Asialink Business’ latest research report — Australia’s Jobs Future: The rise of Asia and the services opportunity — produced in collaboration with ANZ and PwC, demonstrates that by 2030, services can become Australia’s number one export to Asia in terms of total value added, supporting a million Australian jobs in the process.
The export of professional services, including legal services, are also expected to rise. However, there are barriers faced by legal service providers who wish to operate in Asia, including nationality and residency requirements, limited recognition of Australian qualifications and limits on foreign investment in local firms.
Australia–China Free Trade Agreement
The conclusion of a comprehensive free trade agreement (FTA) with China (ChAFTA) is likely to lead to a surge in the export of services (although the final FTA is yet to be signed). China has offered Australia the best services commitments it has ever provided in an FTA (with the exception of China’s agreements with its Special Administrative Regions — Hong Kong and Macau). Most importantly, they include new or significantly improved market access for Australian services, including legal services (see the factsheet prepared by DFAT on ChAFTA’s key outcomes). Australian law firms will be able to establish commercial associations with Chinese law firms in the Shanghai Free Trade Zone. This will allow firms to offer Australian, Chinese and international legal services with a commercial presence in China, without restrictions on the location of clients.
ChAFTA also includes a framework to advance mutual recognition of services qualifications and to support mutual recognition initiatives by professional bodies in Australia and China. This is not the case with other Asian countries, where barriers continue to exist and hinder negotiations for the conclusion of FTAs.
Relationship between the Australian and Indian legal sectors
Through my own involvement in building the Australian–Indian relationship in the legal sector, I am aware that there is an interest on the part of law firms, universities and judiciaries in both countries to develop deeper ties. However, international law firms and practitioners are faced with huge barriers if they intend to set up business or practice in India.
With the growing trade between the countries, and India becoming an important international market, it will be necessary to have lawyers with expertise in both jurisdictions or for clients to have easy access to experts in both jurisdictions.
Because Australia and India are both common law countries, it should be easier for lawyers to transfer their skills across jurisdictions and make positive contributions to each’s legal systems.
The legal market in Australia is comparatively more open. However, from the perspective of the Indian legal sector, that comparative openness is largely academic; it is unlikely that Indian legal firms would be in a commercial or strategic position to enter the Australian market. There are no restrictions on establishment of foreign firms in Australia and foreign lawyers are allowed to work in Australian firms, provided they do not give advice on Australian law or profess to hold local qualifications. Australia’s accreditation requirements for foreign practitioners are still quite onerous, with up to 12 subjects and a year of practical training required before being permitted to practice in an Australian jurisdiction (See the Law Council of Australia’s publication on the admission of foreign practitioners).
On the other hand, the Indian market is much more restrictive: neither joint ventures nor foreign direct investment (FDI) in the legal sector is permitted. Foreign law firms have to largely rely on fly-in-fly-out arrangements and work with Indian law firms. In addition, foreign firms are not permitted to represent local clients in India. The accreditation requirements for foreign practitioners wishing to work in India can also be quite onerous (see this summary of the qualification process prepared by the International Bar Association).
Given these restrictions, it is imperative that wide-ranging reform be undertaken to open up the Indian legal market so that foreign firms can establish local offices and foreign lawyers can practice within India. There is also a continuing need for mutual recognition of academic legal qualifications that allows for the free movement of legal experts.
Towards deeper Australia–India legal ties
The Indian Department of Commerce has recommended a two-phase road map for the liberalisation of the legal professions. The reforms are discussed in detail here.
The first phase would include domestic regulatory reforms, implemented simultaneously with the opening of international arbitration and mediation services in foreign investment law and international law practices. Phase Two would include opening up non-litigious and non-representational services in Indian law.
However, there remains strict and ongoing opposition to FDI and third party ownership of law firms. Further, reservations continue against foreign firms who have third party non-lawyer funding from entering the Indian legal market. There is also hesitancy in respect of multi-disciplinary practices from entering the legal sector, including the ‘Big Four’ accounting firms.
The issue of reciprocal access for Indian lawyers is to be clarified at a later date.
Approval has been given for the implementation of the LLP structure in India, as well as permission for law firms to issue brochures, open websites and access bank finance. An increase in professional indemnity limits has been agreed to in-principle by representative bodies of the Indian Bar.
Deeper ties between would also be fostered if lawyer had the ability to go for internships or secondments at law firms in the other country. Thankfully, the road map also seeks to address this issue.
Despite these recommendations a lot remains to be done before it can be said that the Indian legal market is ‘open for business’. The Department of Foreign Affairs and Trade (DFAT) is working on finalising an FTA between Australia and India and the legal sector is one of the areas that it will address. To support this process, I have made a formal submission to DFAT suggesting a collaborative approach be adopted and that this be based on professional gains, academic gains, sharing of judicial advancements and commonality of legal systems. My submission will be available on the DFAT website shortly and this post will be updated to include the link when it is live.
Molina Asthana is a Principal Solicitor with the Victorian Government Solicitor’s Office. She is the President of the Victorian Chapter of the International Law Association, Chair of the International Law Section of the Law Institute of Victoria and Treasurer of the Asian Australian Lawyer’s Association. She has significant experience in the Indian jurisdiction.