Mauritius law firms active in the offshore market say the jurisdiction urgently needs reform of the legal profession to allow access to international firms.
For the past five years the Indian Ocean island of Mauritius has been making a determined effort to establish itself as an offshore financial services centre with unique geographical, cultural and linguistic links to Europe, the Indian subcontinent and the Far East.
Representatives of the country’s Financial Services Promotion Agency have been globetrotting from conference to roadshow. They are spreading the word about a jurisdiction where people are fluent in English, French and Hindi, whose working day overlaps substantially with those of both the UK and China and which has adopted the new global standards expected of offshore centres without being obliged to accept measures that go beyond them, such as the EU’s Savings Tax Directive.
These efforts are being rewarded with some success above and beyond the traditional ‘Mauritius route’ used by entrepreneurs to invest in India while taking advantage of the double taxation avoidance treaty between the two countries.
Wealth management specialists have noted the usefulness of Mauritius companies to clients anxious to minimise legally their tax liability, and the island is starting to be mentioned as a trust jurisdiction in the same breath as the Crown dependencies and countries and territories in the Caribbean.
But a number of Mauritius lawyers whose practices are focused primarily on offshore business say that growth will be constrained so long as international law firms are unable to establish a presence on the island. Reform has become a controversial issue within the profession and hopes of swift action have now been dashed by an upcoming general election.
According to barrister Saneer Tegally of Tegally Chambers, the problem applies particularly to trust business, but this has a knock-on effect on the financial services industry as a whole. “Unless and until we have international law firms based in Mauritius, we cannot expect this industry to grow,” he says. “There will be no credible and reliable trust industry unless we have active international law firms with particular expertise in trusts. That doesn’t mean local law firms aren’t competent, but high-net-worth individuals who are putting their money in trust want to be sure that they have access to the cream of the cream.
“A lot of clients have told me that business is being diverted away from Mauritius because of this. When they ask who the law firms are, they’re not looking for Saneer Tegally but Clifford Chance or Norton Rose. The government has promised reform of the legal profession will take place, but no one knows how long it’s going to take.”
Last November Sushil Khushiram, the country’s minister of economic development, financial services and corporate affairs, told The Lawyer that legislation allowing foreign law firms to access the Mauritius market through joint ventures or partnerships with domestic firms should come into force within the following six months.
“The legislation has been prepared by a former chief justice,” Khushiram said during a seminar in London last month. He says the measure has been approved in principle by the cabinet and will go before parliament once the attorney-general has “put the final touches to it. It should be through in a maximum of six months.”
The proposed legislation, drawn up by a former chief justice of the island, would create a vehicle known as a ‘law corporation’, which would bring together a barrister, a notary and a solicitor to provide legal services. Foreign law firms taking a stake in such a company through a shareholding agreement, joint venture or partnership could then offer legal services in Mauritius.
Lawyers with expertise in the international sector are enthusiastic about the reforms. For example, Iqbal Rajabalee, a former partner at leading firm Collendavelloo Chambers and now chief executive of the Mauritius Financial Services Commission, believes that existing local firms would benefit by increasing their international expertise.
But dissension within the local legal profession is blamed, at least in part, for delays that have held up the legislation. The measure has now fallen foul of a general election called for 3 July and lawyers do not expect it to be brought before parliament swiftly, especially if there is a change of government.
According to Muhammad Uteem of Erriah & Uteem Chambers, a committee set up to provide the government with input from the profession recommended that the rules be changed to allow the establishment of partnerships before the doors are thrown open to foreign lawyers.
Uteem, who previously worked for a US law firm before returning to the island to practise, says he is “probably the only lawyer in Mauritius who is in favour of allowing in foreign lawyers”. He continues: “The government has been promising reform for three or four years, but it hasn’t done anything because the Bar Council is against it. The higher-end commercial work is concentrated in the hands of a few QCs and senior lawyers – the people who would be most threatened by the arrival of foreign lawyers.”
He argues that the impasse has affected the development of Mauritius as an international jurisdiction by denying most practitioners the opportunity to build up their experience of top-level international business. “If we were open to foreign firms like Allen & Overy, it would not only bring more business, but it would give junior members of the bar the opportunity to receive top-quality training,” insists Uteem.
According to Shakeel Mohamed, a partner at MC Law Offices, liberalisation in Mauritius could proceed in the same way as in Singapore, where foreign firms initially established a presence through joint ventures after the market had opened up. But he adds: “With the launch of the general election campaign, all these discussions have been halted.”
He concludes: “The reform process is still at an embryonic stage, but I believe it would be advantageous by showing potential clients and investors that there is not only expertise here, but expertise from other jurisdictions. Foreign firms would bring both international clients and lawyers with international experience, and I believe Mauritius lawyers would gain a lot from the experience.”
Simon Gray is a freelance jourmalist and former editor of International Maoney Marketing