Editorials March

Restrict foreign access to the Bar

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Restrict foreign access to the Bar

“The Economic Survey has strongly batted for the removal of the restrictions on foreign direct investment (FDI) in legal and accountancy services” ( The Hindu , February 28, 2013). Opening up the legal services sector for foreign lawyers is being debated for over 18 years. Predominantly, foreign law firms want to practise as consultants (FLCs) and not in court. Government apathy, unthinking bureaucratic support to foreign law firms, total disconnect with the legal profession, absence of national policy objectives and dubious behaviour by foreign law firms in the past have clouded the whole issue.

Delhi Bar Council challenge

In 1994, Michael Fysh QC appeared before the Delhi High Court to argue a case representing a multi-national company. An objection was taken by the Bar Council of Delhi challenging his right to appear. This incident catapulted the controversy nationally.

The Bar Association of India (BAI), the premier voluntary association of lawyers functioning for over 50 years, immediately reacted as far back as October 5, 1994. A resolution for setting up a Task Force and a High Powered Committee was suggested. The plea fell on deaf ears.

The Bar Council of India consistently passed several resolutions between 2002 and 2007 opposing the opening up of the Indian legal profession to foreign lawyers or foreign law firms while emphasising the absence of specific proposals by the Central government, and has recorded a desire to continue a dialogue and interaction with the Government of India.

The General Agreement on Trade and Services (GATS) emphasises the right of members to regulate trade and services. Briefly, the core concepts of GATS are non-discriminatory and equality of treatment of all members. In an Annex on Movement of Natural Persons, an exception is carved out offering a clear impediment to Indian professionals working abroad.

Bombay litigation

Three large international law firms viz. White & Case, Chadbourne & Parke and Ashurst Morris Crisp applied to the Foreign Investment Promotion Board (FIPB) for starting branches in India. Their applications were rejected.

Thereafter, they successfully applied under the (now repealed) Foreign Exchange Regulation Act 1973 (FERA) for a licence or permission to open a liaison office under Section 29 for “carrying on any activity of a trading, commercial or industrial nature.” They surprisingly did not apply under Section 30 “to practise a profession or occupation.”

A disingenuous stand by high-ranking professional firms through a dubious route. They leveraged their position by employing the kin of powerful serving and retired bureaucrats. The Indian Express was more to the point — “The first set of clearances was granted after a delegation of foreign law firms, under the leadership of the son of the Union Minister of Law, met officials of the RBI.”

An NGO called ‘Lawyers Collective’ filed and succeeded in a public interest litigation (PIL) in the Bombay High Court challenging these permissions.

The legal profession and the public owe a debt of gratitude to the crusading and dedicated efforts of Indira Jaising, Anand Grover and, later, Chander Uday Singh representing the “Lawyers Collective” which exposed the attempt of the foreign law firms to gain a backdoor entry with government support in the lucrative legal services sector bypassing the Advocates Act.

Most countries, including Australia, Hong Kong and South Korea, prohibit foreign law firms from practising domestic law and also provide for registration under strict regulations for practising foreign or international law.

A case that is referred to in the Bombay judgment arose in the New York Court of Appeals. One Lorenzo Roel started practising Mexican law in New York and contended that as his practice was restricted to Mexican law, he did not practise law in New York. This contention was rejected. The Court held: “… Whether a person gives advice as to New York law, Federal law, the law of a sister State, or the law of a foreign country, he is giving legal advice …”

In the final judgment (Swatanter Kumar CJ and J.P. Devadhar J.) delivered on December 16, 2009, the prima facie view expressed at the interlocutory stage by Chief Justice M.B. Shah and Justice S.H. Kapadia (later CJI) was confirmed. The Bombay High Court held that “the Reserve Bank of India was not justified in granting permission to foreign law firms to open liaison office in India under Section 29 of the Act” and that practising the profession of law under the Advocates Act covered both litigation practice as well as “persons practising in non-litigious matter”.

Nothing could be clearer. Practice of foreign law was covered as non-litigious practice under the Advocates Act. The judgment has not been appealed from and has reached finality, and binds the government.

Madras litigation

Later another petition (PIL) was filed in the Madras High Court by A.K. Balaji. The government contended before the Madras High Court that “the Bar Council of India, which has been established under the Advocates Act, 1961, regulates the advocates who are on the rolls but law firms as such are not required to register themselves before any statutory authority nor do they require any permission to engage in non-litigation practice.”

