What is the story?
On July 18, 2025, the EU adopted 18th package of sanctions against Russia, which, among others, aims to strengthen anti-circumvention measures on traders and customers of Russian crude oil. Nayara Energy, an Indian oil refiner, was also designated for its involvement in an economic sector providing a substantial source of revenue to Russia as it operates a major refinery in Vadinar, India, that is 49% owned by the Russian State oil company Rosneft. Following the EU announcement, U.S. tech giant Microsoft halted its services, including Nayara Energy employees’ access to Outlook, Teams, and cloud data storage. Subsquently, Nayara Energy filed a petition with the Delhi High Court seeking recovery of the paid-for services. The Indian refiner argued that Microsoft’s “abrupt and unilateral” suspension of services lacks legal justification under Indian or US law as the EU sanctions do not have jurisdiction over the non-EU parties. The lawsuit was soon withdrawn as Microsoft restored its services on July 30th, with its representative noting that “We are engaged in ongoing discussions with the European Union towards service continutiy for the organization.”
Why it matters?
Microsoft’s brief suspension of services to Nayara Energy is interpreted as “corporate overreach” by some in India as they believe Microsoft over-interpreted the EU sanctions, which do not cover non-EU entities. In fact, EU’s Russia sanctions (Council Regulation 883/2024) make it clear that they do not apply extra-territorially (i.e., complied with by all EU persons). However, it is worth noting that global services providers such as Microsoft would consider “global” sanctions (at least by Western countries such as EU and U.S. that often coordiate their sanctons policies) due to their global operations and huge concern for reputation, rather than taking risks by squarely applying sanctions for a certain jurisidiction only.
While the story seems to have come to a close for now, compliance professionals would want to monitor for any twist and turn as it is a rare exhibit of how far and proactive corporate compliance can and should act in navigating the global sanctions regime.