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Summary
When global sanctions collide with domestic law, who wins? A high-stakes legal battle between a Russian-backed Indian refiner and a German tech giant is forcing India to confront the hidden vulnerabilities of its critical infrastructure.
At first, the legal battle between Nayara Energy Ltd—the Indian refiner backed by Russia’s Rosneft—and SAP India appeared to be a conventional contract dispute.
However, it quickly raised larger questions around foreign sanctions, India’s technological dependence on multinational software providers, and whether global geopolitical developments could disrupt critical infrastructure operations within the country.
After Justice Vikas Mahajan heard both parties, the court recorded its judgement on 30 April.
Mint explains the case and why it matters.
What is the issue?
The dispute started in July 2025, when SAP India Pvt Ltd suspended all critical software support services including SAP ECC support (maintenance for its legacy core business suite), marketplace access, SSCR keys (developer credentials required to modify SAP source code), and expert services.
SAP said this was done after the European Union imposed sanctions on Rosneft, the Russian oil refinery that has a 49.13% stake in Nayara.
Nayara approached the Delhi High Court in September, saying the suspension blocked access to software critical for refinery operations and regulatory compliance. The company noted it was unable to implement GST 2.0 updates and argued that the disruption "poses a serious risk to India’s sovereignty and public interest", given that its refinery accounts for 8.5% of the nation’s energy production.
What did Nayara argue before the Delhi High Court?
Nayara argued that SAP was using the European Union trade curbs to not provide services to the energy firm despite its contractual obligations in India. It also cited a notification issued by the external affairs ministry stating India has not formally recognised those sanctions.
The oil refinery argued that since the contracts were governed by Indian law and payments were made in Indian currency, the German software giant’s attempt to bypass its commitments had no legal standing.
It also framed the issue as one with implications for India’s sovereignty and public interest. In its plea, Nayara argued that the suspension of software support services could disrupt refinery functions and expose India’s energy infrastructure to operational and cybersecurity risks.
What did SAP argue?
SAP India said the EU sanctions applied to all countries, and as a Germany-headquartered multinational group, it had to comply. SAP also claimed that services would not have been suspended had the entity been entirely India-based and free of any links to Russian ownership. The Delhi High Court declined to grant immediate interim relief to Nayara.
What do experts say about the implications of this case for India’s sovereignty?
Experts said the case extends far beyond a standard contractual dispute, and raises fundamental questions about India's economic independence and control over critical infrastructure.
Bhawani G Mann, founding partner at Mann & Singh Law Firm, said, “If foreign sanctions regimes can indirectly disrupt refinery operations, banking systems, or other strategic sectors within India without any corresponding Indian governmental restriction, courts may view the issue through the lens of public interest and strategic autonomy.”
She added, “The matter raises larger concerns about technological dependence on foreign corporations and whether external geopolitical measures can practically influence domestic infrastructure and commercial stability in India.”
Experts say the dispute highlights India’s reliance on foreign software providers for critical infrastructure and industrial operations.
Is this the first case of its kind?
No. US tech giant Microsoft also suspended its software services to Nayara Energy in July 2025, citing the EU sanctions. Nayara took the matter to the Delhi High Court, asking it to force Microsoft to resume its services and fulfill its contractual obligations. Microsoft restored its cloud-based services to the oil refinery the same month, after which the petition was withdrawn.
The case also reflects a growing global trend. Since the start of the Russia-Ukraine conflict in 2022, major IT companies have frequently suspended services to Russian entities, crippling businesses that rely on Western enterprise resource planning (ERP) platforms. A similar precedent exists for Iran, where international software vendors withdrew support following sanctions by the US’s Office of Foreign Assets Control (OFAC), forcing local companies to scramble for technical workarounds.
What do legal experts say about the wider implications?
Experts believe this case could set an important precedent on whether foreign sanctions can indirectly operate within India through multinational subsidiaries and technology dependencies.
Malak Bhatt, founding partner at Chambers of Malak Bhatt, said courts generally do not treat foreign sanctions as binding domestic law unless they are recognised through Indian legislation. “Courts are likely to treat such arguments with seriousness, but with some caution. A sovereignty or energy-security argument will carry weight only if Nayara can show a real operational impact on refinery functions, supply chains, statutory compliance, or continuity of essential services.”
Experts also said the government could intervene through policy and regulatory directions if it viewed the dispute as relevant to national energy security. Sidhant Dhingra, senior partner at Foresight Law Offices, said, “If the dispute is found to impact national energy security or critical infrastructure continuity, the government could intervene through policy, regulatory directions, sectoral coordination, emergency continuity measures, or diplomatic engagement."
Under Indian law, when a company is caught between domestic legal requirements and foreign sanctions, the only solution is to obtain a licence or exemption from the relevant sanctioning authority, experts said.
Sameer Jain, managing partner at PSL Advocates & Solicitors, said, “Practically, the options include seeking a specific licence or exemption from the relevant sanctions authority (in this case, the EU), engaging diplomatic channels, restructuring the corporate architecture to ring-fence Indian operations, or negotiating transition periods. Challenging the sanction in foreign courts or approaching the relevant authority for delisting rarely produces the desired outcome.”
About the Author
Yash Tiwari
Yash Tiwari is a Mumbai-based journalist who reports on corporate and regulatory developments, with a focus on court-driven policy shifts and the intersection of law and public policy. He has been in the profession for two years. Before joining Mint, he worked at NDTV Profit as an assistant producer on the TV desk while also reporting, gaining experience across television and print journalism and combining reporting with production expertise.<br><br> Born in Kolkata, a city he remains deeply connected to, Yash has a keen interest in the technicalities of Indian law and aims to decode complex legal developments in a clear and accessible manner for readers. He is a graduate of the Asian College of Journalism, Chennai, where he completed his postgraduate diploma in journalism.<br><br> He closely follows politics and government policies, and has covered several state elections as a freelance journalist. His work is driven by the idea of making law less intimidating and more understandable for the general public.<br><br> When not at work, Yash can be found playing cricket, revisiting classic matches, or engaging in conversations about the evolving landscape of law and policy in India.
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