A lawyer who betrayed a client’s secrets risked not just professional disgrace, but moral ruin. Few could have imagined that this centuries-old courtesy of confidence would, over time, travel beyond the realm of domestic rules to one which would invoke conflict of law principles.

The recent judgment of the Supreme Court in In Re Summoning Advocates has placed the issue of privilege back into the spotlight. The Court ruled that in-house counsel do not enjoy privilege under Section 132 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA), because despite being lawyers, they do not enjoy the status of advocates. At first blush, that may sound like a technical distinction, but its impact is potentially far-reaching. Two examples illustrate this.

(1) A foreign company involved in a multi-million dollar transactions in India is often advised by an in-house team of lawyers. Its global legal in-house team exchanges drafts and risk assessments as well as provides legal advice internally. While such information is typically privileged at the place where it is given, it is now at the risk of losing that privilege if legal proceedings are commenced in India.

(2) In many common law countries, privilege is also granted to communications exchanged in relation to a legal battle that is either underway or on the horizon. This privilege is not dependent on whether the communication has been exchanged amongst lawyers. The reasoning for extending privilege to such communication has been captured in a decision of the House of Lords in Waugh v. British Railways Board, where the Court noted the importance of privilege “in order to induce candour in statements made for the purposes of litigation”.

The judgment in In Re Summoning Advocates does not consider these two issues, presumably because they were not brought to the attention of the Court. It would have been relevant for these issues to have been considered for the reason that India is now at a place where cross-border transactions and disputes are par for the course.

Indeed, the world of corporates has moved to a position where in-house counsel now play a crucial role in any organisation. Businesses now prefer being guided by the objective advice given by its in-house legal team, rather than having to engage external counsel who may not always be able to devote the time and appreciate the finer underlying commercial nuances at play. When the rules of privilege were formulated and given statutory recognition close to a century ago, this scenario did not exist because corporates typically relied on external legal advice. Therefore, to go strictly by the provisions of Section 132 of the BSA was perhaps inconsistent with the commercial realities that exist today.

One example of how privilege could have been extended to in-house counsel while also being recognised to exist in a scenario where communications are exchanged in relation to a legal battle that is either underway or on the horizon is evident from the decision of the High Court of Bombay in Larsen & Toubro Ltd v. Prime Displays Pvt Ltd.

In this case, the Court was faced with the issue of privilege attaching to documents containing advice from the applicant’s internal legal department. One of the arguments raised before the Court was that the then Section 129 of the Indian Evidence Act, 1872 (now Section 134 of the BSA), having used the phrase "legal adviser", was broad enough to include within its ambit in-house counsel. The Court did not, in the absence of necessary pleadings to establish that the in-house counsel in that case possessed the requisite legal qualifications, enter into a formal finding on this issue.

However, it did hold that privilege attached to the documents regardless, as they came into existence in “anticipation of litigation for being used in litigation,” and were thus not capable of being referred to, relied upon or produced in this or any other proceedings. In importing the concept of litigation privilege, the Court had aligned Indian jurisprudence with the global position.

The artificial distinction between external and in-house counsel does not reflect how legal work is organised today. The modern legal world functions as a relay, not a divide, between the boardroom and the courtroom. Undoubtedly, as has also been acknowledged by the International Bar Association’s Task Force on Privilege, global uniformity with respect to rules of privilege may be elusive. But some predictability is essential.

Given India’s ambition to host disputes arising from international commercial transactions within its own borders, it may be appropriate for the issue to be revisited either through legislative amendments or even a review of the decision in In Re Summoning Advocates. Sound were the words of former Attorney General of England & Wales Francis Bacon who once wrote, “the greatest trust between men is the trust of giving counsel.” India must preserve that trust in counsel, wherever the counsel may sit.

Nakul Dewan is a Senior Advocate and King’s Counsel.