Monday, July 9, 2012

Foreign Law Firms, LPOs And Chartered Accountant Firms Cannot Practice Law In India Anymore

The issue of legal practice by foreign law firms, lawyers, legal process outsourcing (LPO) providers and others like chartered accountants is a bone of contention between Indian legal fraternity and these persons.

It seems the matter is on the verge of being decided by the highest court of India. In a recent interim order by the Supreme Court of India, the court held that till the matter is finally decided by it, the Reserve Bank of India shall not grant any permission to the foreign law firms to open liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973 ( now FEMA 1999).

The Supreme Court of India also clarified that the expression "to practice the profession of law" under Section 29 of the Advocates Act, 1961 covers the persons practicing litigious matters as well as non-litigious matters other than contemplated in para 63(ii) of the impugned order and, therefore, to practice in non-litigious matters in India the foreign law firms, by whatever name called or described, shall be bound to follow the provisions contained in the Advocates Act, 1961.

This means that foreign law firms and LPOs cannot practice either litigation or non litigation related issues in India anymore. This also means that Indian LPO service providers like Perry4Law would witness an enhanced role in the LPO segment of India.

Of course, the foreign law firms or foreign lawyers can visit India for a temporary period on a “fly in and fly out” basis, for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. However, foreign LPO or an LPO having non legal personals have to close their shops in India immediately.

This also means that chartered accountants (CA), companies secretaries (CS), etc who are in full time practice cannot engage in either litigation or non litigation related activities in India. If they engage in such activities that would clearly be illegal.

All companies, individuals, etc, whether Indian or foreign, who engage the services of such persons  would be doing the same at their own risks as such services would not be recognised by Indian law. This should be avoided till the matter is conclusively resolved by the apex court of India.

The matter would be again reheard after a gap of 10 weeks and let us see how the developments would take shape from here onwards.