Two Indian companies, Indian law governed documents but embroiled in a legal battle on account of suspension of software support services due to foreign sanctions: this is a snippet of the recent judgment by the Hon’ble Delhi High Court (“Court”) in Nayara Energy Limited v. SAP India Private Limited^[1]. Although the decision in this case emanated from an application seeking interim reliefs, the decision sheds much needed light on the growing intersection of the global sanctions regime on one hand and the domestic enforcement of contracts on the other.

• Setting the Context

Under an SAP Software End-User Value License Agreement[2] (“EULA”), SAP India Private Limited (“SAP India”) had granted Nayara Energy Limited (“Nayara Energy”) non-exclusive licenses for the use of specified SAP software products, subject only to the standard terms of payment and usage restrictions. Thereafter, a series of Software License and Support Agreements (“Order Forms”) were executed inter alia to procure additional software products alongside support services. Three Order Forms were executed. The first Order Form explicitly incorporated the General Terms and Conditions for SAP Software and Support (“GTC”) as a binding legal framework; but the other two Order Forms were stated to be governed by GTC and the SAP Enterprise Support Schedule (“Support Schedule”). The Support Schedule included critical assistance from the technical experts of SAP India for resolving operational queries, system troubleshooting, and maintaining exigencies.

The parties then executed SAP Delivered Support Agreement (“SAP DSA”) which provisioned for supplementary support services, including access to the SAP Support Portal, Online Service System (OSS) notes, software patches, license key generation, and expert assistance through Avaali Solutions Private Limited (SAP India’s authorised partner).

In this backdrop, the last work order was issued and accepted by SAP India for the period 1^st January 2025 to 31^st December 2025 and was paid for by Nayara Energy. But then on 18^th July 2025, Nayara Energy was included in the European Union (“EU”) Sanctions
List, which concerned imposition of restrictive measures against actions that undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine[3] (“EU Sanctions”).

Consequently, on 24^th July 2025, Nayara Energy was denied access to the SAP support portal, through which support services were being provided against various licenses and other software products, on account of alleged ‘export issue’. Besides this, SAP India also claimed that as an EU headquartered company, it had to take immediate steps to ensure compliance with these applicable laws and regulations. In this backdrop, Nayara Energy approached the Court seeking interim measures inter alia for restoring the SAP support services.

• Governing Law Clauses: The Foundation of Contractual Enforcement

Prior to deciding the applicability of foreign sanctions, the Court examined which law governed the contracts. The GTC stipulated that the governing law will be Indian law; the Indian law would prevail in the event of conflict with foreign law; and the exclusive jurisdiction shall vest with the courts in New Delhi.

The First Order Form was stated to be governed by the GTC, and the other two Order Forms were governed by the GTC and Support Schedule. However, the Support Schedule did not contain an independent governing law or exclusive jurisdiction clause.

The SAP DSA designated Indian law as the governing law to the specific exclusion of the international law of conflicts.

Overall, the governing law of the contracts chosen by the parties was Indian law, and the parties had further eliminated the scenario of interpretational conflict by according an overriding effect to Indian law over foreign laws.

• Enforceability of foreign sanctions: Automatic?

The most controverted aspect of the dispute was SAP India’s contention that since its parent company, SAP SE is headquartered in Germany, it is also bound by the compliance mandates of EU, and continuing to provide support services to Nayara Energy, who was added to the EU Sanctions list due to its ties with ROSNEFT, a Russian company, would violate the EU Sanctions. This raised a pivotal question of recognition and enforceability of EU Sanctions in India to decide the legal tenability of withdrawal of SAP support services.

The Court noted that: (a) Section 52(1) of the Bharatiya Sakshya Adhiniyam, 2023 (“BSA”) does not include foreign law within its ambit and hence excludes the EU Sanctions, and (b) Section 39 of the BSA states that a foreign law may be brought before an Indian Court, that is, through an expert opinion.

However, an expert opinion could not automatically be relied upon[4], and the expert must be examined and cross-examined as a witness. In this case, both parties had supplemented their case by producing expert opinions, but the opinions were not backed by: an affidavit, record of qualifications / credentials / specialized experience of the experts, authoritative commentaries, official guidance documents from EU institutions, or judicial precedents from the European Courts with respect to applicability of the EU Sanctions to support the interpretations offered. Besides, without examining / cross-examining the expert, the opinions were not admissible in evidence.

Hence, foreign sanctions (like EU Sanctions) would have to be proved, and their application cannot be automatic. The Court on a prima facie basis allowed the application for interim reliefs in favour of Nayara Energy and directed SAP India to restore the status quo ante as it existed prior to 24^th July 2025, by immediately resuming all enterprise and software support services under the respective agreements.

• Takeaways and Learnings

The decision, indeed, is a significant one in the jurisprudence of sanctions law in India and at the moment, appears to be a much-needed breather for entities grappling similar situations. Be that as it may, the decision does not mean that foreign sanctions are completely unenforceable in India or that they have no meaning. Rather, it underscores that the applicability and enforceability of foreign sanctions would be a matter of evidence to be proved before an Indian court. Therefore, the party invoking applicability of foreign sanctions would have the evidentiary burden of providing the same. Even then, simply producing an expert opinion would not suffice unless the expert has been examined / cross-examined in court. Until then, contractual obligations cannot become redundant by mere imposition of sanctions.

Nonetheless, the decision signifies that eventually what impact foreign sanctions can have on an Indian law governed contract or even Indian parties to multi-jurisdictional contracts, would depend on the contract, the nature of the service, the governing law, the provider’s Indian presence and whether continued performance is actually possible through an Indian entity or a non-sanctioned jurisdiction.

Another thing that assumes importance, and must be done with utmost caution, is drafting the documentation suite – not just standalone clauses in a contract, but where there are multiple documents, how each interacts with the other, especially in adversities. Indian companies should examine not only the governing law and jurisdiction clauses, but also sanctions provisions, force majeure, service-continuity obligations, and the location from which support is delivered. Contracts should expressly capture provision on how a foreign parent’s policy can permit the Indian contracting entity to suspend services and provide for alternative delivery arrangements before critical services are discontinued. More importantly, sanctions and risk clauses in contracts (whether entirely between Indian parties or a combination of Indian and offshore parties) should not be undermined as boilerplate clauses, and this decision (albeit interim) serves as a cue to reassessing sanctions and risk clauses with a macroscopic lens.

Authors:

Disclaimer: 

This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein.

[1]  I.A. No. 23754 of 2025 in CS (COMM) No. 1006 of 2025; decided on 21^st September 2026

[2]  Initially, the EULA was executed between Essar Steel India Limited and SAP India, which was later assigned by Essar Steel to Essar Oil Limited (subsequently renamed as Nayara Energy). SAP India was obligated to provide ongoing support services.

[3] As reported in the judgment: “Nayara Energy Limited is an entity established in India and operating an important refinery in Vadinar. That refinery is 49% owned by the Russian State oil company Rosneft and is a major refiner of Russian crude oil. The energy sector, in particular the oil sector, is a sector providing substantial revenue to the Russian Government. Therefore, Nayara Energy is involved in an economic sector providing a substantial source of revenue to the Government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilization of Ukraine.”

[4]  Hari Shanker Jain v. Sonia Gandhi, (2001) 8 SCC 233; Rasmala Trade Finance Fund v. Raman Gupta, 2019 SCC OnLine Del 9285