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India eases restrictions on foreign lawyers

Plegal Wars are common in India. One of the longest running concerns of all concerns allowed to practice in the country. On March 10, the Bar Association of India quietly issued a statement that, albeit with inevitable caveats, lifted some of the restrictions that had prevented most foreign lawyers from operating on Indian soil for decades. “With this, legal practice in India has entered a new era,” says Vyapak Desai of Nishith Desai Associates, a rare Indian law firm with offices overseas.

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Since independence in 1947, India has erected barriers to entry in many industries in the name of self-sufficiency. As elsewhere in the world, the legal profession is considered particularly sensitive. So sensitive that in 1961, the Lawyers Act required all lawyers to be Indian citizens. At the urging of the central bank, the Foreign Exchange Control Act of 1973 created an exemption. Foreigners are still barred from representing clients in court, but they can advise clients on issues such as contracts and mergers. By the 1990s, a handful of foreign companies had set up shop in India, including giants such as New York conglomerate White & Case.

Then, in 2009, the Supreme Court ended the immunity. Foreign lawyers eager to gain a foothold in India’s growing economy have had to forge “best friend” relationships with local law firms. This enables non-Indian lawyers to conduct brief visits to Indian clients. To avoid the hassle that comes with it, though, many prefer to meet in London, Singapore or, most recently, Dubai.

Under new government-approved rules, foreign lawyers can spend 60 days a year in India — or permanently if they register with the authorities. They can advise foreign companies in India on matters of international law. They still probably won’t appear in any courtroom, regulatory body, or other forum with “court trappings.” There is one exception: In international commercial arbitration cases, foreigners will be able to represent clients before Indian arbitral tribunals.

Burzin Somandy of Mumbai-based law firm Somandy & Associates pointed out that this break-up hints at the reasons behind the reform of the bar council. As the board explained in its decision, “experience and facts have shown” that multinationals prefer to have their claims in India heard through foreign arbitration panels. There seems to be an expectation that foreign businesses will conduct such litigation in India if they can be represented by their foreign lawyers. And that, in turn, would boost confidence in India’s legal system — and by extension, the Indian economy. Strong legal logic? The jury is out.

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