SC restrains RBI from allowing foreign law firms to operate in India

The apex court’s passed the direction after senior counsel M N Krishnamani appearing for BCI sought a clarification on the issue as the Madras High Court’s February 21,2012,judgement was contrary to the earlier ruling of the Bombay High Court that no foreign lawyers or firms can operate in India.

Noting that the issue raised important question of law,the apex court sought response of the law firms on the issue and said that “in the meanwhile,the RBI shall not give license or permission to foreign law firms to practise in India.”

It clarified that the the term “practise” would include not only litigious practise but also non-litigious practise,like consultation,legal drafting,etc.

A division bench of the Bombay High Court had in December 16,2009,held that the RBI was not justified in granting permission to the foreign law firms to open the liaison offices in India under Sec 29 of the Advocates Act 1973.

According to the BCI,Sec 29 prohibits the entry of foreign lawyers or foreign firms in the country and only those enrolled with the various bar councils of the country can practise in India.

The BCI has argued that since the Bombay HC judgement was not challenged in the Supreme Court,it has attained finality but the Madras High Court subsequent ruling caused confusion.

The Bombay High Court had said the activities carried on by the foreign law firms at their head office,branch offices and liaison officers in India were inextricably linked to the practise in non-litigious matters.

It was further held the expression “to practise the profession of law” in Section 29 is wide enough to cover the persons practising in non-litigious matters.

However,the Madras HC in a subsequent judgement held that though foreign law firms cannot practise the profession either on the litigation or non-litigation side; but there was no bar for foreign law firms or lawyers to visit India for a temporary period for advising clients in India regarding foreign law or their own system of law on diverse international legal issues.

The high court took the view that under the International Commercial Arbitration introduced in the Arbitration and Conciliation Act,1996,foreign lawyers cannot be debarred from coming to India and conduct arbitration proceedings in respect of disputes arising of contracts relating to international commercial arbitration.