Microsoft severs cloud services for Nayara Energy citing EU sanctions, prompting legal pushback from Indian oil refiner.

New Delhi, July 29, 2025 Indian oil refiner Nayara Energy has moved the Delhi High Court after Microsoft blocked its access to cloud services and data. The tech giant acted as part of growing compliance with sanctions against Russia. The move has raised concerns among Indian firms with indirect Russian ties.

Experts believe Microsoft made the decision based on EU sanctions and its interpretation of rules concerning companies indirectly linked to Russian energy. Nayara Energy, which processes over 20 million tonnes of crude oil annually, has strong trade ties involving Russian crude. Nayara Energy runs a major refinery in Vadinar, Gujarat, contributing nearly 8% to India’s total fuel supply. This includes 7% of the country’s petrol and 8% of its polypropylene output.

Microsoft recently disrupted Nayara’s cloud services without any prior consultation. The company acted unilaterally, with no legal mandate under Indian or U.S. law. Nayara called the move “unilateral, without prior notice, consultation, or recourse, under the guise of global sanctions compliance.”

The firm warned that such actions show the overreach of foreign laws in countries where they don’t apply.

Furthermore, the company warned that such actions could lead to arbitrary disruptions. As a consequence, such actions could seriously compromise data sovereignty, national security, and the core principles of fair trade. Therefore, it stressed the need for clearer legal boundaries to prevent similar incidents in the future.

“Microsoft acted without notice, prior audit, or proper consultation, using sanctions compliance as a justification,” the statement said.. “These actions reflect a troubling trend of global firms applying foreign laws in places where they don’t apply,” Nayara stated in its court filing.

Although the sanctions originate from the EU, Microsoft—a U.S.-based company—chose to suspend services based on its own compliance review.

Ask ChatGPT. Nayara contends this lacks legal basis under Indian regulations. The firm has sought urgent intervention from the Delhi High Court to restore access to critical operational data and applications acquired through Microsoft’s cloud services. The company considers these services essential for daily refinery operations and for meeting statutory obligations.

Notably, Nayara is the first Indian refinery to face such punitive action under the extended EU sanctions.

As a result, the incident has sparked a broader debate over the extraterritorial application of foreign laws. Specifically, sectors like data services and energy trade are facing growing concerns, since geopolitical interests are increasingly at odds with corporate operations.

Moreover, legal experts say that if the Delhi High Court grants relief to Nayara, it could set a precedent. This may lead to clearer rules on digital infrastructure and global compliance under Indian law.Microsoft has not yet commented publicly on the legal challenge.

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