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Chennai writ petition v foreign firms will have little impact, say corporate lawyers

As the Madras High Court decided on Wednesday (7 July) to serve 31 foreign law firms with the petition that seeks to prevent them from operating in India, respondent firms and local corporate lawyers have expressed confidence that firms' India businesses would remain largely unaffected.

A spokesperson for Clifford Chance, which is one of the 31 foreign law firms that will now be served in the writ, said: "We will await service and then take appropriate steps to protect our position as we are confident that we are operating within the current regulations."

One UK law firm's general counsel told Legally India that the petition had not been at the "top of his mind" since it was first started almost four months ago but that the firm would formally be instructing local counsel soon.

Another law firm general counsel added: "We have not yet been served but I believe we are going to be."

However, several local sources have confirmed that a large number of senior Chennai advocates and lawyers have been approached and retained by foreign firms months ago, on the possibility of having to defend the case.

Amongst other points the writ petition seeks to prevent foreign law firms from entering India on visits to meet clients for business development and foreign legal advice, as well as to conduct seminars.

ICICI Bank general counsel Pramod Rao said: "On the visits of the foreign law firms to India, and on questions of immigration and tax laws, etc., I would tend to believe that these foreign law firms would be quite careful and cautious on not violating any law, though rightfully it is for the immigration authorities and tax authorities to undertake due scrutiny and satisfy themselves or prosecute, as the case may be."

Khaitan & Co Mumbai litigation partner Chakrapani Misra said: "The remaining issues that's posed in the petition doesn't have much risk. It's a prayer that may fit within the four corners of law but the point is that then you're carrying it to an extreme."

"And how does it work what is practising law and what is not?" asked Misra. "For example, if I receive a foreign solicitor and we're just chatting over a drink and he talks about a legal point – does it mean practising law? And who monitors it? Or does it become a witch hunt?"

"I am very, very confident of the legal system that the courts will be mindful of that," Misra noted. "Having said that we'll have to wait and watch."

"[The petition] did not seem substantive to me," agreed Anand Prasad, who is co-founding partner of Allen & Overy's best-friend firm Trilegal, although he thought that the new petition could also present an opportunity for foreign law firms.

"I think that the foreign firms possibly are overreacting but it also gives the foreign firms an excellent opportunity to clarify some of the issues raised by the Bombay [Lawyers Collective case]," said Prasad, referring to the December 2009 Bombay High Court judgment that established that foreign firm's practice of transactional law was also prohibited in India under the Advocates Act.

"For example, what is the practice of foreign law, whether they have ability to fly in and out of India, those kinds of issues," added Prasad. "I don’t see that it's going to have anything more than what the Bombay High Court judgment [in the Lawyers Collective case] is – if foreign firms are out, they're out."

Misra agreed. "The law is clear, the understanding and interpretation by the High Court [in the Lawyers Collective case] is clear and in that sense, foreign firms can not practice. But to say you can not even advise and have an India desk outside India, that would be stretching it too far."

The writ petition also seeks an interim order to injunct the foreign firms from the behaviour it impugns as illegal.

ICICI's Rao said that even such an injunction would not have a huge impact on the day-to-day legal business of Indian corporates. "Injuncting the foreign law firms - if restricted to practice of Indian law - makes no impact on their engagements by Indian corporates…"

"Though if the injunction is on foreign law firms not doing anything at all with Indian corporates it can have a slight implication on Indian corporates," said Rao, "on account of legal advice and discussions for Indian corporates' overseas operations and business discussions being restricted to telecons, videoconferencing and of course emailing."

The next date for the hearing in the case and for the replies of all respondents is set for 4 August 2010.

One lawyer closely involved in the matter told Legally India that it could take several weeks for the petitions to be served to all the foreign law firm respondents and that the case would probably continue to drag on for years.

Photo by Andrew Mason

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