Exclusive – Big Shift Indian-foreign law firms concept introduced, India Opens Up to Foreign Law Firms -BCI amends rules to let foreign law firms operate in India
The Bar council of India in its recently circulated notification confirms the entry of Foreign Lawyers and Law Firms to India. These amendments, which enforce the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022 (originally notified on March 10, 2023), aim to regulate the practice of foreign and international law in India while safeguarding the interests of Indian advocates.
A recent decision by the Bar Council of India (BCI) has made a remarkable amendment to the rules to now allow foreign law firms to operate in India with certain partnerships. Previously, foreign law firms were limited to “non-litigious” areas and could only advise clients on foreign or international law. However, the new amendments mark a significant opening of the legal market and underscores the importance of the BCI’s decision in potentially facilitating India’s development as a key center for international arbitration.
The entry of foreign law firms has been a significant regulatory consideration in achieving this goal. There has been a consistent demand, particularly from foreign companies operating or involved in arbitration in India, to have the option of engaging foreign law firms for their legal needs. It’s worth noting that the broader context surrounding India’s ambition to become a global arbitration hub.
Under the revised rules, foreign law firms can now represent clients in all international arbitration cases within India. Furthermore, they can effectively practice before Indian courts by referring cases to their Indian advocates and partners who are licensed to practice in India.
Rule 8(3) of the new BCI rules clarifies this, stating that Indian advocates and partners within these foreign law firms can handle matters referred to them, provided these matters fall under Indian law and the advocate’s permitted practice area. This allows a foreign law firm registered in India to refer cases to an Indian lawyer who can then argue in court. This is a notable shift from the previous restrictions.
Legal Era speaks to Leading Indian Lawyers and their thoughts are Cyril Shroff, Managing Partner Cyril Amarchand Mangaldas said thta
“It progresses a long pending issue. I welcome this.“
*Haigreve Khaitan, Senior Partner at Khaitan & Co’s* said that
“The entry of foreign law firms into India is a positive step that will result in increased knowledge sharing, innovation and faster adoption of global best practices. This must be accompanied by appropriate regulatory reforms for Indian law firms to create a level playing field and allow them to compete successfully on the global stage while spurring domestic growth. Overall, a welcome move and we look forward to the period of dynamic growth this will usher in for India’s legal industry.”
Anand Desai, Managing Partner at DSK Legal said,
“This is consistent with India’s business growth and global opportunities.”
Vyapak Desai, Partner, Nishith Desai Associates, a leading law firm, said the BCI decision marks a “big shift” in the market.
“Indian advocates can work in foreign law firms registered in India without giving up their right to audience in a court. This really opens up the market for Indian lawyers,” he said.
The BCI had introduced the Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India in 2022 which came into force in 2023 and allowed foreign law firms to set up offices in India to practice transactional and corporate work on reciprocal basis. “A foreign lawyer registered under rules 2023 shall be entitled to practice law in India in non-litigious matters only,” the earlier rules stated. These earlier rules already allowed foreign law firms to establish offices in India for transactional and corporate work, provided it was on a reciprocal basis. Rule 6(1)(b) specified that a foreign lawyer registered under these rules was entitled to practice law in India in non-litigious matters only.
Amar Gupta, Joint Manging Partner, JSA Advocates & Solicitors said
“JSA welcomes this initiative of the Government that deepens and strengthens the Indian legal market’s ability to offer sophisticated legal advice to domestic and international clients doing business in India and globally. We also hope that this is a precursor to overall reform of the legal services sector and BCI will, in the same spirit, address the grievances of Indian law Firms which have been pending for long.”
Vivek K Chandy, Joint Managing Partner JSA Advocates & Solicitors said
“The Rules have been in the works for a long time and the notification dispels any uncertainties about the direction of the Indian legal market. While the actual impact of the new Rules will be felt in the days and months to come.”
Saraf & Partners, Managing Partner Mohit Saraf said this is a significant and long-awaited step.
“We welcome the Bar Council of India’s landmark decision to open up the Indian legal market through the issuance of new rules. This is a significant and long-awaited step that will enable the orderly development of the legal sector in India. It has the potential to elevate the quality of legal services and improve price realization for key players in India, ultimately benefiting clients and the profession alike. That said, there remain certain aspects of the rules that would benefit from further clarity. We are hopeful that the BCI will proactively address these to ensure smooth and effective implementation.”
The New Rule
Regarding arbitration, the new Rules clarify that “practice by foreign lawyers or foreign law firms in India” can include various activities. These include giving legal advice, conducting transactions, and providing opinions on the laws of their primary qualification, international law, and the foreign laws of other jurisdictions. Significantly, they were also permitted to represent clients in international arbitration cases conducted in India.
The definition of these arbitration cases could involve foreign law, international law, or a combination of both. Interestingly, the rules did not explicitly exclude arbitrations involving domestic law. This meant foreign law firms could potentially handle any arbitration in India as long as their clients were “individuals, firms, companies, corporations, trusts, or societies with their principal office or address in a foreign country.”
Introduction of “Indian-Foreign law firms”
A significant aspect of the amended Rules is the introduction of a new category: “Indian-Foreign law firms.” This rule for the first time, allow Indian law firms to register as foreign law firms. Previously, an Indian lawyer who registered with or worked for a foreign law firm would have to give up their Bar license to practice in India. However, the concept of “Indian-foreign law firms” has been introduced. This allows Indian lawyers to continue working as Indian lawyers while also undertaking work in foreign or international law within India. Essentially, these “Indian-foreign law firms” provide a mechanism for Indian firms to compete more directly with foreign firms in the Indian legal market. This dual registration offers Indian lawyers an opportunity for professional growth while maintaining their status as advocates under Indian law. To prevent excessive competition and protect the interests of Indian lawyers, the BCI has established stringent registration and renewal requirements for foreign lawyers and law firms seeking to practice foreign law in India. These regulations necessitate thorough documentation, including proof of primary legal qualification, no-objection certificates, and declarations of compliance with Indian regulations.
