By: Austyn Campbell, Solicitor, Commercial Litigation and International Arbitration
On 13 March 2023, the Bar Council of India took a historic step toward the liberalisation of its legal profession. Previously, the Indian legal market was off-limits to foreign lawyers and foreign law firms. Many international firms had therefore taken steps to build strong relationships with India’s domestic firms to facilitate the timely resolution of clients’ disputes. The Bar Council of India’s Rules for Registration and Regulation and Foreign Lawyers and Foreign Law Firms in India, 2023 (the 2023 Rules) seeks to change this. Now, international solicitors and arbitrators are eligible to advise in the world’s most populous country. In this article, we break down what the changes mean for foreign lawyers and law firms, and the state of play for arbitration in India. Overall, the changes are likely to be mutually beneficial for foreign lawyers and Indian lawyers alike, providing countless opportunities for cross-border collaboration.
Background
Before the 2023 Rules, India’s Advocates Act, 1961 and the then-current Bar Council of India’s Rules had set out a general rule that foreign lawyers were not entitled to practice in India.[1] However, there was no bar on foreign lawyers or law firms visiting India on a “fly-in and fly-out” basis to give legal advice that concerned the law of the jurisdiction in which that lawyer practiced, or on international law.[2] Then, in 2018, India’s highest court, the Supreme Court, definitively ruled that foreign law firms and foreign lawyers were not entitled to practice in India unless they fulfilled the requirements of the Advocates Act and the Bar Council of India’s Rules.[3] These requirements included that persons seeking to practice law in India had to be an Indian citizen and must possess a degree in law from a recognised domestic university.
Within that context, Indian courts considered the objectives of the country’s Arbitration and Conciliation Act, 1996. In a 2015 decision,[4] the Madras High Court determined that foreign lawyers could not be debarred from visiting India to “conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration”.[5] However, the Supreme Court then clarified that no absolute right to conduct such arbitral proceedings existed.[6]
As such, foreign lawyers and law firms have, in past, been heavily restricted in practising law in India. Instead, foreign law firms have pursued close relationships with domestic Indian law firms and lawyers in order to advise clients engaged in the Indian market.
Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India
The Bar Council of India released the 2023 Rules to significant acclaim. Its stated purpose is to “help address the concerns …about the flow of Foreign Direct Investment in [India] and [make] India a hub of International Commercial Arbitration”.[7] It allows, for the first time, lawyers to practice in India, while foreign law firms are now entitled to open domestic offices. However, the 2023 Rules do not do so without limitation.
The 2023 Rules prescribe a broad definition of “Foreign Lawyers”. It includes “a person, including a law firm, limited liability partnership, company or a corporation, by whatever name called or described, who/which is entitled to practice law in a foreign country”.[8] “Foreign Country” is then defined as any:
“country which is recognized as such by the Government of India and it includes a constituent State thereof in case such as a foreign country has a federal structure of governance and such constituent State has its own justice-delivery system and a separate class of persons entitled to practice law”.[9]
Critically, rule 3(1) provides that “a foreign lawyer or foreign law firm shall not be entitled to practice law in India unless he/it is registered with the Bar Council of India under these Rules”. Registration costs currently amount to approximately AUD 25,000 per lawyer, and AUD 50,000 per firm. Registration must be renewed every five years.[10]
“Fly-in and fly-out” lawyers (i.e. those that are not registered and who do not reside in India) are restricted to a maximum of 60 days in a 12-month period, and are restricted to advising clients on foreign law or on issues of international law.[11] Such lawyers are not entitled to establish an office in India.
Registration with the Bar Council of India involves a complicated process. There are 12 conditions for registration, contained in rule 4(1). Importantly, a foreign law firm must establish “reciprocity”. While this term is not explicitly defined in the 2023 Rules,[12] it can be generally understood as creating a requirement for a foreign lawyer’s jurisdiction to offer ‘reciprocity’ of allowances, comparable to Indian advocates. However, this requirement remains vague and would benefit from further clarification.
Registered foreign lawyers may practice law in India from a local office. However, they are only entitled to be engaged on transactional and corporate matters.[13] Further, the Bar Council of India subsequently clarified that “Foreign lawyers and Law Firms shall be allowed to advise their clients about Foreign laws and International laws only [sic]”.[14] Foreign lawyers and foreign law firms are also not permitted to appear in any domestic court, tribunal or like-body.[15] However, foreign lawyers are now allowed to appear for clients in international commercial arbitrations seated in India.[16]
Impact on Arbitration Sector
The 2023 Rules provide new opportunities for arbitrations involving foreign clients and foreign lawyers. Whereas previously, there was no absolute right for foreign lawyers to conduct arbitral proceedings in India, registered foreign lawyers now have an entitlement to represent foreign clients in arbitral proceedings involving Indian and foreign law.[17]
The stated purpose of the 2023 Rules is to “encourage India being preferred as a venue for such International Arbitration Proceedings, thus helping India become a hub of International Commercial Arbitration”.[18] While, on the whole, the 2023 Rules further their stated purpose, residual ambiguities (such as whether foreign lawyers are restricted from participating in arbitrations that involve only Indian parties and questions of Indian law) may create uncertainty and disincentive parties from choosing India as their seat of choice.
