Suit seeks bar on Foreign Law Firms in India

FREEHILLS and Clayton Utz are part of a group of international law firms facing legal action in India aimed at preventing them from working in that country.

Indian lawyer A.K. Balaji has filed proceedings in the High Court at Madras arguing that 30 international firms are practising illegally in the country.

His action is also directed at the Bar Council of India, the Bar Council of Tamil Nadu, six government departments and the Reserve Bank of India.

While the Balaji case poses no immediate threat to the Indian operations of any of the firms, it comes soon after international firms Ashurst, White & Case and Chadbourne & Parke were forced to leave India because of a ruling by the Bombay High Court.

The Bombay court had ruled that the Reserve Bank of India did not have permission to allow the firms to set up liaison offices in the early 1990s. That ruling ultimately affirmed India's protectionist model, but the litigation dragged on for more than a decade. During that time, Ashurst continued to conduct business in India. It closed its Delhi office this year.

Freehills and Clayton Utz declined to comment on the Balaji litigation. But industry sources said the conclusion of the case and any potential impact on the foreign firms involved was a long way off. While the imminent practical threat to Freehills and Clayton Utz is minimal, the case has highlighted the issue of market access and reciprocal practice rights with India.

An affidavit filed by Mr Balaji says: "Allowing the entry of foreign law firms with no reciprocal arrangements with respect to Indian lawyers should not be entertained. "Indian lawyers have to be allowed to work in the respective country, otherwise foreign law firms should not be allowed to exploit the Indian market without actually opening up their domestic markets to Indian lawyers."

A spokesman for Attorney-General Robert McClelland said the Balaji case might clarify the position for foreign firms practising in India. "It is hoped that the Balaji action will provide a framework which permits foreign lawyers to establish in India and work with local lawyers in providing legal advisory services in India," the spokesman said.

Last month, Mr McClelland indicated that the draft bill for the planned national regulatory system for the profession would liberalise the entry requirements for foreign lawyers.

"The draft bill will propose a new option of `conditional admission' for foreign lawyers which will allow them to practice law in Australia, either for a particular period of time or for practice only in a specified area of the law," Mr McClelland said. The International Legal Services Advisory Council, which advises Mr McClelland, has identified India as a key export market.

"ILSAC, with the government, has been lobbying for a considerable time for appropriate access to the Indian market," said council chairman Tim Bugg said.

"Whilst the action is unfortunate because it seeks to restrict the practice of foreign law by foreign law firms in India, it hopefully will have a positive side-effect, which will bring some pressure to bear on the Indian authorities, to look more speedily at the way in which foreign law firms can practice in India," Mr Bugg said.

The desire to push deeper into India is a recognition of its booming market for legal services.

London-based RSG Consulting has analysed the Indian legal market for the past two years, and in its latest report valued the sector at $US800 million ($850m).

Nearly half of that figure is expected to go to foreign law firms.

Indian law firms are citing targets of up to 500 per cent growth over the next three to five years as they ride the growth trajectory of the emerging economy. The consultancy interviewed more than 330 Indian law firms and foreign legal service purchasers to determine which international firms were having an impact.

Mallesons Stephen Jaques, Minter Ellison and Davies Collison Cave were the three Australian firms acknowledged in the RSG report for their activity in the region.

While the big British and US players dominate the market, RSG Consulting managing director Reena SenGupta said Australian firms were making significant inroads.

"It does tend to still be the British firms that get the most mentions, and then the American firms, but Australia is certainly the next key jurisdiction," she said.

"If I compare the research we did in 2009 to 2008, there were far more mentions of Australian firms, far more awareness of Australian firms. And actually, a bit more of a liking for Australian firms, culturally."

Ms SenGupta confirmed the council's belief that the Indian market was a key opportunity for Australian law firms.

"There's a sense of more of an inclination to work with Australian firms . . . more of a focus to the whole Asia-Pacific, and a turn away from the US and from Europe."

For Mallesons, India represents the latest jewel in its Asian crown. The firm has had a hand in Indian-related work for two decades.

While Mallesons does not capture figures on the value of India as a discrete market, income drawn from its combined Asian practices contributes around 15 per cent to total revenues.

Further growth is expected to come from leveraging opportunities across its regional network, particularly the bridge between the two Asian high-growth economies -- China and India. With China now India's number one trading partner, Mallesons said the firm was poised to capitalise on the growth in this relationship, and other cross-border work in the region.

"It is an area of advantage for us, in that we have a scale in China," Mallesons partner John Sullivan said. "We see that (as an advantage) for the longer term, with the two engines of Asian growth."

Mallesons, like many global firms, is keen to see a dismantling of India's barriers to entry.

"As a firm that has operated in Asia for two decades, we are supportive of opening up of trade between the two countries, including legal services," Mr Sullivan said.

Source - http://www.theaustralian.com.au/business/legal-affairs/suit-seeks-bar-on-foreign-firms-in-india/story-e6frg97x-1225854279782

Hearing Delayed....
The Chennai public interest litigation (PIL) against 31 foreign law firms that was scheduled for Government respondents' filing of replies on 8 April remains unheard to date owing to judicial delays.

The case was postponed for hearing on 9 April as item no 84 after post lunch matters were not taken up by the bench on the previous day. The matter did not come up for hearing due to shortage of time on that day.

This Monday 12 April, after the weekend holidays no matters were listed before the concerned bench sitting in court number 1. The last the cause list placed the case as number 86 on Tuesday 13 April. 14 April was a gazetted holiday and the courts were closed.The hearing was not listed for today and did not show up for tomorrow, according to the Madras High Court causelist.

The lead petitioner of the writ petition A K Balaji told Legally India: "Delays have been caused because there are a lot of pending matters before the court." "Only admissions are taken up but not adjourned admissions," he added, explaining that the Association of Indian Lawyers, which was formed for the purpose of filing the writ petition, was also waiting for the matter to be heard but did not know when this would happen.

The writ petition names 31 international firms and legal process outsourcing (LPO) provider Integreon as co-respondents for practising law illegally in India. It is understood that respondents other than Government departments and statutory bodies would not be served with notices until after the matter has been admitted in a preliminary hearing.
Source - http://www.legallyindia.com/20100415699/The-Bar-and-Bench/madras-writ-hearing-v-foreign-firms-bogged-down-by-court-delays