Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign law firms

The Supreme Court of India (“SC”) had, by way of interim orders dated July 4, 2012 and September 14, 2015 ( “Interim Orders”), in the case of Bar Council of India v. A.K. Balaji (“SC Case”), directed the Reserve Bank of India (“RBI”) to not grant permission to any foreign law firms to set up liaison offices in India, after the date of the Interim Orders. Pursuant to this direction, the RBI, in exercise of its powers under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (“FEMA Provisions”) issued a circular dated October 29, 2015 (“Circular”). By way of this Circular, RBI has informed all Category - I Authorised Dealer Banks (“AD-I Banks”) that no fresh permission shall be granted to any foreign law firm to open liaison offices in India, till the existing policies are reviewed on the basis of, inter-alia, the final disposal of the SC Case. Although the foreign law firms that had obtained the permission to open liaison offices prior to the Interim Orders were allowed to continue to operate the offices, no renewal of such existing permission was allowed. The SC Matter was disposed off on March 13, 2018 (“Final Order”), and it was held that advocates enrolled under the Advocates Act, 1961 alone are entitled to practice law in India and that foreign law firms/ companies or foreign lawyers cannot practice legal profession in India. The SC also held that foreign law firms/ companies or foreign lawyers or any other person resident outside India shall not be allowed to set up a branch office, liaison office, project office, or any other place of business under the Foreign Exchange Management Act, 1999 for the purpose of practicing legal profession in India. Pursuant to the Final Order by the SC, the RBI, in exercise of its powers under the FEMA Provisions, has issued a circular on November 23, 2020, and has directed the AD-I Banks to not grant approvals to any branch office, liaison office, project office, or any other place of business under the Foreign Exchange Management Act, 1999, to practice legal profession in India. The AD-I Banks have also been directed to bring to the notice of the RBI, any such violations of the Advocates Act, 1961, that may come to their notice. Please find a copy of the circular here. Contributed by Aastha (Partner) and Arjun Gopalakrishnan (Associate).