SAP must restore Nayara Energy services, Delhi HC says EU sanctions no bar

The court observed that SAP India's suspension of critical software support was prima facie in breach of its contract with Nayara Energy

The Delhi High Court on Monday directed software services provider SAP India to restore software and enterprise support services to the Indo-Russian oil refining and marketing company Nayara Energy, Bar and Bench reported.

 

Granting interim relief to Nayara Energy, a bench led by Justice Vikas Mahajan allowed the company's plea against the Indian arm of the German software service provider over the suspension of critical software services following European Union (EU) sanctions. 

 

The court declined SAP counsel’s request to keep the judgement in abeyance for a few weeks and asked the counsel to review the judgement first.

 

The court said that SAP’s abrupt suspension of services following the EU sanctions on Nayara in July 2025 was, prima facie, in breach of the contractual agreement between the two companies.

 

 

The bench ruled that SAP “cannot take advantage of these unproven EU sanctions to argue that the performance of the contract has become impossible” at the interlocutory stage. 

 

“There is no doubt that the contractual relationship between the parties is strictly governed by the domestic laws of the Republic of India. The agreement gives a conscious and unambiguous primacy to the Indian laws in the event of any conflict with foreign rules or regulations,” the report quoted the statement issued by the court.

 

Justice Mahajan observed that maintaining Nayara’s critical software infrastructure was important given the “volatile geopolitical situation and the current oil crisis stemming from the USA-Israel war with Iran”. 

 

Nayara involved in meeting 8 per cent of India’s energy needs

 

In its earlier observations, the court noted that losing the SAP contract could leave Nayara’s software infrastructure vulnerable to system failures, security vulnerabilities, and critical bugs. Given Nayara’s role in meeting around 8 per cent of India’s energy needs, the court stressed the importance of uninterrupted technical support.

 

“For critical infrastructure of this scale, an uninterrupted flow of technical support services is absolutely essential,” read a copy of the order accessed by Mint.

 

SAP argued that continuing support could expose its German parent, SAP SE, to criminal liability under EU sanctions. The court, however, distinguished between SAP India and its German parent, noting that the Indian entity could continue providing the services.

 

“Restoring the support services poses no inconvenience to defendant no. 1, an Indian corporate entity,” the court said, noting that SAP India had itself indicated it would have continued providing support in the absence of trade sanctions.

 

The court directed SAP to restore status quo ante as it existed before July 24, 2025 by immediately resuming all enterprise and software support services to Nayara. 

 

What’s the history of the dispute?

 

Nayara’s dispute with SAP India Pvt Ltd began in July 2025 when the software services provider 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 claimed that the services were suspended following EU sanctions on Rosneft, a Russian oil refinery that has a 49.13 per cent stake in Nayara.

 

Following the disruption of services, Nayara approached Delhi HC in September claiming that the suspension violated its contractual rights, blocking the company’s access to software critical for refinery operations and regulatory compliance. 

 

The company said it was unable to implement GST 2.0 updates and argued that the disruption posed a serious risk to “India’s sovereignty and public interest", with its refinery accounting for 8.5 per cent of the nation’s energy production.

 

This is not Nayara Energy’s first software disruption. In July 2025, Microsoft also suspended services to the refinery, citing EU sanctions. Nayara subsequently moved the Delhi High Court, after which Microsoft restored its cloud services later that month and Nayara withdrew the petition.

 

The episode mirrors a wider sanctions risk. Since the Russia-Ukraine war began in 2022, Western tech firms have cut services to Russian companies, disrupting businesses reliant on foreign ERP systems. Iran saw a similar fallout, with software vendors withdrawing support and local firms turning to technical workarounds.