As per Rule 2(vi)(b), this registration allows such firms to engage in legal practices involving both Indian and foreign law. They are permitted to handle non-litigious legal work related to foreign law, international law, and arbitration matters. Importantly, they retain the unrestricted ability to practice Indian law, including representing clients in litigation before Indian courts, tribunals, and other adjudicatory bodies. These firms can also operate in foreign jurisdictions, subject to reciprocal recognition of qualifications, and will be under the BCI’s regulatory supervision. Their scope of work includes providing advisory services on foreign and international law, offering legal documentation and consultancy for cross-border transactions, and representing clients in arbitration proceedings involving foreign or international law. The BCI emphasizes that the creation of the Indian-Foreign Law Firm category aims to facilitate the professional advancement of Indian legal entities, allowing them to operate seamlessly in both Indian and international legal arenas while adhering to strict regulatory standards.
“Fly in-fly out” conditions
The Rules also explicitly state that foreign lawyers and firms cannot practice in India without registering with the BCI. However, an exception is made for “fly in-fly-out” arrangements, subject to the following conditions:
- (a) The practice must be strictly limited to providing legal advice to clients in India concerning foreign law, the foreign lawyer’s own legal system, or international legal issues, and must not constitute “practice” as defined under Indian law.
- (b) The client must procure the engagement or expertise of the foreign lawyer or firm either in a foreign country or in India.
- (c) The foreign lawyer or firm must not establish, operate, or maintain any office, infrastructure, or regular presence in India for such legal practice.
- (d) The total duration of such practice in India must not exceed 60 days in aggregate within any 12-month period, starting from the first day of arrival. Subsequent days of presence within the 12-month period will be counted consecutively.
- (e) Any dispute regarding whether the foreign lawyer’s activities qualify as permissible “fly-in, fly-out” practice or constitute prohibited “practice” under Indian law will be determined by the Bar Council of India.
- (f) All rules and regulations applicable to registered foreign lawyers and firms, including the Code of Ethics, will also apply to those operating under “fly-in, fly-out” arrangements.
As India aims to position itself as a key center for international arbitration, the entry of foreign law firms has become a significant point of discussion. There has been a push to allow foreign companies involved in business or arbitration within India to engage foreign legal counsel.
Fee Structure
The Bar Council of India (BCI) has notified & outline the permissible areas of practice, registration prerequisites, applicable fees, and potential disciplinary actions for non-compliance.
The regulations specify various fees for registration, including $15,000 for individual foreign lawyers and $25,000 for foreign law firms, with additional charges for those operating in multiple foreign jurisdictions. Furthermore, refundable security deposits of $10,000 and $30,000 are mandated for individual lawyers and firms, respectively. Renewal fees are set at $8,000 for individual lawyers and $15,000 for firms every five years, with supplementary charges for multi-jurisdictional entities. Non-refundable process charges of $2,000 for lawyers and $5,000 for firms are also applicable, with higher amounts for those with multiple jurisdictions. For lawyers and firms intending to provide services on a temporary basis, fees of $1,500 and $3,000, respectively, are prescribed. The BCI retains the right to periodically revise these fees, potentially aligning them with costs incurred by Indian lawyers or firms practicing in the respective foreign jurisdictions.
Registration Process
The registration process necessitates the submission of extensive documentation, including certifications from the Indian government confirming the existence of an effective legal system in the applicant’s country and a lack of objection to their registration. Applicants must also provide detailed statements regarding the foreign jurisdictions in which they intend to practice, along with certifications of their primary qualifications and their entitlement to practice law in those countries.
Additionally, a certificate from the foreign government confirming reciprocal practice rights for Indian advocates is required, as are certificates attesting to the applicant’s years of practice and the absence of pending professional misconduct proceedings. Information on fee structures applicable to Indian advocates in the foreign jurisdiction, a no-objection certificate confirming good standing, and declarations on affidavit regarding convictions, disciplinary actions, and consent for BCI inquiries are also mandated. Moreover, an undertaking not to practice Indian law or appear before Indian legal authorities, details of existing or proposed partnerships, and a declaration waiving interest on the security deposit are part of the requirements.
Partnerships between Indian and foreign lawyers or firms are permissible only if the foreign entity is registered under these Rules. However, Indian lawyers and firms can receive referred work from foreign entities without requiring the latter’s registration. Indian lawyers may also work abroad as employees, consultants, or advisors in foreign law firms without needing to register under these Rules.
Disciplinary action
Regarding disciplinary action, foreign lawyers and firms are generally expected to adhere to the ethical and practice standards of the Advocates Act, 1961. However, substantive misconduct will not be subject to Chapter V of the Act; instead, the BCI may cancel the registration.
Upon receiving a complaint against the Foreign Lawyer or Foreign Law Firm, the BCI will conduct a preliminary inquiry, allowing the entity to present its case. Minor violations may result in warnings, reprimands, or penalties, while more serious misconduct could lead to penalties and/or suspension of registration.
“The BCI shall have the authority to independently conclude disciplinary proceedings, including cancellation of registration, in cases where it determines that the misconduct or violation warrants such action.”
The BCI may also refer matters to the disciplinary authority of the concerned foreign country for further action and retains the independent authority to conclude disciplinary proceedings, including registration cancellation, when deemed necessary.
This matter was reportedly also brought up during the UK-India Free Trade Agreement negotiations but was ultimately not included in the final trade package.