Unilateral Sanctions: Outlook for Indian Businesses
There is increasing debate surrounding the unprecedented use of unilateral sanctions in recent years (e.g. by the US, the EU, Japan, China, and Russia) — specifically, their legality under international law (as countermeasures), legality under WTO law (as national security exceptions), their architecture and overall market-distorting effect, and investment protection and/or administrative disputes against (allegedly wrongful) freezing of assets and/or listing of businesses and individuals in sanctions lists (see, pending disputes, Fridman v. Luxembourg UNCITRAL (2024), Shvidler v. Secretary of State UKSC (2024)). On its part, India has rarely used unilateral sanctions (except previous trade prohibitions against Pakistan, Fiji, and Nepal) and has abided by unilateral sanctions at the state level — e.g. by complying with price caps on oil purchases and refusing to deal with (an increasing number of) sanctioned oil vessels/tankers.
Notwithstanding the untested meta-questions around sanctions, several Indian private enterprises are now listed on unilateral sanctions lists/packages with an increasingly extraterritorial reach. For instance, the EU’s 13th sanctions package (February 2024) listed an Indian company as being a part of ‘Russia’s military and industrial complex’, the EU’s 14th sanctions package (June 2024) listed another Indian company, while also requiring EU operators (or subsidiaries of EU companies in India) to incorporate a ‘no-Russia’ clause in their contracts regarding sale/license/transfer of intellectual property and trade secrets, and the EU’s 15th sanctions package (December 2024) listed a third Indian company. In more significant numbers, the US OFAC has listed approximately 30 Indian entities (dominantly in the shipping sector) in relation to its Iranian sanctions and, more recently (in October 2024 and January 2025), approximately 23 Indian entities and individuals in relation to its Russian sanctions.