Legislative Framework for Arbitration in India
India’s Arbitration and Conciliation Act 1996 (Arbitration Act) serves as the cornerstone of the country’s arbitration regime.[19] Over the years, the Arbitration Act has played a pivotal role in fostering a favourable environment for arbitration, promoting investor confidence, and positioning India as a sought-after arbitration destination.
The Arbitration Act embodies a modern and pro-arbitration approach by incorporating internationally recognized principles, particularly those of the UNCITRAL Model Law and the New York Convention. It encompasses crucial provisions such as the appointment of arbitrators, the conduct of arbitral proceedings, the recognition and enforcement of arbitral awards, and the grounds for challenging or setting aside awards.
Recent amendments to the Arbitration Act have sought to address various concerns raised by the international business community and aims to streamline arbitration procedures. For example, in 2019, amendments introduced time-bound arbitration proceedings, imposed stricter confidentiality obligations, limits court intervention, and encouraged the use of institutional arbitration.[20]
In addition, India has specialised commercial courts, constituted by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (as amended in 2018). These courts provide exclusive jurisdiction over commercial disputes, including arbitration-related matters. The creation of these dedicated forums has expedited the resolution of arbitration disputes, reducing delays and ensuring specialized adjudication.
India’s courts recognise the key principle of non-intervention.[21] However, Indian courts can intervene in domestic arbitration proceedings, and can also refuse to enforce an arbitration agreement where they determine that no valid arbitration agreement exists, or the dispute is not arbitrable.[22]
The legislative framework endeavours to align with the underlying objective of the 2023 Rules, which aims at enhancing India’s appeal as a jurisdiction of choice for international commercial arbitration. However, it is imperative for foreign lawyers to acquaint themselves with the discretionary powers vested in Indian courts.
Concluding remarks
While the 2023 Rules herald a significant opening of the Indian legal market, foreign lawyers and foreign law firms must still navigate the rigorous conditions on practice that remain imposed by the Bar Council of India. Already though, the transformative shift is generating mutually beneficial opportunities for foreign lawyers and Indian lawyers alike, with many international law firms exploring options for investment into India’s legal sector.
In terms of the impact on the arbitration space, the 2023 Rules introduce fresh avenues for the involvement of foreign lawyers in international commercial arbitration proceedings seated in India. Nonetheless, there remain uncertainties and challenges that necessitate attention, particularly concerning the participation of foreign lawyers in arbitrations exclusive to Indian parties and matters governed by Indian law.
Taken together, these developments reflect India’s commitment to establishing itself as an appealing destination for international commercial arbitration. While notable progress has been made, further clarity and the resolution of ambiguities in the 2023 Rules will be necessary to fully unlock the potential.
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[1] Advocates Act, 1961, section 29.
[2] A.K. Balaji v. The Government of India, AIR 2012 Mad 124. Civil Appeal No. 7875-79 of 2015.
[3] Bar Council of India v. A.K. Balaji & Others, (2018) 3 MLJ 470.
[4] A.K. Balaji v. The Government of India, AIR 2012 Mad 124. Civil Appeal No. 7875-79 of 2015.
[5] Ibid, at [63](iii). Note, the Madras High Court is the most senior court in the state of Tamil Nadu and the union territory of Puducherry. Australian readers may analogise this with each state’s Court of Appeal.
[6] Bar Council of India v. A.K. Balaji & Others, (2018) 3 MLJ 470, at [45].
[7] Rules for Registration and Regulation and Foreign Lawyers and Foreign Law Firms in India, 2023 (2023 Rules), ‘Objects and Reasons’ at [9].
[8] 2023 Rules, rule 2(iii).
[9] Ibid, rule 2(iv).
[10] Ibid, rule 4(1).
[11] Ibid, rule 3(1).
[12] See, for example, ‘principle of reciprocity’ at Rule 12, ‘complete reciprocity’ at Rule 5(4), ‘reciprocity’ at Rule 6(A), and ‘reciprocal basis’ at Rule 8(2).
[13] 2023 Rules, rule 8(2).
[14] Bar Council of India, ‘Press Release Dated 19.03.2023: “True Facts about BCI’s Rules regarding Entry, Rules and Regulations of Foreign Lawyers and Law firms in India”’ <https://images.assettype.com/barandbench/2023-03/57a2a39d-a1a9-4d43-ae22-aa1a5fbf3e8d/Press_Release_Dated_19_03_2023.pdf> at [1].
[15] Ibid, at [3]-[4].
[16] Ibid, at [6].
[17] Ibid, at [10].
[18] Ibid, at [6].
[19] As amended by the Arbitration and Conciliation (Amendment) Act, 2015, Arbitration and Conciliation (Amendment) Act, 2019 and the Arbitration and Conciliation (Amendment) Ordinance, 2020.
[20] See Arbitration and Conciliation (Amendment) Act, 2019, section 9 (inserting new section 42A) and section 10 (inserting new Part IA ‘Arbitration Council of India’).
[21] Arbitration and Conciliation Act, 1996, section 5.
[22] Ibid, section 8(1).