Indian in-house lawyers face privilege exemption after Supreme Court ruling

Section 132 of the Bharatiya Sakshya Adhiniyam affords privilege between an advocate and their client, with some exceptions around crime or fraud.

But the court ruled (pdf, 78 pages/690 KB) that while advocates could not be compelled to give up communications under the law, in-house lawyers were not subject to the same privilege when it came to investigations as the nature of their salaried roles legally distinguished them from advocates.

“An in-house counsel though is engaged in the job of advising his employer on questions of law would even then be influenced by the commercial and business strategies pursued by his employer and would always be beholden to his employer and obliged to protect their interest,” the court, led by Chief Justice of India B R Gavai, wrote.

There would be limitations on the privilege enjoyed in communications between counsel and employer, although not between counsel and the employer’s legal representative.

Mohammed Talib, a disputes expert at Pinsent Masons, warned that international businesses operating in India would now need to review how they handle sensitive advice in the wake of the ruling.

“This will have a profound impact on how companies manage legal risk, particularly in the context of internal investigations, regulatory scrutiny, and pre-dispute strategy. The inability to assert privilege over in-house legal communications means sensitive advice around strengths, weaknesses and strategy could now become exposed during subsequent proceedings,” he said.

“Corporates must reassess their internal protocols, document handling, and the timing and extent of engagement of external counsel to safeguard confidentiality and mitigate exposure.”

Scheherazade Dubash, international arbitration specialist at Pinsent Masons, added: “The recent Supreme Court ruling introduces a significant divergence from the expectations of international businesses accustomed to common law protections of privilege. In jurisdictions like England and Wales for example, communications between in-house counsel and their corporate clients are generally protected by legal advice privilege, provided the counsel is acting in a legal not commercial capacity. This ensures that early-stage legal strategy, risk assessments and internal advice remain confidential”.

“In contrast, the Indian Supreme Court’s decision to deny full privilege to in-house counsel communications on the basis that they are not ‘practising advocates’ under the Advocates Act creates uncertainty. It exposes internal legal advice to potential disclosure, even in arbitration, unless external counsel is engaged or litigation is clearly anticipated.”

“For international businesses operating in or arbitrating under Indian law, this ruling underscores the need for early crystallisation of disputes and strategic engagement of external counsel to preserve privilege. It also raises broader questions about India’s alignment with global arbitration norms, particularly as it seeks to position itself as a preferred seat for international dispute resolution,” she said.