Govt explores EU-like law to safeguard firms against third countries' sanctions, Pg1

Key Highlights:

• The government is considering an EU-like law to protect Indian firms from third-country sanctions.
• This consideration was triggered by Microsoft's suspension of IT services to Nayara Energy in July 2025 due to EU sanctions.
• The proposed law aims to ensure Indian companies can maintain critical services despite international sanctions.
• The Finance Ministry suggested a domestic law or regulation similar to the EU Blocking Statute.

Detailed Insights:

• The EU Blocking Statute, introduced in 1996, aims to shield European companies from sanctions imposed by third countries, like the US.
• The proposed Indian law may require Indian companies to contract with subsidiaries of global service providers registered in India.
• The law could make it illegal for India-registered vendors to comply with sanctions imposed by the vendor's home country or other jurisdictions.
• The EU sanctioned Nayara Energy in July 2025 due to Rosneft's over 49% stake, restricting its exports to Europe.
• The EU Blocking Statute prohibits compliance with third-country sanctions, nullifies non-EU court rulings based on them and allows companies to recover damages caused by them.
• EU companies face challenges when doing business with countries like Iran and Cuba, caught between US sanctions and the EU regulation.

Key Concepts Involved:

• Extraterritoriality: The application of a country's laws beyond its own borders.
• Blocking Statute: A law designed to counteract the effects of another country's sanctions.