23:11, October 24 243 0

2016-10-24 23:11:14
India legal market liberalisation hits new roadblock

India has taken one step forward and two steps back in its move to liberalise its legal market following an unexpected move by the Bar Council of India (BCI) this month.

The BCI has U-turned on a bill that would open up the legal services market to foreign firms, adding further uncertainty to the long-running row over liberalisation.

The council completed its keenly anticipated proposed rules to allow foreign lawyers to practise in India back in July. But at the end of September, it backtracked on its previous support of liberalisation of the legal market and withdrew its draft rules, according to Legally India.

It is understood that BCI rescinded its support for the proposal due to strong opposition from state bar councils and as a result of its objection to the involvement of private organisations in the discussion with the Ministry of Law and Justice.

In its letter to the Law Secretary, BCI said some bureaucrats in the law ministry were “trying to usurp the powers and functions of the Bar Council of India” and were “trying to bring separate legislature for regulating foreign lawyers without understanding the nuisances and intricacies and the legalities involved”.

BCI claimed this “serious issue of utmost importance to the future of the legal fraternity” could not be deliberated upon by an “inconsequential organisation” like the ICCA, which has no “locus standi on these issues”.

BCI started drafting the rules in January this year following a renewed push towards liberalisation among local legal bodies and government. Previously it had held longstanding opposition to opening up the market.

Under BCI’s draft bill, foreign lawyers and firms would be allowed to set up offices in India to practise non-Indian law. Law firms would have to pay BCI registration fees of around $50,000 and a deposit of $40,000, while individuals would pay $25,000 and a deposit of $15,000.

Foreign lawyers would then be allowed to practise non-Indian transactional law and could hire or go into partnership with Indian lawyers.

While foreign firms could not appear before courts or tribunals, they would be allowed to appear as advisers for foreign-headquartered clients in international arbitration proceedings held in India.

Several international firms expressed disappointment at the latest development.

“The BCI backtrack just underlines that, after some glimmers of optimism were shining through the fence, the opening up of the market is not going to happen any time soon,” said a head of India practice at an international firm.

“The opposition is just far too strong.  This is a pity since, whether or not a foreign firm felt the need to actually set up in India, it would have sent a really positive and progressive message if they had the option to do so.  The other issue in all of this is what do the GCs on the ground want?”

In the latest development, Legally India reported last Friday (21 October) that the Indian Corporate Counsels Association (ICCA) proposed eight weekly meetings between various stakeholders in the legal services liberalisation discussion, in order to prepare a status report on the points of consensus and disagreement between them. Its proposal comes after a month and in a response to the BCI’s withdrawal of its support towards liberalisation and the end of its involvement in the discussion.