The Reserve Bank of India (RBI) has directed banks not to grant fresh permission/renewal of permission to any foreign law firm for opening its liaison office (LO) in India. The Central Bank’s notification reiterates its five-year-old stand after the Supreme Court had clarified in 2015 that foreign law firm’s liaison offices are not permissible in India.
On Monday, referring to October 2015 notification, RBI said that “foreign law firms/companies or foreign lawyers or any other person resident outside India, are not permitted to establish any branch office, project office, liaison office or another place of business in India for the purpose of practising the legal profession.”
“AD Category – I banks are directed not to grant any approval to any branch office, project office, liaison office or other places of business in India under FEMA for the purpose of practising the legal profession in India,” said the central bank in its notification of November 23. “Further, they shall bring to the notice of the Reserve Bank in case any such violation of the provisions of the Advocates Act comes to their notice.”
As per the Foreign Exchange Management Act (FEMA), the Liaison Office means a place of business to act as a channel of communication between the head office by whatever name called and entities 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.
The notification further says that the direction is based on the Supreme Court’s ruling in 2015 where it 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 the profession of law in India.
The Apex Court, in the case between the Bar Council of India (BCI) and AK Balaji had held that foreign law firms can not set up offices in India or practice in Indian courts.