Sanctions 2026

INDIA Law and Practice Contributed by: Ayush Mehrotra, Upkar Agrawal and Varsha Goel, Khaitan and Co

• Restrictions on the provision of services to coun - tries and entities subject to UNSC sanctions, including arms-related services, technical assis - tance, brokering services and training related to prohibited activities. • Prohibition on making available any funds, financial assets or economic resources to or for the benefit of persons and organisations designated under UNSCA Orders or the UAPA. • Services (technology) covered under the SCOMET list or under catch-all control provision, also having military end use, without authorisation from the DGFT. 5.2 Goods India maintains significant prohibitions and restric - tions on the import and export of goods. The principal measures include: • complete prohibition on direct or indirect import or transit of all goods originating in or exported from Pakistan under FTP; • prohibition on trade in items, materials, equipment, goods and technologies with designated persons organisations and nations as notified under UNSCA Orders and FTP; • arms embargoes on countries subject to UNSC sanctions (as applicable under the relevant UNSC resolutions); • SCOMET list items (covering special chemicals organisms, materials, equipment) without specific export authorisation requirements administered by the DGFT; and • catch-all controls on items with military end-use or weapons of mass destruction applications, empowering the DGFT to require an export licence even where items are not specifically listed on the SCOMET list, where the exporter has reason to believe the items may have use in a military or WMD application. 6. Civil Litigation and Arbitration 6.1 Force Majeure Indian courts have had limited occasions to consider sanctions as a ground for excusing contractual obli - gations. The legal framework is governed by Section

56 of the Indian Contract Act, 1872 (doctrine of frus - tration). Key judicial precedents have been outlined below. • The Calcutta High Court vide its order dated 27 September 2016 (2016 SCC OnLine Cal 5067) rejected the force majeure defence based on US sanctions imposed on Iranian trade/ financial transaction for non-performance of a contract of supply of Sulphur from Iran to India, between an Indian phosphate manufacturer and a USAR-based trading company. The Court held that the sanctions did not make performance impossible. The sanc - tions applied only to US persons and not to other parties from trading with Iran. The Court noted that difficulty in procurement and commercial arrange - ments is insufficient to establish force majeure. • The National Company Law Tribunal (NCLT) vide its order dated 26 March 2026 (CP(IB)N. 35/ AHM/2026) rejected a sanctions-based frustra - tion/impossibility defence to a payment obligation between two Indian parties in INR. The NCLT did not accept US-Iran sanctions (framed as a reason for impossibility) as a valid excuse for non-perfor - mance in this case. Its reasoning rested on three grounds: (a) unilateral foreign sanctions lack legal force in India absent domestic recognition; (b) the specific “US person” nexus alleged was factually not established; and (c) Section 56 frustration requires impossibility/ unlawfulness under the contract’s own govern - ing (Indian) law, which was not shown. Sanctions imposed by a foreign jurisdiction (such as the US or EU) that do not directly apply to Indian par - ties are unlikely to constitute a force majeure event in its natural meaning and scope, unless the party can demonstrate that compliance was impossible or such event is explicitly included as a contract suspension/ termination event in the contractual documentation

between the parties. 6.2 Enforcement

Indian courts are yet to decide on enforcement of a judgement, whether domestic or foreign, against a sanctioned or designated entity. Any such judicial enforcement would, however, be expected to be

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