Delaware Ruling on Indian In-house Counsel and Legal Privilege

A couple of years ago, we had discussed
the European Court of Justice (ECJ) decision in the Akzo Nobel and Ackros
Chemicals case where in-house legal counsel was denied legal professional privilege
even though such counsel was enrolled as an advocate in the relevant bar at the
time. Although that case involved European companies, we had made some guesses
as to what might be the position in India as follows:
Under Indian law, the Bar Council of India Rules require any
lawyer taking up full-time salaried employment to “intimate the fact to the Bar
Council on whose roll his name appears and shall thereupon cease to practise as
an advocate so long as he continues in such employment” (Rule 49, Section VII,
Chapter II, Part VI). Hence, the reasoning of ECJ in the 
Akzo Nobel judgment ought to
apply with greater force in such circumstances, ceteris paribus (i.e. without
taking into consideration other procedural and evidentiary aspects of domestic
Indian law, if any, that may operate to the contrary).
A recent
post
on Spicy IP discusses a Delaware District Court opinion involving
Cadila Healthcare Limited where the issue was raised squarely, and answered on
similar lines surmised above. The Court found that the in-house counsel of an
Indian company is not entitled to protections of confidentiality and legal
privilege given the prevailing law in India. The Court was persuaded by the
opinion of Justice B.N. Srikrishna, who was appointed as a neutral expert. The Delaware
Court opinion, Justice Srikrishna’s opinion and Cadila’s response are contained
in the Spicy IP link above.
The Delaware Court’s opinion is not informative as it simply
refers to Justice Srikrishna’s opinion, which requires us to consider some of
its key reasoning. The opinion analyzes sections 126 and 129 of the Indian
Evidence Act, 1972 that deal with confidentiality of professional communication
and legal privilege. The opinion finds that while these sections refer to various
types of professionals such as “barrister, pleader, attorney or vakil”, all of
these positions have been aggregated by the Advocates Act, 1961 within the
single concept of an “advocate”. Despite the Bombay High Court’s finding to the
contrary in Municipal Corporation of
Greater Bombay v. Vijay Metal Works
, AIR 1982 Bom 6, Justice Srikrishna’s
analysis of the Advocates Act, the Bar Council Rules and recent decisions including
Lawyers Collective v. Bar Council of
India
, (2010) 2 Comp LJ 108 (Bom), and A.K.
Balaji v. Government of India
, AIR 2012 Mad 124
, leads to his
conclusion that in-house legal counsel are not “advocates” or “professional
legal advisors” who are entitled to the protection of confidentiality and legal
privilege under the Indian Evidence Act.
Cadila’s response that Vijay
Metal Works
, which is the only Indian decision squarely on the point, supports
legal privilege to in-house counsel and also that the Advocates Act and Bar
Council Rules must not be used to interpret sections 126 and 129 of the Indian
Evidence Act did not hold sway with the Delaware court.
Although this is only a ruling of a district court in a foreign jurisdiction,
it has potentially negative consequences on the roles and responsibilities of
in-house counsel in Indian companies. The in-house counsel movement has been
building up quite strongly in India, with in-house counsel taking on a more
proactive role in Indian corporates. This is consistent with the global
phenomenon being witnessed in emerging economies generally, as Professor David
Wilkins notes in a recent
paper
.

While it is possible
to deliberate on the merits of specific court decisions that interpret an
assortment of Indian laws in this regard, including Evidence Act, the Advocates
Act and the Bar Council Rules, it may perhaps be time to revisit some of the
concepts in these legislation and their applicability to in-house counsel whose
roles were not nearly as relevant when these laws were enacted as they are now.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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