This is directly contrary to the Bombay judgment which is binding on the government. The Madras High Court while following the Bombay judgment surprisingly deviated from it and made several concessions to the benefit of foreign lawyers which were vigorously supported by the governmental authorities. The Bar Council of India has appealed to the Supreme Court. By an interlocutory order, the Court has only permitted foreign lawyers to visit India for a temporary period on a “fly-in and fly-out” basis for the purposes of giving legal advice to their clients in India regarding foreign laws. In the absence of strict monitoring, this exception is likely to cause grave abuse.

The Law Commission of India, in a working paper in 1999, raised pertinent issues and concerns while recommending amendments to the Advocates Act to prepare a level-playing field for Indian lawyers.

Government apathy and opacity

On September 20, 2004, the U.K.-India Joint Declaration was made in London. The U.K.-India Joint Economic and Trade Committee (JETCO) was set up to provide recommendations on the possibility of opening up legal services in India. It appears that reports were made by the two teams but they are not in the public domain. It is understood that during the JETCO meetings, some Indian delegates were unequivocally informed by the U.K. team that they would emasculate Indian firms and pick and choose the attorneys from Indian firms so as to destroy capabilities and create their own strengths. U.K. firms had no interest in joint ventures with Indian firms which could help assimilate new technologies and know-how and training. It is however gathered that thereafter no significant progress has been made.

The Society of Indian Law Firms (SILF), which consists of firms which specialise in Joint Ventures, international arbitrations and transactional practice, had this to say: “The demand for opening legal services sector in India does not come from Indian business or Indian profession or even foreign multinational companies. Strangely the demand comes from foreign lawyers and particularly those from the U.K. … The problem is that in India the legal profession is not a business and it is not up for sale.”

It is time a resolution to this contentious issue was arrived at. The ball lies in the government’s court. It must start a frank and meaningful dialogue by publishing a position paper containing the national objectives and a proposed mechanism.

In sum, reciprocity, transparency and accountability of foreign lawyers with strict court-monitored mechanism of disciplinary control (one cannot trust the executive in view of its consistent support to foreign law firms) and a level-playing field are essential to be put in place by law. Our law firms should not be eliminated in India as has happened in the accountancy sector but should grow nationally and internationally. Amodus vivendi between the legal profession and the authorities is a precondition for fashioning a meaningful mechanism. Foreign Legal Consultants (FLCs) and foreign lawyers being permitted to enter the legal services sector in India without these safeguards would be unacceptable, inopportune and contrary to national interest.

(Anil Divan is president, Bar Association of India. anildivan@gmail.com)

A court monitored mechanism for a level-playing field should be set up before international firms are allowed to enter the legal services sector in India

No country for newborn children

India loses 4,200 children under the age of five every day. This figure is certainly unacceptable for any emerging country. The collective ache of losing so many newborns is worsened by the realisation that many of these deaths are preventable.

The country accounts for nearly a fifth of the world’s child deaths. In terms of numbers, it is the highest in the world — nearly 16 lakh every year. Of these, more than half die in the first month of life. Officials believe that the reason for this is the absence of steps to propagate basic healthy practices relating to breast feeding and immunisation. Also the large reproductive population of 2.6 crore remains bereft of care during the critical phases of pregnancy and post-delivery.

Added to this is the prevalence of child marriages, anaemia among young women and a lack of focus on adolescent sanitation, all of which impact child death rates.

Millennium goals

While India in recent years has made appreciable achievements in bringing down deaths per 1,000 live births (infant mortality), deaths within 28 days of birth (neonatal) and under-five mortality are the areas which can certainly do with some more attention.

In recent years, the Under Five Mortality Rate (U5MR) has declined sharply. In fact in the last two decades, it has fallen faster than the global average. While the global decline in child mortality was 35 per cent, India registered a healthier fall of 48.7 per cent between 1990 and 2010. In terms of numbers, 2010 saw U5MR decline by nearly half to 59 per 1,000 live births.

Worryingly, more than half, 33, were neonatal deaths or infants who died within 28 days of birth. In other words, the neonatal mortality rate has remained stagnant and has begun constituting an even larger proportion of the total number of child deaths. Part of the reason is that in the last two decades, efforts to tackle the problem were not as well funded as HIV and AIDS prevention. Now with the health-care sector’s and diminishing donor enthusiasm for HIV and AIDS prevention, mother and child care is coming back into prominence. The urgency to show results is also necessitated because India needs to meet the Millennium Development Goals (MDGs) by 2015 which still appear a long distance away.

This should be welcome news for those battling infant deaths in the country. But given the vastness of the country, achievements in reducing child mortality are not uniform. While some States have done extremely well, there are others that have fallen behind.

State variations

While Kerala is the leader in reducing infant mortality by a wide margin, Tamil Nadu, Maharashtra, Karnataka and Andhra Pradesh have bucked the national average decline of 7.25 per cent between 2008 and 2010. Haryana and Bihar, with a decline rate of just over seven per cent, manage to just about touch the national average.

