TO SAFEGUARD against disruption of critical services by foreign companies citing sanctions in other jurisdictions, New Delhi is studying the European Union Blocking Statute, an anti-sanction law that EU countries take recourse to. Introduced by Brussels in 1996, it acts as a potential ‘shield’ for European companies against sanctions by third countries.A key trigger that raised concerns in the government was a sudden move by Microsoft last July to suspend IT services of Indo-Russian oil refining and marketing company Nayara Energy. There have also been discussions among concerned ministries about the dependence of Indian companies on vital digital infrastructure services provided by foreign companies.“The EU anti-sanctions law is among the options (being looked at). It does offer a template… There is a compelling need to have a mechanism in place and something like this(the EU anti-sanctions law) is among the options on the table,” a senior government official told The Indian Express.Regulation No 2271/96 of this EU statute considers the extra-territorial application of measures such as sanctions imposed by a third country to be in breach of international law.According to officials, after Nayara Energy made representations to the government, the Finance Ministry pointed to the EU statute example and proposes a similar domestic law or regulation. It can be insisted upon that Indian companies that are customers of global service providers, should sign service contracts or procure products only from a subsidiary of a global company in India, the ministry is learnt to have suggested.“The provision should ideally make it ‘illegal’ for these India-registered vendors to comply with sanctions slapped by the home country of the vendor or any other jurisdiction. All this is still being debated and is at a very early stage,” the senior government official quoted above said.In July 2025, the European Union had announced it was sanctioning Nayara Energy, in which Russian oil giant Rosneft holds over 49% stake, as part of its slew of actions to force the Kremlin to end the war in Ukraine. The sanctions meant that Nayara Energy would not be able to export petroleum fuels and products to Europe, and potentially hit its dealings with European companies.Story continues below this adJust days later, Microsoft suspended its tech support to Nayara Energy affecting its employees’ Outlook and Teams accounts. This resulted in Microsoft effectively blocking Nayara Energy’s access to its own data, proprietary tools, and products—despite these being acquired under fully paid-up licenses. Shortly thereafter, Nayara Energy sued Microsoft in the Delhi High Court, following which it restored services to the oil refiner.While the original EU’ legislation was specifically aimed at American sanctions against Cuba and later Iran, there have been some implementation issues. According to Sven Bates, Julian Godfray and Johanna Asplund of Baker McKenzie, when it comes to doing business with Iran or Cuba, EU companies, and particularly those operating internationally and/or with a presence in the US, have for long been “stuck between a rock and a hard place. On the one hand, EU companies engaging in trade relating to Iran and Cuba risk being subject to punitive US extraterritorial sanctions, and a restriction of access to US markets while on the other hand, if EU companies choose to refrain from Iranian and Cuban business to comply with the US measures, they face the threat of breaching the EU Blocking Regulation. In 2021, Brussels had initiated a renewed consultation on these regulations.The EU ‘blocking statute’ attempts to shield its people and companies from the extra-territorial application of third-country laws and measures in three broad ways:i) prohibiting compliance with those third-country sanctionsii) nullifying the effect in the EU of any non-EU court ruling or administrative decision based on them, andStory continues below this adiii) allowing EU-based companies or individuals to recover in court damages caused by themThe Indian Express had reported last week that New Delhi is also considering a policy that could require companies in critical sectors such as energy, telecom, and banking to only use domestically-made sovereign cloud systems, as India seeks tighter control over sensitive data and digital infrastructure. The move, still under discussion, is aimed at reducing dependence on foreign cloud providers and strengthening data security amid rising geopolitical and cybersecurity concerns.The Nayara blockade by Microsoft was a trigger for this move too.After that incident, the Union IT Ministry (MeitY) had sought Microsoft’s response on why it had suspended services to Nayara Energy. In August 2025, The Indian Express had reported that Microsoft told the government the block happened due to an automated “legacy” compliance system, and the company has changed its enforcement mechanism since, including adding a review process by its senior leadership before suspending services to an entity.Story continues below this adIn a written submission to the ministry at the time, Microsoft said: “The outage was caused by automated sanctions enforcement.…” But, acknowledging the flaw, it said the automated system “presumed” a jurisdictional nexus (legal necessity) to the EU due to the historically global nature of its operations. “However, Microsoft’s significant investments in India in recent years render this jurisdictional presumption no longer appropriate,” it said.