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A monumental challenge

Infrastructure is finally taking its place in the sun. And for good reason: the task ahead is urgent

Simply to maintain the smooth running of today¡¯s economy, º¬Ðß²ÝÉçÇø infrastructure requires a significant overhaul. To keep pace with rapid growth, not to mention laying the foundations for the next stage of expansion, will involve truly dazzling sums of money.

In this regard, Reliance Power¡¯s US$3 billion IPO on 15 January is perhaps a foretaste of things to come. It was certainly spectacular timing, coming but two days prior to a market-closing 10% fall in the Sensex.

This month¡¯s Cover Story (Building the future) investigates the renewed confidence of investors in º¬Ðß²ÝÉçÇø infrastructure sector and examines the roles that local and international law firms are playing in bringing groundbreaking ¨C and once unthinkable ¨C deals to fruition. The shadow of Dabhol persists, but is fading: Indian and foreign lawyers ¨C including some of those who were involved in the infamous Maharashtra power plant ¨C tell India Business Law Journal that its lessons have been heeded.

Such lessons include optimal structuring of joint venture agreements, diligent implementation of expertly crafted dispute resolution provisions, careful nurturing of the right strategic relationships and more. Linking infrastructure investments to the exploration of new sectors, such as the development of special economic zones, is another strategy being used to hedge risks and foster greater levels of social acceptance among communities in whose hinterlands projects are to be located.

For a grassroots insight into what all this can mean, look no further than the fictional case study of Project Windstorm. In the first of a two-part series, Bob Nelson, a lawyer who was himself involved in the Dabhol restructuring, sheds light on the planning and development considerations that are essential aspects of any foreign direct investment in infrastructure.

It is always encouraging to see the government grappling with pieces of old legislation that have clearly passed their sell-by dates. One of our two Spotlight features this month (Redrawing the corporate framework) previews reforms to the 1956 Companies Act that the government may put before parliament this year. They include welcome harmonization of the different procedures for mergers and acquisitions, as well as a call to allow board meetings to be conducted by telephone.

In a further sign that the regulatory and political ground is shifting, Dr Montek Singh Ahluwalia, vice-chair of the Planning Commission of India, recently told India Business Law Journal that the role of government in developing the economy is ¡°increasingly that of a referee¡±.

But as our competition & antitrust correspondent forcefully illustrates, not all new regulations are smoothing the path for foreign investment.

Infrastructure investors and others may soon face, or even fall foul of, more onerous compliance requirements under the Competition (Amendment) Act, 2007. This controversial law brings with it the spectre of a compulsory pre-merger notification requirement for corporate amalgamations, including, it seems, some international mergers that have little, if any, bearing on India. Expect to see ongoing and vigorous debate on this new piece of legislation¡¯s potential impact.

Another topic of ongoing and vigorous debate is the thorny issue of opening º¬Ðß²ÝÉçÇø legal market to foreign law firms. This month¡¯s Intelligence Report (Open sesame) looks at four jurisdictions ¨C China, Hong Kong, Japan and Singapore ¨C that have opened their legal markets in starkly contrasting ways.

The comparison is thought-provoking and instructive. Each jurisdiction has had successes, yet also made mistakes. But in every case, the local legal profession has survived.

Do any of these models provide a template for India to follow? Opinions are bitterly divided, but the divergent voices heard in our coverage offer much food for thought.

Tackling the same issue in this month¡¯s Vantage Point, seasoned commentator VG Kulkarni asks why, if Indian businesses can stand up to global competition, the legal profession can¡¯t do the same. Kulkarni concedes, however, that before the market is opened, the rules governing º¬Ðß²ÝÉçÇø law firms must be changed.

One such rule is the prohibition on law firms advertising and having websites. But as India Business Law Journal was going to press, news broke of a significant movement on this front: According to reports in the Hindustan Times, ¡°the Bar Council of India has told the Supreme Court that it has acceded to overwhelming demands from lawyers across the country to allow them to give basic authentic information about themselves to their prospective clients¡±.

While this news will no doubt be a cause for celebration for º¬Ðß²ÝÉçÇø lawyers, the evidence suggests they have a great deal more to look forward to. A pointer may be visible in our story on cyber-laws and online intellectual property theft (Piracy in another domain), an area of legal practice unimaginable 10 years ago, but which now sustains a host of specialist law firms and practitioners.

If such self-generating growth can be perpetuated and sustained, the question may well become how to find enough qualified and experienced lawyers, not from which country they come.