How does extraterritorial application of domestic legislation (such as U.S. sanctions bills) challenge the sovereignty and economic interests of third countries like India? Discuss with examples.

Extraterritorial application means a state extends its domestic law to persons and transactions outside its territory. Its sharpest form is the secondary sanction, which penalises a third country for trade that is entirely lawful under its own law — a pressure India now faces directly.

The mechanism

• The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 authorises duties of up to 100% ad valorem on all goods entering the U.S. from major purchasers of Russian crude and gas [1].
• India is named among the countries eligible for such tariffs, alongside China and Türkiye; imposition is not automatic but rests on presidential discretion [1].

Challenge to sovereignty

• It converts a sovereign commercial choice — where India sources its energy — into an offence under another state's municipal law, bypassing the UN Security Council, the only body that can make sanctions universally binding.
• The pressure is unilateral, substituting national legislation for negotiated WTO discipline.
• It constrains strategic autonomy: under CAATSA (2017), India's S-400 purchase left it exposed to Section 231 sanctions, with relief hinging on a national-interest waiver granted in Washington [2][3].

Challenge to economic interests

• Misdirected burden: the tariff strikes Indian exporters of textiles, gems and engineering goods, not the refiners purchasing Russian crude.
• Energy security: with over four-fifths of its crude imported [4], discounted Russian oil moderates India's import bill and domestic inflation; forced substitution raises costs for consumers.
• Permanent leverage: once a country is named in a statute, the tariff power stays loaded, usable in unrelated future disputes.

India's position — the MEA has called such targeting "unfair, unjustified and unreasonable", noting that critics sustain their own trade with Russia while India buys to keep energy affordable for 1.4 billion people [5].

Extraterritoriality thus tests both the legal equality of states and the development needs of import-dependent economies. India's course lies in diversifying crude sourcing, concluding the bilateral trade agreement, and seeking a written waiver as under CAATSA — while pressing in the WTO and G-20 that sanctions draw legitimacy only from multilateral authority, consistent with Article 51's directive to foster respect for international law.