ABSTRACT An in-depth study of the flaws and gaps in regulations in relation to non-litigious services, entry of foreign law firms and making India an ‘arbitration hub’. Dr. James J Nedumpara, Prakhar Bhardwaj, Shruthi Ramakrishnan & Sunanda Tewari REFORMS IN THE NON- LITIGIOUS SERVICES SECTOR: A ROADMAP FOR GROWTH A report prepared by the Centre for Trade & Investment Law Disclaimer The views expressed in this Report represent the views of the contributors and is a product of professional research conducted at the Centre for Trade and Investment Law, Indian Institute of Foreign Trade. These views cannot be attributed to the Government of India or any of its officials. This Report is the product of ongoing research and consultations with the members of the bar, the government ministries and the industry. Accordingly, this Report is subject to modifications. Copyright © 2018 by the Centre for Trade and Investment Law, Indian Institute of Foreign Trade. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law. For permission requests, write to the Centre for Trade and Investment Law, addressed “Attention: Permissions Coordinator,” at [email protected]. ii Foreword It is a pleasure to know that the Centre for Trade and Investment Law has prepared a comprehensive report on the legal reforms required for the governance of non-litigious legal services in India. The role of non- litigious services in India has gained prominence over the last decade. However, the extant rules and framework need to be fine-tuned to facilitate the growth and orderly functioning of non-litigious services to keep in line with international trends. On 28 February 2018, the Union Cabinet chaired by the Hon’ble Prime Minister has approved the proposal of the Department of Commerce to give focused attention to twelve identified “Champion Services Sectors” for promoting their development, and realizing their potential. The legal services sector is one such Champion Services Sector. In this light, a comprehensive, systematic and analytical approach needs to be adopted to chart out the course of regulatory reform in this sector keeping in mind potential benefits to India and in alignment with various Supreme Court judgements. Any reform of the legal services sector must not only contemplate the increasing globalization of the legal profession, but must also take into account the changes required in the regulatory regime to ensure a level-playing field for domestic lawyers and legal services. I would like to compliment the Centre for Trade and Investment Law for the preparation of this report on “Reforms in the Non-Litigious Legal Services: A Roadmap for Growth”. This is an important step in establishing a robust regulatory framework for the regulation of non-litigious legal services in India. Sudhanshu Pandey, IAS Additional Secretary Department of Commerce iii Table of Contents About the Centre for Trade and Investment Law ..................................................................................... v Introduction to the Report .............................................................................................................................. vi Executive Summary .......................................................................................................................................... vii Section I: The Regulatory Model for Non-Litigious Services ............................................................... 1 Part I: Introduction To Non-Litigious Services ........................................................................................................... 1 Part II: Regulatory Model for In-House Counsel ......................................................................................................... 1 1. The Rise of the In-House Counsel .............................................................................................................. 1 2. Current Flaws and Gaps in Regulation of In-House Counsel ................................................................ 2 3. Comparative Analysis of Regulatory Regimes ........................................................................................... 8 4. Action Points in relation to Regulatory regime for In-House Counsel ............................................... 15 Part III: Regulatory Model for Law-firms ................................................................................................................. 18 1. Law firms in India today: Onwards and Upwards .................................................................................. 18 2. Current Flaws and Gaps in Regulation of Firm Lawyers ...................................................................... 18 3. Comparative Analysis of Regulatory Regimes ......................................................................................... 22 4. Action Points in relation to Regulatory regime for Law-Firms ............................................................ 28 Part IV: Regulatory Model for Legal Process Outsourcing Firms .............................................................................. 30 1. LPOs: The Fledgling Sub-sector for Non-Litigious Services ............................................................... 30 2. Current Flaws and Gaps in Regulation of LPOs .................................................................................... 30 3. Comparative Analysis of Regulatory Regimes for LPOs ....................................................................... 31 4. Recommendation for Regulating LPOs in India .................................................................................... 33 Section II: The Regulatory Model to Make India an ‘Arbitration Hub’ .......................................... 35 1. Introduction to Institutional Arbitration in India ................................................................................... 35 2. Challenges faced by Institutional Arbitration in India ........................................................................... 36 3. Proposed Reforms to Encourage Institutional Arbitration & Status .................................................. 40 4. Conclusion ..................................................................................................................................................... 51 Section III: The Regulatory Model for the Entry of Foreign Law Firms in India ........................ 52 1. Introduction .................................................................................................................................................... 52 2. Overview of the Draft BCI Regulations .................................................................................................... 52 3. Brief Overview of proposals by INBA, ICCA and SILF ........................................................................ 54 4. Consolidated Critique and Analysis of the BCI Draft Regulations........................................................ 57 Endnotes .............................................................................................................................................................. 63 iv About the Centre for Trade and Investment Law The Centre for Trade and Investment Law (“CTIL”) was established in the year 2016 by the Ministry of Commerce and Industry, Government of India, at the Indian Institute of Foreign Trade. The Centre’s primary objective is to provide sound and rigorous analysis of legal issues pertaining to international trade and investment law to the Government of India and other governmental agencies. The Centre is aiming to create a dedicated pool of legal experts who could provide technical inputs for enhancing India's participation in international trade and investment negotiations and dispute settlement. The Centre also aims to be a thought leader in the various domains of international economic law such as WTO law, international investment law and legal issues relating to economic integration. It is CTIL’s mission to identify, analyse and provide creative ideas and perspectives to influence the international discourse on wide ranging aspects of international economic law. The Centre engages on a regular basis with different stakeholders including central and state governments, think-tanks, research centres, national law schools and other institutions rendering legal education in international economic law, independent legal professionals, industry organizations and the private sector. The Centre is also conceived as a ready repository of trade and investment related information including updates on ongoing trade negotiations and disputes. v Introduction to the Report This report seeks to provide an outline of the principal changes required in the regulatory regime for non- litigious services. It first analyses the flaws and gaps in the current regulatory regime and then evaluates the regulatory regime in the United States of America, the United Kingdom, Singapore and Malaysia for best practices. This Report deals with three key areas and is accordingly divided into three sections: (i) Regulatory Model for Non-Litigious Services This section of the Report studies three key sub-sectors