Madras Bar Association discusses Entry of Foreign Law Firms in SEZs

Earlier this week, the Madras Bar Association held a discussion on the entry of foreign law firms into India, specifically on ‘Whether Foreign Law Firms would be allowed to open in SEZ IFSC (Special Economic Zone – International Financial Service Centre) for offshore business’..Advocates B Raja Ravi and Arvind Srevatsa briefly spoke of pertinent concerns in the area, in the context of recent Amendments to the SEZ rules and the case pending before the Supreme Court, due to be heard in January 2018..In January, this year, the Central government had made certain amendments to Rule 76 of the SEZ rules, thereby relaxing conditions for foreign law firms to enter SEZs in India. In July, the Bar Council had written to Bar Councils across the country, seeking their views on foreign firms being allowed to open in SEZs for offshore business..Pursuant to this, the Bar Council of Tamil Nadu and Puducherry had also sought the views of the Madras Bar on the matter. A Committee has also been formed accordingly with the aim of consolidating a detailed note on the subject..In the discussion held last Thursday, Advocate B Ravi Raja opined that such entry could be permitted where there exist reciprocal arrangements in foreign jurisdictions. The remark was made in the context of the changing economic scenario, and the profitable contributions made by India in the fields of medicine, engineering, IT and mega infrastructure projects abroad..However, he opined that the government should be advised to put in place safeguards to protect against risks associated with what could end up being a backdoor entry for foreign firms. Such regulatory measures may even be framed so as to benefit bar councils in the country..Advocate Arvind Srevatsa drew attention to the fact that the SEZ law was initially framed for the development of trade, not the legal arena, as gauged from its preamble. He discussed the SEZ amendments in light of the two judgments currently of relevance in this area i.e. the Bombay High Court judgement in Lawyers Collective v Bar Council of India, and the Madras High Court verdict in AK Balaji v Government of India, which is currently pending before the Supreme Court..He noted that following these judgments, the government appears to be attempting to do indirectly what cannot be done directly through the SEZ amendment. In this context, he raised the following, among other, concerns:.Whether the Union Ministry has the jurisdiction to make amendments to the SEZ rules which aid in the entry of foreign law firms to SEZs in India?Whether amendments to the Advocates Act, 1961 are necessary before such entry is allowed?Whether the Amendment is on a matter which is sub judice, given that the Supreme Court is due to hear the case of entry of foreign firms to India next year?Whether proper and comprehensive amendment is required in both the Advocates Act and the SEZ rules, particularly in respect to areas such as legal practice, disciplinary proceedings etc.?.Given such concerns, Advocate Srevatsa opined that it would be better if the Union Ministry waited for the Supreme Court to decide on the issue first..In closing, Advocate VR Kamalnath, Secretary to the Madras Bar Association, informed that the Committee is working to compile a report, which will be sent to the Bar Council of India. The concerns raised will also be represented before the Supreme Court when it hears the case next year.