers from across the world. As a result, many foreign as well as Indian parties have time and again sought counsel from foreign lawyers in relation to legal issues pertaining to foreign and Indian law (and overlapping aspects thereof). Whilst this arrangement, on the face of it, seems perfectly reasonable, limitations emanating from Indian statutes (governing the practice of law) place certain limitations on such cross border dispensation of services.

Much has been said about section 29 of the Advocates Act 1961? What is it and why is it often described as ‘sacrosanct’?

Section 29 prohibits any person other than an ‘advocate’ from engaging in the ‘practise of the profession of law’. An advocate as defined under the said law means any person who has been enrolled with the State Bar Council or the Bar Council of India. Enrolment necessitates that the advocate has met certain criteria including Indian citizenship and educational qualifications, e.g. completing legal academics from an Indian institution. While this provision per se does not prohibit the invocation of services of a foreign lawyer/firm, its obvious consequences (exclusion of foreign lawyers) have been the subject matter of public debate and consequent judicial scrutiny for a considerable amount of time.

What did the first High Court decision say?

The first decision in this context was pronounced by the Bombay High Court in Lawyers Collective v Bar Council of India in 2010, wherein the court interpreted Section 29 to mean that it was the intent of lawmakers to prohibit foreign lawyers and law firms from engaging in both litigious and non-litigious matters. In a nutshell, the court interpreted the ‘practice of the profession of law’ to include both litigious and non-litigious matters insofar as foreign lawyers/firms were not ‘advocates’ as per the Act (Indian citizens with Indian legal degrees).

Many international law firms with interest in the Indian market were of the belief that while arriving at the aforesaid decision, the Bombay High Court had failed to take cognisance of the apparent needs of the industry. But that wasn’t the end of the matter. There were still unresolved issues that were considered by the High Court of Madras.

The fact that foreign lawyers often advised Indian clients on matters relating to foreign law while following a ‘fly-in, fly-out’ model (i.e. coming to India on a visitor’s visa and rendering advice on matters) was not yet adjudicated. Representation in international commercial arbitration matters was in a flux too. Furthermore, with several foreign legal process outsourcing (LPO) firms having set up offices in India, the need for interpretation was imminent. In A. K. Balaji v Government of India, a writ petition (constitutional challenge) was filed by a local attorney before the High Court of Madras seeking to prevent foreign players from rendering legal services in India. Herein, the Madras High Court – partially – held in favour of the respondents (foreign law firms) and stated that there was no bar to the ‘fly-in, fly-out’ practice or the engagement of foreign lawyers as counsels in international commercial arbitrations with respect to matters pertaining to foreign law. Many believe that the court’s observations re the issue of assistance in arbitration matters was a direct consequence of India Inc.’s commitment to project itself as a hub for international arbitration.

First, the court made no new/path-breaking observations regarding representation by foreign legal practitioners in the realm of Indian law. Second, the court also did not examine the issue of LPO. This was for the reason that the firms in question represented themselves as business process outsourcing (BPO) firms involved in activities limited to non-legal matters, such as secretarial services, proof reading, and word processing. Inasmuch as domestic lawyers silently disagreed to the stance taken (and alleged impropriety/concealment of information), observations made by the High Court merely stated that BPO firms were not bound by the provisions of the Advocates Act. Needless to say, this aspect of the judgement failed to appropriately address the legality of LPO firms in India.

Largely perceived as decisions (both, Bombay and Madras High Court) favouring foreign law firms, appeals were filed before the Supreme Court. Hearing thereon was clubbed due to the overlapping nature of issues and a consolidated judgement was passed by the Supreme Court a month ago.

So, after much anticipation, we finally reach the Supreme Court. What happened?

The Supreme Court in an attempt to further clarify the legal position in relation to the operation of foreign law firms/lawyers in India adjudicated on the aforesaid issues.

While considering the previous two decisions from the high courts and rival submissions, on the issue of ‘fly-in, fly-out’ arrangements, the Supreme Court deviated from the view adopted by the Madras High Court. Here it was observed that ‘fly-in, fly-out’ was not an absolute right of the foreign lawyers. The Apex Court expressly stated that only causal visits would be permissible as opposed to regular occurrences. The court refused to formulate a strait jacket formula to determine when a series of casual visits may be deemed regular and consequently, impermissible.

The issue of international commercial arbitration was also considered, right?

Since foreign lawyers do not owe allegiance to India’s regulations governing ethical conduct of legal practitioners, their work in India (in arbitration matters) is likely to remain unregulated, putting Indian parties at the risk of professional impropriety. Keeping this submission in mind, the Supreme Court further bridled the freedom of foreign lawyers to act as counsels in matters of international commercial arbitration. This limitation has been placed so that all lawyers practicing in India are bound by uniform ethical standards/code of conduct (which prohibit advertising, solicitation, contingency fees, etc.).

And what about BPOs and LPO?

The court abstained from giving any blanket indemnity to foreign outsourcing outfits (notwithstanding the nomenclature used to define them). It was decided each such foreign outsourcing processes/businesses will have to be evaluated on merits and if the same in pith and substance amount to an outfit rendering legal services in India, the same shall be impermissible. In a way, the Supreme Court placed fetters on the unlimited approval accorded to BPOs vide the Madras High Court decision.

But while the Supreme Court’s decision is binding, it’s not exactly conclusive, is it?

Unfortunately, the Supreme Court’s decision is neither pragmatic nor lays down clear cut limits on the activities that are impermissible within the present legislative framework. The decision is merely a reiteration of statutory and judicial benchmarks already known to the public. Though the language is unambiguous and leaves little room for misinterpretation, several cardinal issues were not examined, such as what happens when collaborative teams (that include Indian advocates) work on cross-jurisdictional legal issues, or where Indian law-related international commercial arbitrations are being conducted. Thus the decision leaves much to be desired.