On 21 September 2026, the Delhi High Court directed SAP India to restore software support to Nayara Energy. The interim order addresses an increasing practical question: can a local contracting party stop performance because its foreign parent is subject to sanctions imposed outside India?

The Court’s answer was narrow. EU sanctions do not become Indian law merely because they bind a multinational group elsewhere. A party relying on them must prove the foreign law, show that it covers the promised performance and identify a legal basis for non-performance. SAP had not done so.

The dispute in brief

Nayara operates the Vadinar refinery and a large fuel retail network. SAP India supplied enterprise software and annual support. ‘SAP Support’ meant access to the support portal, updates, patches, security and system keys, and specialist assistance. A perpetual licence without that operational layer was difficult and risky to use.

On 18 July 2025, the European Union added Nayara to Annex I of Regulation (EU) No 269/2014. This ‘designation’ triggers an asset freeze and, within the regulation’s scope, a ban on making funds or ‘economic resources’ available to the listed person. India imposed no corresponding sanction.

SAP blocked Nayara’s support portal on 24 July 2025, on grounds that its EU-headquartered group had to suspend support. Nayara sought a mandatory injunction restoring access. Nayara pleaded India’s national interest. Its refinery met roughly 8% of India’s energy requirements and unsupported systems created operational, cyber-security and regulatory risks.

What the Court had to decide

The first contest concerned governing law. Nayara relied on terms selecting Indian law, Delhi courts and, in case of conflict, the primacy of Indian law. It also cited India’s stated opposition to unilateral sanctions. SAP answered that ‘support’ came through a global network, including SAP SE in Germany, making continued service unlawful or exposing the group to enforcement risk.

The Court held that Indian law governed the contract. EU law could still be relevant as a fact, but section 39 of the Bharatiya Sakshya Adhiniyam, 2023 required it to be proved through reliable expert evidence; an Indian court does not take ‘judicial notice’ of foreign law. The legal opinions before the Court were inadequate: qualifications were not properly established by affidavit, the opinions were untested, and official guidance and authorities were not sufficiently produced. SAP’s assertion of illegality could not displace performance on its own.

The contracts also mattered. SAP relied on an export-control clause and a sanctions clause in a separate Delivered Support Agreement. Nayara argued the former omitted support services and the latter covered only a few partner modules, not the wider support arrangement.

The Court accepted, prima facie, that the Delivered Support Agreement was distinct in value, modules and territory. Its sanctions clause could not automatically be imported into every support obligation. Where it applied, the clause contemplated a sanction lasting at least six months and required notice. It was a contingent event under section 32 of the Contract Act, not a free-standing claim of frustration under section 56 of the Indian Contract Act.

For the other agreements, SAP had not shown impossibility under section 56 of the Indian Contract Act. Performance was not contractually confined to Germany, and the record left open support through a non-EU location. Greater difficulty or expense was not enough. The force-majeure clause extended time; it did not permit indefinite suspension.

SAP argued that the agreements were determinable and involved continuous duties, barring specific relief. The Court disagreed. A contract is not ‘determinable’ merely because it may end for breach or another specified cause; the bar principally concerns arrangements revocable at will or without cause. Restoring defined, long-performed services also required no impracticable supervision.

Nayara had shown a strong prima facie case, serious operational risk and a favourable balance of convenience. SAP was ordered to restore the support available before 24 July 2025. The conclusions remain provisional; EU law can still be proved and decided at trial.

Extraterritorial sanctions and Indian public law – The Legal framework 

EU sanctions are foreign public law. They bind EU persons and conduct within the Regulation’s scope, but do not acquire coercive force in India merely because an Indian company belongs to an EU-controlled group. India gives sanctions domestic effect through its own constitutional and statutory processes. The United Nations (Security Council) Act, 1947, for example, authorises Gazette orders implementing Security Council measures. No Indian measure implements Nayara’s EU listing.

