Delhi High Court Orders SAP to Continue Software Support for Nayara Energy Amid EU Sanctions Dispute

The Delhi High Court has refused to suspend an earlier order directing SAP India to restore and continue software support services for Nayara Energy, an Indian oil refining and marketing company with links to Russian energy interests. The decision means SAP must continue providing the services while its appeal against the earlier ruling remains pending.

A division bench of Justices Prathiba M. Singh and Dinesh Bhatt said SAP’s support system was essential to Nayara Energy’s operations and that denying access could expose the refinery operator to substantial costs and operational risks. The court has allowed SAP to approach it again if circumstances change, particularly if European authorities impose new restrictions that affect the company’s ability to provide support.

Delhi High Court Refuses to Stay Earlier Order

The latest development concerns SAP India’s appeal against a September 2026 order passed by a single-judge bench of the Delhi High Court.

On September 21, Justice Vikas Mahajan directed SAP India to restore the software services and support arrangements that existed before July 24, 2025. The order covered access to SAP’s Marketplace and online service systems, along with enterprise and technical support under the parties’ contractual arrangements.

SAP challenged that direction, arguing that continuing the services could create legal exposure because of European Union sanctions affecting Nayara Energy.

However, the division bench declined to stay the single judge’s order. It observed that SAP’s support infrastructure was comparable to an essential service for Nayara’s business operations.

The bench also recognised that Nayara could face significant costs if access to the support system were withdrawn. It issued notice on SAP’s appeal and directed that the services ordered by the single judge should continue during the proceedings.

The next hearing is scheduled for January 11, 2027.

Why SAP Suspended Services to Nayara Energy

The dispute began on July 24, 2025, when SAP India blocked Nayara Energy’s access to its support portal and related services.

SAP cited export-control restrictions and European sanctions. The European Union had imposed sanctions against Nayara Energy on July 18, 2025, as part of measures targeting Russian interests following the continuing war in Ukraine.

Nayara operates the Vadinar refinery in Gujarat and has significant Russian ownership links. Russian state-controlled oil company Rosneft holds a 49% stake in the Indian company.

SAP, headquartered in Germany, argued that its parent company and wider European operations were required to comply with EU restrictions. It maintained that continuing to provide certain services could expose the group to penalties under European and German law.

Nayara disputed the suspension, arguing that its contracts were governed by Indian law and that no corresponding Indian restriction prevented SAP India from fulfilling its obligations.

The company also maintained that SAP’s services were critical to its day-to-day operations, including software maintenance, technical support, updates and access to proprietary tools.

Why SAP Software Is Important to Nayara’s Operations

SAP provides enterprise software used by companies to manage interconnected business processes. Such systems can support finance, procurement, inventory, supply chains, maintenance, human resources and other operational functions.

For a large refinery, these systems help coordinate activities across multiple departments and business processes. Interruptions to technical support can create difficulties when the company needs software updates, security patches, troubleshooting or assistance with system changes.

Nayara argued that it could not simply replace SAP’s support infrastructure with another service provider. Access to proprietary software tools, licence keys and technical assistance was part of the existing contractual arrangement.

The earlier single-judge order took account of the potential operational and cybersecurity risks associated with losing access to these services. It also considered Nayara’s claim that the refinery and its associated business activities were important to India’s energy supply.

The division bench’s latest observations reinforce the importance of maintaining the support arrangement while the legal dispute is being examined.

What the September 2026 Judgment Said

Justice Vikas Mahajan’s September ruling examined whether SAP India could rely on European sanctions and foreign export-control restrictions to suspend its obligations under contracts with an Indian company.

The single judge found, at the interim stage, that the contractual arrangements were governed by Indian law. The court also considered the contractual provisions dealing with foreign laws, export restrictions and circumstances that could prevent performance.

SAP had argued that continuing the services could become legally impossible because of the restrictions affecting its German parent company.

However, the single judge was not persuaded that SAP had established a sufficient basis for suspending its Indian contractual obligations at that stage. The court considered that the applicability and legal effect of foreign restrictions needed to be properly established.

It also examined whether the dispute amounted to frustration of the contract under Section 56 of the Indian Contract Act or triggered a contractual contingency under Section 32.

The court found that SAP had not demonstrated, at the interim stage, that providing the services had become impossible. It distinguished between performance becoming more difficult or commercially inconvenient and performance becoming legally or practically impossible.

Importantly, these findings were preliminary observations for the purpose of granting interim relief. They are not a final determination of every legal issue raised by SAP.

SAP’s Arguments Against Continuing Support

SAP’s appeal centres on the relationship between its Indian contractual obligations and the restrictions applicable to its European parent company.

The company has argued that the software support system depends on a wider international infrastructure and cannot be treated as an entirely independent Indian service.

Its legal team also raised concerns about potential consequences under European and German regulations. SAP argued that contractual provisions dealing with export-control restrictions should be considered when determining whether it can be compelled to continue providing support.

During the appeal proceedings, SAP also informed the court that it had approached European authorities regarding permission to continue the services. Its counsel said the company had received permission subject to conditions concerning Nayara’s dealings with Russia, and expressed concern that the permission could change or be withdrawn.

The division bench allowed SAP to return to court if there is a material change in circumstances, including an immediate restriction imposed by European authorities.

This provision is significant because it leaves room for the court to reconsider its interim direction if the regulatory position changes.

Why the Case Matters Beyond Nayara Energy

The dispute highlights the challenges international technology providers can face when sanctions imposed by one jurisdiction affect contracts with customers in another country.

Global software companies often operate through interconnected networks involving local subsidiaries, overseas parent companies, cloud infrastructure and technical support teams. A restriction imposed in one jurisdiction can therefore raise questions about how services should be delivered elsewhere.

For Indian companies, the case also highlights the importance of continuity in enterprise software systems. Large manufacturers, refineries and infrastructure operators depend on specialised digital platforms to manage complex operations.

A sudden interruption in technical support can create risks beyond the software itself, particularly when systems are integrated into critical business processes.

The case could become relevant to future disputes involving international technology contracts, foreign sanctions and the application of Indian contract law. However, its broader legal implications will depend on the final outcome of the proceedings.

The Bigger Picture

The Delhi High Court’s latest direction provides temporary protection to Nayara Energy by ensuring that SAP’s software support continues while the appeal is pending. It also demonstrates the court’s concern about the operational consequences of disconnecting a critical technology system before the underlying legal questions have been fully examined.

At the same time, the dispute is not simply about whether a software company should continue serving a customer. It raises a more complicated question: how should Indian contractual obligations be balanced against foreign sanctions and export-control restrictions that may affect a multinational company’s wider operations? The court has not yet delivered a final answer.

Looking Ahead

The next important date is January 11, 2027, when the Delhi High Court is scheduled to consider SAP India’s appeal. The proceedings could examine the relationship between the Indian contracts, European sanctions, export-control restrictions and the ability of SAP India to provide services through its international support network.

Until then, SAP must continue providing the services in accordance with the earlier order. The company retains the liberty to approach the court if the regulatory situation changes, meaning the dispute could evolve if European authorities introduce or enforce additional restrictions affecting the arrangement.