India Business Law Journal – December 2007/January 2008

India’s year of opportunity

What might 2008 hold for all those whose fortunes rest on the business of law, and the law of business, in India?

It’s the time of year to reflect on what’s passed and look ahead to what the coming year may bring. It’s not the place of India Business Law Journal to expound on what anybody should or shouldn’t do or think. What we can do is look at the subjects we covered and make the connections and conclusions they suggest.

The picture, unsurprisingly, is mixed. Our Cover Story this month (see Deals of the Year) showcases Indian and international law firms at their best, working together to bring unprecedented transactions – both in terms of value and complexity – to fruition.

At the same time, however, our Spotlight (see Laws of competition) and Vantage Point (see India in 2008) features both point, among other things, to a seemingly growing trend towards more stringent regulation of domestic and international companies. Such a trend is exemplified in the Competition (Amendment) Act, 2007, which is pending only presidential assent to become law. This will introduce tougher compliance requirements than the original 2002 Competition Act appeared to envisage and may catch a large number of international deals in its bureaucratic net. Qualified commentators fear the new measures will prove unworkable.

Such observers might see the “Novartis saga” in a similar light. India Business Law Journal’s inaugural issue in June 2007 examined this controversial dispute over the patentability of “incremental innovation” by pharmaceutical companies. Our coverage continued in the following issues and presented the strongly held opinions on both sides of the debate. Following the failure of Novartis’ bid to strike down a clause of the patent act on the grounds of unconstitutionality, the company vowed to redirect some of its India investments elsewhere. With an appeal under way, further comment would be premature.

The long-simmering debate over whether and when India’s legal market should be opened to foreign lawyers has occupied many of our pages over the last seven months. One of the arguments frequently raised in opposition to the move relates to restrictions limiting the size of Indian law firms to 20 partners. This restriction, some believe, will inhibit the ability of local firms to compete on a level playing field if and when their larger international counterparts arrive. But as this month’s Vantage Point predicts, the problem may be solved by limited liability partnership legislation that is likely to be enacted in 2008.

While the majority of Indian law firms will welcome this move, the debate over the entry of foreign lawyers is far from over. This is one of the most divisive issues facing India’s legal profession and the different sides of the argument have all had their voices heard in this magazine. They will continue to be heard in 2008 as the debate rolls on.

But as our coverage over the last seven months has forcefully illustrated, of equal or greater importance than the issue of foreign law firms are lingering shortcomings in the practice and administration of law and justice. Our September issue exposed the significant risks faced by outsourcers as a result of India’s woefully inadequate data protection laws. It also highlighted the persistent problem of corruption and nepotism in the judiciary.

Then in October, we examined the tediously slow pace of justice in India’s courts and the pressing need to restructure and speed up the administration of justice to allow parties to disputes to build a measure of trust in India’s litigative system. In the same month, an extensive survey revealed that judicial paralysis is one of the greatest legal problems facing corporate counsel in India.

This month, our Intelligence Report (Getting the right advice) explores the perilous risks local and international businesses face when instructing Indian law firms. Foremost among these risks is a lack of genuine accountability, and, more alarmingly, the frequent lack of professional indemnity insurance on the part of private practitioners for any incorrect or negligent advice they offer.

None of these problems is insurmountable, and their impact is dwarfed by the immense advantages modern India affords domestic and international businesses. However, they do call for urgent remedies nonetheless.

2008 is therefore a year of opportunity for India. Opportunity not only to consolidate the immense achievements of recent years and bring many more groundbreaking business deals to the table, but also opportunity to address some of the underlying problems that impact domestic and foreign businesses, and the population at large.

The legal profession must be at the forefront of these efforts if it is to contribute to India’s attractiveness as a target for foreign and domestic investment in the future.

Finally, we would like to offer our congratulations to all the deals and dealmakers that made it onto India Business Law Journal’s Deals of the Year list.

And in that spirit, we congratulate and thank all our readers, contributors, advertisers and correspondent law firms for their generous support in 2007. We wish you all a prosperous, happy and successful 2008.