(As Prepared for Delivery)
Good morning. Thank you very much for the invitation to speak with you today. I am honored to share the dais with distinguished members of the legal profession. Let me thank our hosts the American Bar Association and the Society of Indian Law Firms for organizing this important event. Let me especially take a moment to acknowledge Dr. Lalit Bhasin, ABA President Paulette Brown, Mr. Fali Nariman, Judge Sanjay Tailor, and Mr. Salman Khurshid. It is truly a pleasure to join you this morning.
Celebrating our “Natural Partnership”
The U.S.-India relationship matters now more than ever before. There is a great deal of excitement in the partnership. I’ve been calling 2015 a “year of consequence.” Our two countries came together closely and built stronger partnerships in trade and investment, defense, education, travel, research, science, climate, and energy. Washington played host to the first ever Strategic and Commercial Dialogue between our countries, which advanced our objectives at the highest levels on important issues like innovation and entrepreneurship, infrastructure and Smart Cities, and promoting a business climate that facilitates increased two-way trade and investment. We are looking forward to another S&CD this summer in Delhi. We have broken all kinds of records this year: bilateral trade is over $104 billion, two-way investment is over $33 billion. There are 500 American companies working in India. India sent over 132,000 students to the US this year. And we are not done yet, we have only just begun.
There are many reasons for this dynamic connection but certainly a major one is our shared values and shared commitment to the rule of law. Our strong legal systems serve as the backbone to protecting our citizen’s rights and are a vital part of the U.S.-India relationship. In fact, one of the fundamental aspects of our “natural partnership” stems from the fact that we are both constitutional democracies who share an unwavering commitment to the rule of law and the peaceful resolution of disputes.
Liberalization of the Legal Service Sector
As we examine the connection between rule of law and economic success, there is one issue that is especially valuable to mention in this particular venue. I refer to the liberalization of the legal services market here in India. In my view, this liberalization is a critical area that would be mutually beneficial for both countries.
I had the pleasure to meet with both Paulette Brown of the American Bar Association and with Lalit Bhasin on the Society of Indian Law Firms. We discussed the long-standing and productive collaboration between the two organizations, and I want to commend Dr. Bhasin on his untiring efforts to expand that relationship. Additionally, I want to commend both organizations for their willingness and efforts to take steps toward liberalizing the rules for the provision of legal services in India.
Indian and American companies alike tell us that they would benefit from having law firms with whom they are familiar advising them abroad. A more open legal services sector would bring increased cross-border investment opportunities for both countries. Law firms that have a presence in the U.S. and in India will be able to more easily advise their clients as they make important decisions on key investment matters. As India is the fourth-fastest growing source of FDI into the United States, Indian firms could also benefit by having more cohesive legal teams to advise them as they plan to open or expand operations in our nation.
Some have questioned whether the U.S. legal system has true reciprocity with foreign attorneys in the context of these discussions on liberalization.
The fact is that no state requires American citizenship in order to practice law in the United States. Now, not all states’ bars are reciprocal with one another, which means an attorney may be required to pass the bar of more than one state, in order to practice in several states. But this requirement is agnostic to citizenship: Americans and non-Americans alike are subject to the same requirements. Having passed the bar in Pennsylvania I can certainly sympathize with those who consider this to be an onerous task, but the fact remains that all lawyers that practice in the United States, regardless of citizenship, are offered the same set of requirements to practice law.
There are several opportunities for us to work together with the legal community here in order to advance the discussions around liberalization. The discussions held during and after this conference are critical to advancing the market access in this field.
Additionally, I would encourage more exchanges between legal experts in India state bars and the American Bar Association in the United States. These visits would be important opportunities for Indian and American attorneys to exchange best practices and better acquaint themselves with the cultural norms of doing business in each other’s countries. I hope this is something we can help develop.
Advances in educational accreditation are another area in which we can work together. If more U.S. educational institutions could apply for accreditation by the Bar Council of India, it would allow students that graduate from these accredited institutions to practice law in India.
Last fall, members of the U.S. Department of Commerce’s Commercial Law Development Program held substantive discussions in India regarding key legal issues like bankruptcy, insolvency and contract enforcement. And they are back in New Delhi today to further their work. This program is now inviting a handful of leading Indian legal scholars and practitioners to visit the United States later this year. I understand the delegates may include Indian Supreme Court Justices Sikri and Dr. Bhasin. The purpose of their visit will be to exchange insights on the American and Indian legal systems and to promote better understanding and communication around legal liberalization, debt recovery procedures, and more.
Ease the Burden on Indian Courts – Make Doing Business in India Easier
With a commitment to rule of law, there must also be a focus on making the legal process work in an efficient and seamless manner. In recent meetings with members of the legal profession, I’ve been amazed to hear accounts of the volume of cases that the courts hear and act upon in India. What is just as remarkable is that this mammoth workload does little to reduce the enormous backlogs of cases. However, I’m optimistic that recent legislative efforts on commercial courts and bankruptcy legislation will relieve some of this pressure on the courts, while at the same time making it easier to do business in India.
We also welcome Indian government efforts to pursue the Insolvency and Bankruptcy Code in Parliament. Effective bankruptcy legislation that better facilitates business closures would curb asset stripping and ensure higher recovery rates for creditors, a longstanding demand of industry. The World Bank’s Ease of Doing Business 2016 Report noted that in India it currently takes more than four years to resolve insolvency cases, versus one and a half years on average in OECD countries. I understand the Bankruptcy Bill targets a 180-day time period to fully assist companies through the bankruptcy process. US companies and the broader industry would applaud legislation that realizes this goal.
Transparent, fair, predictable, and efficient commercial legal systems will help propel our investment and trade relations further forward. We welcomed Parliament’s passage of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill and its focus on facilitating smooth and prompt resolution of commercial disputes.
While much is happening, more can be done. One example is for the US and India to start the process of negotiating and completing a bilateral investment treaty or BIT. We are committed to President Obama and Prime Minister Modi’s call to assess the prospects for a high standard BIT with India. A BIT that meets high standards could help facilitate economic reforms in India, including further opening to foreign investment, and increased transparency in rule-making. What do I mean by high standard? A BIT will only be high standard if it provides meaningful protections for investors, including robust market access commitments, and reliable access to international dispute settlement. A concluded BIT would send an important signal to U.S. investors, especially infrastructure investors, that India is open for business, and would support some of India’s top initiatives such as: “Digital India,” “Smart Cities” and “Make in India”.
In conclusion, let me reiterate that the rule of law is what unites our countries in so many areas of commercial, strategic and political interactions. It is a shared value. It is a commitment we will always uphold. It is why our lawyers work so well together, and our people and governments have become so close. In the months and years ahead, we can do even more to deepen and broaden our already strong relationships.
I want to applaud the American Bar Association and the Society of Indian Law Firms for organizing this conference, and more importantly, for their continuing engagement and efforts to strengthen our bilateral relationship. As India continues to build its stature as a global leader, you will continue to have a strong and steadfast partner in the United States. Thank you very much.