The conflict is between the EU’s claimed regulatory reach and India’s territorial sovereignty. Article 15a of EU Regulation 269/2014 seeks compliance through non-EU entities owned or controlled by EU operators. Indian law determines the obligations of an Indian company under an Indian-law contract. In Gramophone Company of India Limited v Birendra Bahadur Pandey & Ors (AIR 1984 SC 667), the Supreme Court held that international law and comity may be accommodated only while consistent with municipal law; municipal law prevails where conflict is unavoidable. Nayara follows that logic without ruling on the validity of the EU measure or restraining SAP SE.

The order also separates foreign public law from private risk allocation. Parties may expressly make specified sanctions a trigger for suspension or termination; an Indian court would then enforce the contract, subject to Indian law, rather than the foreign measure directly. Silence or a general reference to export laws may not suffice. The ruling remains provisional: stronger proof, a closer EU nexus or evidence that every lawful route requires EU participation could lead to a different result.

Why the issue matters for India

India-Russia trade reached about US$68.7 billion in FY 2024–25; Indian imports were about US$63.8 billion, led by crude and petroleum products. Exposure therefore extends beyond refinery software. Banking, insurance, shipping, cloud services and maintenance can all become pressure points for trade lawful in India.

The order protects continuity for Indian infrastructure and limits the ability of foreign group policies to rewrite Indian contracts. Global suppliers may respond by pricing regulatory risk into Indian engagements or shortening renewal cycles. The better response is clear contracting, local support capability and early dispute planning.

The developing litigation map

The closest Indian parallel arose when Microsoft suspended Nayara’s cloud and collaboration services after the EU listing. Microsoft restored access, and the Delhi High Court disposed of Nayara’s petition on 30 July 2025 with liberty to return if difficulties recurred. It is therefore not pending.

Two other proceedings illustrate adjacent risks. In EuroChem North-West-2 v Tecnimont, pending before the Bombay High Court, Russian-project contracts were suspended after the 2022 sanctions and the claimant later sought relief in India on the strength of a Russian judgment. In June 2026, the Court refused an interim asset-freeze request, raising questions about the Russian court’s jurisdiction, an agreed London arbitration and natural justice. 

A useful counterpoint is Bitumix India v Union of India. The Gauhati High Court (WP(C) No.240/2026) recognised that foreign sanctions are not, by themselves, Indian municipal law, but refused to interfere with a bank’s refusal to process an Iran-linked transaction because the banking documents expressly incorporated US, EU and other sanctions requirements. Read together, the cases show that outcomes turn on governing law, drafting, evidence, jurisdiction and the remedy sought.

As of date, no publicly available Delhi High Court or Supreme Court record or report located for this article disclosed an appeal from, or stay of, the 21 September 2026 Delhi High Court’s order. The suit remains to be tried. Nayara’s separate annulment action against its EU listing, Case T-619/25, also appears pending before the General Court of the European Union.

A disputes perspective: What legal teams should do

Nayara v SAP is a case about litigation discipline. Indian courts regularly examine the contract promised, governing law, whether the foreign prohibition was proved and whether non-performance was unavoidable. Parties should prepare those answers before an operational crisis begins.

For Indian legal teams, a global sanctions notice should begin, not end, the enquiry. The team should identify the exact restriction, whether it binds the Indian entity or service, and whether the contract incorporates that regime. It should also map where the personnel, systems, data, payments and decision-making sit, since these facts may reveal an available route to performance. Critical operations should define the relevant sanctions regimes and address notice, mitigation, alternative performance, suspension and termination. 

Practical matters: local support, access to keys and data, transition assistance, escrow and workable exit rights, should be secured before disruption occurs.

If a dispute is likely, evidence must be prepared early: a qualified foreign-law expert, an affidavit-backed opinion, the operative legislation, official guidance and technical proof of impossibility should be collated. Indian counsel should not treat it as legal impossibility without foundation.