An international law firm that linked up with an island legal company has won the right to be recognised in Bermuda.

But the winning case by Walkers (Bermuda), which set up an agreement with Bermudian firm Taylors under a licensing deal, is set to be challenged by the Bermuda Bar Council, which claimed the company had broken rules requiring local companies to be controlled by Bermudians.

Walkers appealed to Supreme Council to reverse a decision last year to block its deal with Taylors.

But Chief Justice Ian Kawaley, in a written ruling, said that the Walkers arrangement with Taylors did not breach section 114 of the Companies Act 1981, which requires local companies to be owned and controlled by Bermudians.

Mr Kawaley said: “Although in my judgment it would be a bridge too far in terms of statutory interpretation for this court to find that section 114 by implication prohibits licensing arrangements of the sort that the appellant proposes to enter into, it is easy to see that the Bermuda Bar Council would be assisted by legislative support to regulate, either itself or through an appropriate Minister, the terms on which foreign legal brands can be used by local professional companies.

“I should add that it is not apparent to me that the most pressing concerns underpinning any such regulatory regime would be the minutiae of the financial or service arrangements that Bermudian professional services firms enter into.

“What those concerns might be was not canvassed in the present appeal, which focused on a different statutory regime altogether.

“My gentle suggestion that some regulation might be helpful involves no tacit criticism of the proposed arrangement in this case. Rather, it is to express sympathy with the conundrum which confronted the Bermuda Bar Council and prompted the decision to refuse to issue the certificate sought by the appellant on grounds which I have found to be unsound in legal terms.”

The written judgment said: “At the time of the relevant application, 100 per cent of the appellant’s shares were owned by Bermudians.

“At the time of the present appeal, the appellants were 99 per cent owned by a Bermudian lawyer and one per cent owned by a lawyer with a local permanent residence certificate.”

Kevin Taylor, partner in Taylors, in association with Walkers, said yesterday that Supreme Court “has declared that the company fulfilled all the requirements of the Bermuda Bar Act 1974 and ordered that a certificate of recognition be granted.

“On February 2, the Bar Council filed a notice of appeal challenging the Chief Justice’s decision. The company will oppose the appeal, which, it is hoped, will be listed for hearing in the March Court of Appeal session.

“In the meantime, Taylors continues to provide Bermuda legal services in association with Walkers as usual.”

Richard Horseman, of Wakefield Quin and president of the Bar Council, added: “I can’t really comment on it right now because the matter is not yet concluded and may still be ongoing through the courts.”