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RBI Issued Notification for Banks asking them not to Grant or Renew Permissions to Foreign Law Firms for the Purpose of Opening Liaison Offices in India
The Reserve Bank of India has issued a notification for the banks and asked them not to grant fresh permissions/ renewal of permission to any foreign law firm for opening Liaison Office in India.
As per the notification issued by RBI, it referred to a Supreme Court verdict in which it was observed that advocates enrolled under the Advocates Act are only the ones who can practice law in India and no foreign law firms/ companies or foreign lawyers can practice law profession in India.
“As such, foreign law firms/ companies or foreign lawyers or any other person who resides outside India, cannot be allowed to establish any branch office, project office, liaison office, or other places of business in India for the motive of practicing law profession. According to the guidelines, AD Category-I banks are instructed not to grant any permission to any branch office, project office, liaison office, or other places of business in India under FEMA for practicing law profession in India. They also have to inform the Reserve Bank if they found any kind of violation of the provisions of the Advocates Act.”, reads the notification.
‘Liaison Office’ has been defined under the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations. It means a place of business to act as a channel of communication between the principal place of business or Head Office by whatever name called and entitles in India but which does not undertake any commercial/trading/industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel;
In the case of BCI vs. AK Balaji (2015), the Supreme Court held that foreign law firms are not permitted to set up offices in India or practice law in Indian Courts. But they can provide advisory services to Indian clients on a basis of “fly in and fly out” and not as a regular practice. Visit of any such foreign lawyer will amount to be a part of “fly in and fly out” basis can be amount to regular practice. Causal visits for the purpose of advising cannot be covered under the term ‘practice’. Bar Council of India holds liberty to frame rules in this regard.”
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