Indian court rules for sanctioned refiner in Microsoft services dispute 

Indian oil refiner Nayara Energy said Microsoft had restored services after the Delhi High Court intervened in a dispute over the US technology giant’s suspension of critical business operations following sanctions imposed by the EU.

‘Nayara Energy confirms that all Microsoft services critical to its operations have been fully restored, with no disruption to business continuity and data integrity remaining fully intact,’ the refiner said in an email. ‘We acknowledge the prompt intervention of the Hon’ble Delhi High Court in facilitating the resolution of this matter. The petition was disposed of by the High Court in favour of Nayara Energy.’

It said the resolution came after it filed a petition under India’s Arbitration and Conciliation Act challenging Microsoft for discontinuing services that breached their contract. The Delhi High Court issued notice on Monday and Microsoft restored services two days later, prior to the scheduled hearing, the company said.

Microsoft did not immediately reply to an email for comment after the court intervention, and earlier emails also were not answered.

The court granted Nayara liberty to approach the tribunal again if issues recur and directed Microsoft to address any further concerns.

The dispute arose after the EU included Nayara Energy in its 18th Russia sanctions package in July, primarily due to Russian oil giant Rosneft’s 49.13% stake in the Indian company. Following the EU designation, Microsoft suspended services to the refiner without any US or Indian legal requirement to do so.

Nayara had accused Microsoft of restricting access to its own data, proprietary tools and products, calling the decision ‘a dangerous precedent for corporate overreach’ that raised ‘serious concerns regarding its implications on India’s energy ecosystem’.

The case highlights the extraterritorial impact of sanctions compliance as multinational technology companies often choose caution when dealing with sanctioned entities, even when not legally required to cease operations in all jurisdictions.

Nayara Energy operates India’s second-largest single-site refinery, contributing approximately 8% of the country’s total refining capacity and 7% of its retail petrol pump network while employing over 55,000 workers. 

Since the EU sanctions were announced on July 18, Nayara Energy has faced various business disruptions, including logistics challenges and canceled cargo pickups at its Vadinar port in Gujarat, according to local media reports.

The refiner has maintained that its operations are fully compliant with Indian laws and regulations, emphasising its role as an Indian company committed to meeting the nation’s energy needs. Rosneft has called the EU sanctions unjustified and illegal, noting it is not a controlling shareholder and that Nayara is managed by an independent board of directors.