Global Legal Advisory Service Licence – Are we ready for it!

Following the announcement made in the Budget Speech 2016, the Finance (Miscellaneous Provisions) Act 2016 was enacted. This Act amends the Financial Services Act to empower the Financial Services Commission, Mauritius (the ‘FSC’) to grant licences in the field of Global Legal Advisory Services. The way the amendments in the Finance (Miscellaneous Provisions) Act 2016 have introduced the concept of ‘Global Legal Advisory Services’ is at best confusing and raises a number of challenging issues. It would appear that the FSC would not be issuing new regulations to regulate the Global Legal Advisory Services.

1. Past Legislation

• The Law Reform Commission (“LRC”) discussed the concept of Global Legal Advisory Service in 2007 and in light of their recommendations, a new legislation was adopted.

• At the time, the LRC was of the opinion that “the practice of Mauritian law [that is the right of audience before our courts, notarial services, advice on Mauritian law] must still for some time remain the reserved activity of our local law practitioners. The citizenship requirement for practice of Mauritian law should not be done away for the time being as it may open the floodgate to law practitioners from other jurisdictions.” The LRC did, however, specify that the situation may change in the future and this requirement may be lifted.

• The recommendations of the LRC were as follows:

o Law practitioners, who so wish, should be allowed to provide legal services within the legal framework of a corporate entity, be it as an employee or an associate or partner/director/shareholder of the corporate entity [which is to be called law firm/corporation or legal practice corporation].
o As regards to foreign law firms, it was recommended that foreign law firms and foreign lawyers be permitted to team up with local law firms or law practitioners with a view to establish a Joint Law Venture. The approval of such a Joint Law Venture was to be obtained from the Attorney General.
o Moreover, the registered foreign lawyer though entitled to advise only on foreign law and/or international law, would be subjected to the same professional ethical and practice standards as are applicable to our local law practitioners.

• We note that this initiative of the LRC has, indeed, been a success as we have registered local offices of 2 foreign law firms, 6 joint law ventures and 19 foreign practitioners in Mauritius in as at today.

2. New legal regime

• The Finance (Miscellaneous Provisions) Act introduces sections 77A and 77B in the Financial Services Act to allow “an entity whose main activity is to provide legal services pertaining to global business, international arbitration, corporate law, taxation law and foreign and international law” to apply to the FSC for a Global Legal Advisory Services licence. The striking aspect of this new legal regime is that a law firm in a foreign jurisdiction can apply to the FSC for a licence that will allow the foreign law firm to provide legal advice on Mauritian laws. Lawyers who are, thus, regulated by the FSC (and not by the Law Practitioners’ Act) will, however, not be able to represent clients in contentious matters before the courts in Mauritius.

• The Financial Services Act, as amended by the Finance (Miscellaneous Provisions) Act will not apply to the holder of a Global Legal Advisory Licence issued by the FSC nor would the entity need to employ a Mauritian law practitioner. On the other hand, the foreign law firm must employ at least two foreign qualified lawyers and have a physical establishment in Mauritius. We again need to pause here to note that there is no requirement for such foreign qualified lawyers to be resident in Mauritius. We can, therefore, deduce that it is possible for these qualified foreign lawyers to be able to provide Mauritian legal advice without being tax resident in Mauritius.

• These types of legal services were previously (as it is in the case of foreign lawyers) regulated by the Attorney-General. It would appear, however, that the holder of the licence will only be regulated by the FSC and will not be accountable to the Mauritius Bar Association, the Mauritius Law Society, the Chamber of Notaries, or even the Hon. Chief Justice. We would, therefore, be in a situation where legal advice is being provided by foreign law practitioners on Mauritian law and they will not be answerable to the existing regulatory bodies which supervise the professional conduct of lawyers but instead will be under the supervisory of the FSC, a regulatory body which had been created to regulate the provision of ‘financial services’ – as defined in that law. This raises the legitimate question of how would matters relating to professional conduct be dealt with and by whom. We understand that when it comes to ethical issues, the foreign law firms under this legal regime will have to answer to their respective regulatory bodies in their respective countries and not to any legal regulatory body in Mauritius.

3. Political & Economic Aims of the Government

• During a press interview in March 2016, one would recall that the Honourable Roshi Bhadain GCSK, the Minister of Financial Services, Good Governance and Institutional Reforms stated that “Mauritius did not have an identity of its own, let alone a logo or a collectively-approved brand.” “The vision of this Government, in line with its strategy of graduating the products and services we offer to the international business community to a new level of sophistication, is positioning Mauritius as an international financial centre of excellence, repute and substance which would act as a platform and add value to cross-border investments into the region and into emerging markets.”

• The amendments which have now been enacted in the Financial Services Act with regard to the Global Legal Advisory Licence are in line with the objectives set out above in order to boost further investment in the Mauritius Financial Services Sector.

4. Does the new legal regime achieve this?

It is certainly hard to say at the moment as to whether the new legal regime has achieved the aims of the Government.

• Attracting international law firms which do not have the obligation to employ Mauritians does not enlighten us as to how this new legal regime will provide new job opportunities to Mauritians. There is a disparity between the legislation & the economic aim of being able to create job opportunities to young Mauritians. The latter are for the majority educated to university level with many having gone to qualify as barristers or solicitors. If, however, the international law firms are not subject to a statutory obligation of employing Mauritian professionals, it is not easy to say how this will create employment prospects.

• The Attorney General is not responsible for vetting these applications and the FSC does not really have experience in dealing with those types of applications. It is, of course, understood that the FSC is well versed with the process of vetting applications for businesses, however, this concept concerns the provision of legal services which is an entirely different profession. For example, it is unclear how the FSC will be able to distinguish between reputable law firms such as the so called “magic circle” firms and other firms which may not have adequately foreign qualified lawyers and who may bring the legal profession into disrepute.

• An essential question which crops up as a result of the introduction of this new legal regime is to which legal institution the client turns to when the legal advice which has been given by the foreign legal practitioner proves not to be accurate.

• Furthermore, we wonder what would happen to the existing foreign law firms operating as Joint Ventures in Mauritius. Would they proceed to apply for this new type of licence and no longer need local lawyers? This again goes against the objective of the Government to provide for more job opportunities to Mauritians.

• This new legal regime also makes us ponder on the subject of the 5 year tax holiday which has been mentioned in the Budget and which has not yet been enacted. Would the new legal regime attract the wrong kind of people who would come to Mauritius only to enjoy the 5 year tax holiday under this new legal regime?

5. Conclusion

• At this point in time, we would have to say let bygones be bygones as the law has already been enacted, however, it is the responsibility of the FSC to issue new regulations to provide a proper structure to the Global Legal Advisory Service Licence, or else, we are in for a pickle.

By Khemila Narraidoo,
Associate Barrister

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