Roscoe Pound, the esteemed jurist, famously defined a profession by three fundamental pillars: organisation, expertise, and a commitment to public service. This principle is particularly relevant in the evolving landscape of India’s legal industry, where the entry of foreign lawyers and law firms represents a significant shift from past protectionist policies. However, for international commercial arbitration, there was no absolute bar, with regulations depending on the rules of arbitral institutions and the Advocates Act, 1961.
Through the introduction of the Advocates (Amendment) Bill, 2025, the central government proposes to give itself the power to frame rules regarding the entry of foreign law firms or foreign lawyers in India. Previously, the Bar Council of India (BCI) was at the forefront of regulating their entry. The Rules issued on March 10, 2023, called the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India, 2022, permitted foreign lawyers and firms to practise foreign law in India on a reciprocity basis. However, amidst ongoing concerns, the BCI has indicated its intention to release amended rules governing the entry of foreign law firms. For now, the Indian legal market will be opened exclusively to lawyers and law firms from the United Kingdom (UK).
With the 2025 Amendment Bill, the power to frame rules will shift from the BCI to the central government. Additionally, the definition of a “Legal Practitioner” will expand to include advocates working in corporate entities, statutory bodies, and foreign law firms.
For decades, India maintained a restrictive stance toward foreign legal professionals, preventing their direct participation in its legal services sector. However, with the introduction of new rules permitting foreign lawyers and law firms to engage in international arbitration conducted in India, the nation is positioning itself as a global hub for dispute resolution. This shift aligns with India’s broader economic aspirations – fostering foreign direct investment (FDI), strengthening international trade relations, and reinforcing its status as an attractive destination for commercial arbitration.
Breaking Legal Barriers for Economic Growth
The debate on foreign legal participation reached the Supreme Court of India in 2015, culminating in the landmark 2018 judgment of Bar Council of India v. A.K. Balaji. The Court ruled that foreign law firms could operate in India on a limited “fly-in and fly-out” basis for transactional and arbitration-related matters. However, it did not impose an absolute bar on their participation in international commercial arbitration, leaving the door open for regulatory advancements.
The latest rules now clarify that foreign lawyers and law firms can represent foreign clients in international arbitration proceedings conducted in India. This move is expected to significantly enhance India’s reputation as an arbitration-friendly jurisdiction, offering an alternative to existing arbitration hubs such as Singapore, London, and Paris. Given that Indian parties were the top users of the Singapore International Arbitration Centre (SIAC) in 2021, and over the past decade, SIAC has handled more than 2,000 arbitration cases involving Indian parties, with over 1,300 cases specifically featuring Indian entities with disputes surpassing SGD 20 billion. This shift could encourage them to opt for India-based institutions like the Mumbai Centre for International Arbitration (MCIA) and the Delhi International Arbitration Centre (DIAC).
Balancing Protectionism and Globalisation
Despite the economic benefits, opposition to liberalisation remains. Some argue that the influx of foreign law firms may undermine smaller Indian legal practitioners, leading to unfair competition. Others fear that the presence of foreign firms might dilute professional standards. However, a well-regulated, phased approach can mitigate these concerns.
A viable way forward would involve allowing foreign firms to operate in specific legal areas such as international arbitration and cross-border transactions while retaining restrictions in core domestic litigation. Also, an encouraging regulatory framework and collaboration between Indian and foreign firms to ensure knowledge transfer and professional development.
The Economic Rationale for Liberalisation
The presence of foreign lawyers in India is not merely a legal debate, it is an economic necessity. Several economic benefits are poised to arise from this liberalisation:
Enhanced Foreign Investment: Global investors prefer legal environments where they can engage counsel familiar with their business and legal systems. Allowing foreign law firms to operate in India makes the country more attractive for cross-border transactions, ultimately boosting FDI.
Development of the Indian Legal Market: Competition from international law firms can drive Indian firms to improve service quality, embrace specialisation, and adopt global best practices, making the industry more robust and competitive.
Growth of Arbitration and Dispute Resolution in India: Arbitration is a preferred mode of dispute resolution for multinational corporations. By permitting foreign lawyers to participate in international arbitration cases, India strengthens its ambition of becoming a leading arbitration hub, in line with the government’s vision to establish India as an International Centre for Alternative Dispute Resolution (ICADR).
Increased Tax Revenues: The taxation of foreign law firms operating in India can lead to substantial government revenues. Under international tax treaties, foreign legal professionals with significant business presence in India may establish a Permanent Establishment (PE) and become subject to Indian tax laws, further benefiting the economy.
The growing popularity of arbitration in India has coincided with an inflow of foreign direct investment (FDI). Reports indicate a significant shift of FDI can be driven by India’s improving international commercial arbitration framework and economic liberalisation efforts. The revised rules present a lucrative opportunity for foreign law firms seeking entry into India’s expanding international arbitration market.
But relying solely on this measure to attract foreign parties to choose India as an arbitration hub may be overly optimistic, given the substantial financial burdens imposed by the rules on foreign lawyers and law firms. Arbitration, while often preferred for resolving international disputes, comes with a hefty price tag, making it a viable option mainly for high-value cases. An individual foreign lawyer in India must pay a hefty registration fee of $25,000 USD, while foreign law firms face double that amount. These steep costs could deter many, particularly solo practitioners, from establishing a presence in India. Additionally, registration requires renewal every five years, with renewal fees set at $10,000 USD for individuals and $20,000 USD for firms. Compared to other jurisdictions, these fees are significantly higher, potentially discouraging many foreign legal professionals from entering the Indian market.
Also, arbitration institutions like the ICC charge substantial fees too. For instance, the ICC estimates that a $300,000 USD claim could incur around $60,000 USD in arbitration costs, while a $100 million USD dispute might exceed $700,000 USD.
A New Era for Indian Legal Services
India stands at a pivotal juncture in legal and economic history. The influx of foreign legal expertise, when channeled effectively, can elevate India’s standing in global arbitration, attract foreign investment, and modernise the domestic legal industry. Instead of viewing foreign law firms as a threat, India must embrace them as partners in its journey toward becoming an international legal powerhouse.
In a rapidly globalising world, legal liberalisation is not merely an option, it is an imperative for India’s economic ascendance. By creating a balanced, competitive, and well-regulated legal market, India can transform itself into a preferred global destination for legal services and arbitration, ensuring long-term economic and professional prosperity.