Delhi High Court Restores SAP Services Despite EU Sanctions
The Delhi High Court has directed SAP India to immediately restore enterprise and software support services to Nayara Energy, holding at the interim stage that the company could not unilaterally suspend contractual services by relying on European Union sanctions.
Justice Vikas Mahajan passed the order on September 21, 2026, in a commercial dispute between Nayara Energy and SAP India concerning the suspension of critical software support services.
The dispute began after SAP India suspended Nayara Energy’s access to several services in July 2025. SAP cited European Union sanctions imposed on Nayara, which has significant Russian ownership through Rosneft.
SAP India argued that its ability to provide the services was connected to its German parent company, SAP SE, and that compliance with EU regulations prevented it from continuing to support Nayara.
Nayara Energy challenged the suspension, arguing that its agreements were with SAP India, an Indian company, and were governed by Indian law. It contended that the sudden withdrawal of services amounted to a breach of its contractual obligations.
The company also argued that India had not imposed corresponding sanctions on Nayara and that foreign sanctions could not automatically override a contract governed by Indian law.
The High Court accepted Nayara’s position for the purposes of granting interim relief. It observed that the contracts between the parties expressly provided for Indian law to govern their relationship.
The court further noted that SAP had not established before it, in the manner required under Indian law, the foreign legal provisions on which it relied to justify non-performance of the contract.
The court emphasised that foreign law cannot simply be assumed or taken judicial notice of by an Indian court. If a party seeks to rely upon foreign law, it must establish the relevant law before the court.
SAP had also argued that the services were dependent upon its parent company in Germany and therefore could not be provided without creating a conflict with EU sanctions.
The High Court was not persuaded by this argument at the interim stage. It noted that the contractual documents did not make the provision of support services exclusively dependent upon performance from a particular geographical location.
The agreements described the territory for licensing and support services as worldwide, which also weakened SAP India’s argument that performance was necessarily localised outside India.
The court therefore described the unilateral and abrupt suspension of support services as prima facie illegal and contrary to the contractual arrangements between the parties.
The nature of Nayara Energy’s operations was another important consideration. The company operates a large oil refinery and a nationwide network of fuel stations and has been described before the court as catering to approximately eight per cent of India’s energy requirements.
The court observed that uninterrupted technical support was particularly important for infrastructure of such scale. Without continued support, Nayara argued that its software environment could face unresolved system failures, security vulnerabilities and critical software problems.
The company also submitted that shifting to an alternative support arrangement would require considerable time and expense and could disrupt its operations.
Taking these factors into account, the High Court directed SAP India to restore the status quo that existed before July 24, 2025 and immediately resume all enterprise and software support services covered by the agreements.
The ruling does not finally determine the dispute between the parties. The court specifically clarified that its observations were prima facie findings made only for deciding the application for interim relief and would not prejudice the final adjudication of the commercial suit.
The case raises a broader legal question concerning the interaction between Indian contractual obligations and foreign sanctions regimes.
The dispute is particularly significant for multinational technology companies operating in India because it involves the difficult question of what happens when a company incorporated in India enters into a contract governed by Indian law but is part of a global corporate structure subject to foreign regulatory restrictions.
For now, the Delhi High Court has prioritised the contractual framework agreed between SAP India and Nayara Energy, while leaving the larger questions concerning the ultimate applicability and legal effect of the EU sanctions to be examined as the main proceedings continue.
The commercial suit remains pending before the Delhi High Court, meaning the interim order is not the final word on whether SAP can ultimately rely on the European sanctions as a defence to its contractual obligations.