Among the larger States that fare badly are Jharkhand and Madhya Pradesh (M.P.), with Assam for company. West Bengal, Punjab, Jammu & Kashmir, Uttar Pradesh (U.P.), Rajasthan and Chhattisgarh are just below the national average.

Just as there are variations among States in reducing child deaths, there are wide disparities within States as well. For example in Assam, the U5MR in Kokrajhar is double that of Dhemaji district. In Chhattisgarh, U5MR in Durg is half that of the tribal dominated Surguja. It’s the same story in Patna and Sitamarhi in Bihar. While 53 children per 1,000 live births die in Patna, the figure is 106 for Sitamarhi. These disparities are even starker in Rajasthan and Jharkhand. Then there are stand-alone districts in many States where child deaths are rampant such as Kandhamal (145) in Odisha, Shrawasti (142) in U.P. and Panna (140) in M.P.

These figures are important in the discourse on approaches to reducing child deaths. Both the Centre and the States will have to address these disparities — regional, State and inter-State — if they are committed to achieving the 12th Plan goal of U5MR of 33. This target in itself requires a tremendous effort because India has aimed higher than the MDGs of 38 deaths per 1,000 live births. If the current rate of decline continues, Odisha is probably the only State that will not achieve the 12th Plan target (2017).

Targeting adolescents

To sustain this high rate of annual decline, it cannot be business as usual, as an officer of the Ministry of Health and Family Welfare put it. Each State will have to identify a specific goal to meet the target. These could be enhanced coverage of health and nutrition, water, sanitation and hygiene which can prevent pneumonia and diarrhoea.

It is also equally important to forge interlinkages and package different interventions at various levels like linking child survival to reproductive health, family planning, and maternal health.

According to national surveys, adolescents (15-19 years) contribute about a sixth of total fertility in the country. With the substantial unmet need of contraception — nearly a quarter of married adolescents (15–19 years) — and low condom use by them in general, girls in this age band are at a high risk of contracting sexually transmitted infections, HIV and unintended and unplanned pregnancies. All these impact the child mortality rate.

In addition to focusing attention to addressing disparities within States and among regions, there is an urgent need to bring health and child services under universal health coverage with a focus on special requirements of vulnerable and marginalised groups.

Inexpensive lifesaving treatments remain inaccessible to a vast majority of Indian children, and especially those in the poorest groups within the country. All these challenges can only be met by State intervention.

Therefore, universalisation of maternal health and child services, which includes special newborn care, skilled delivery, immunisation and management of diarrhoea, seems to be the only answer if India is to achieve the high goals of reducing child deaths it has set for itself.


India accounts for the largest number of deaths of infants primarily because it has failed to provide them and their mothers access to critical health care

Why India needs to vote for U.N. resolution on Sri Lanka

With a vote due soon on a U.S.-sponsored resolution at the U.N. Human Rights Council (HRC), the Indian government has a chance to strongly encourage sustainable peace and political reform in Sri Lanka. Policy-makers in Delhi are clearly disturbed by the Sri Lankan government’s backsliding on promises of devolution of power to Tamil-speaking areas, its politically motivated impeachment of the Chief Justice there and its refusal to comply with last year’s HRC resolution on “Reconciliation and Accountability in Sri Lanka.” To maximise its ability to influence Sri Lanka towards a lasting resolution of its ethnic conflicts and a restoration of its democratic institutions, India should take the lead in developing a forceful, international strategy, first at the HRC, then through other multilateral bodies, to be able to hold Colombo to its promises.

Risks of instability: Some argue that India should avoid supporting the HRC resolution in order not to lose leverage with the Sri Lankan government. Unfortunately, the limits of India’s bilateral influence have long since been reached. Despite India’s unprecedented financial assistance to Sri Lanka over the past four years, the Rajapaksa government has made no genuine effort to treat Tamils as equal citizens, or to recognise their right to autonomy in the north and east. At the same time, as the International Crisis Group detailed in our February report on “Sri Lanka’s Authoritarian Turn,” there has been a sharp deterioration in democracy and the rule of law and no accountability for human rights violations at the end of the civil war. The risks of eventual political instability and a return to violence are growing.

The Indian government finds itself in a challenging position. India has wisely tried to remain engaged in Sri Lanka and avoid inflaming Sinhala nationalist sentiments. Sinhalese fears about the role of India’s 70 million Tamils are being stirred by increasingly bellicose, at times irresponsible, rhetoric from politicians in Tamil Nadu, as well as violent attacks on visiting Sri Lankans. The active and emotional support of politicians and activists in Tamil Nadu for the HRC resolution, including the current intense pressure from the ruling United Progressive Alliance’s coalition partner, the Dravida Munnetra Kazhagam, for the central government to support a resolution denouncing “genocide” in Sri Lanka, and the apparent effect this pressure has had on policy-makers in Delhi has led some analysts to argue that India risks having its foreign policy “hijacked” by “regional interests.”

Such arguments are exaggerated. Action on Sri Lanka’s human rights and governance crisis isn’t only in the interest of Tamils and Tamil Nadu. The Indian nation as a whole has every reason to prevent the further entrenchment of authoritarian rule in Sri Lanka, where Tamils and Tamil-speaking Muslims are being increasingly marginalised politically and the rights of all Sri Lankans are being undermined.

Consensus and persuasion

Beginning at the HRC, Delhi should lead in forging a strong international coalition to pressure the Rajapaksa government into reversing its most dangerous policies. This will require India modifying its long-standing reluctance to support country-specific resolutions at the U.N. and its preference for working through bilateral engagement.

India’s endorsement of a forceful HRC resolution, especially if it includes a call for an international war crimes inquiry, will send an important message to the Sri Lankan government that it cannot break promises, to India and its own people, and violate its international obligations without consequences.

Strong Indian action would also encourage other governments to toughen their own policies towards Sri Lanka. U.S. and European diplomats make it clear that they look to India as the key part of an effective international coalition, and India wields great influence among nations of the global south.

In addition to voting for a strong U.N. resolution, India should actively seek to bring others, particularly fellow Asian governments, on board. This includes supporting efforts of other Commonwealth members to ensure that its next heads of government meeting, currently scheduled for Colombo in November, is hosted by a government that respects Commonwealth values of democracy and the rule of law.

India should also work to persuade Japan, the World Bank and the Asian Development Bank to use their considerable collective financial leverage to reverse Sri Lanka's dangerously militarised development policies in the northern and eastern provinces. All major donors should press for a return to civil administration and for fair elections to the northern provincial council. Without these minimal conditions in place, development assistance risks supporting an unjust, and eventually unstable, political order in traditionally Tamil areas and an unreliable authoritarian regime in Colombo.

Until India begins actively helping set the agenda for multilateral action on Sri Lanka, even its strongest messages to the Rajapaksa government will continue to be ignored. Voting for a strong U.N. resolution, including an international investigation, will be an important step in India assuming a real leadership role in international policy on Sri Lanka.

(Alan Keenan is senior analyst and Sri Lanka Project Director, International Crisis Group.)

Limited headroom

Entirely in line with expectations, the Reserve Bank of India in its mid-quarter policy review announced on Tuesday reduced the policy repo rate by 0.25 percentage points to 7.5 per cent. On strict monetary grounds the case for a rate cut might not have been so obvious. However, in its first policy statement after the budget, the RBI would have found it difficult to resist pressures and not so subtle hints including from the Finance Minister himself. The budget had stressed fiscal consolidation, which the RBI has been asking for, as an essential complement to the anti-inflation stance of its monetary policy. So irrespective of whether the revised fiscal road map — which among other signposts calls for the ratio of gross fiscal deficit to GDP to decline to 4.8 per cent in 2013-14 — can in fact be reached, the RBI was forced to act. However, even without the government’s prompts, the RBI has not ignored growth concerns. Recent policy statements have, in fact, shifted the RBI’s focus away from inflation towards growth. As so often in the past, the mid-quarter review explains why monetary policy has to balance the conflicting claims of growth and inflation.

Growth has decelerated significantly. In the third quarter of the current year, GDP growth at 4.5 per cent was the weakest in 15 quarters. Particularly worrying has been the decade-low growth in the services sector. Industrial output has turned positive in January but significant weaknesses in capital goods production and mining activity remain. Initial estimates of the kharif crop indicate a lower level of foodgrains production compared to last year. If these suggest an easier monetary policy, the messages from the inflation front are not so clear-cut. While WPI inflation has edged up to 6.8 per cent in February from 6.6 in January, the other widely relied upon inflation index relating to core inflation — non-food manufactured inflation — has been coming down. Food inflation has remained worryingly high. Persistently high food prices have a negative impact on inflation expectations. They also explain the growing wedge between wholesale and retail inflation. Inflation is expected to remain at around the current levels during 2013-14. A competitive interest rate is necessary for reviving investment, but it needs to be backed by other measures such as easing supply constraints, staying the course on fiscal consolidation and emphasising quality governance. For these reasons, while the monetary policy stance underscores the need to address growth risks, the headroom for further monetary easing remains quite limited.

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