Ashkenazic custom requires standing during Kaddish, whereas Sephardic practice allows sitting during Kaddish (unless one had been standing before Kaddish began).
Hacham Bension Abba Shaul (Jerusalem, 1924-1998) writes that if a Sepharadi is praying in an Ashkenazic Minyan, he must abide by the Ashkenazic custom and stand during Kaddish. If he remains seated, Hacham Bension writes, this would violate the prohibition of "Lo Titgodedu," which forbids following divergent religious practices in the same place. Hacham Bension makes an exception in a case where there are others in the Minyan sitting during Kaddish, such as elderly congregants who have difficulty standing and are thus permitted to sit during Kaddish even according to Ashkenazic practice. Since there are already some people sitting, a Sepharadi is permitted to sit, as well.
Hacham Ovadia Yosef disagreed. He argued that the law of "Lo Titgodedu" does not apply when the divergent practices involve a Minhag (custom), as opposed to a strict Halachic obligation. It is thus not relevant to the issue of sitting or standing during Kaddish, and so a Sepharadi is allowed to sit during Kaddish in an Ashkenazic Minyan. Nevertheless, Hacham Ovadia added, if the Sepharadi has reason to suspect that sitting would cause tension and controversy – which we must always try to avoid – then he should certainly stand in the interest of maintaining peaceful relations among Jews.
Summary: A Sepharadi praying in an Ashkenazic Minyan is allowed to sit during Kaddish, despite the fact that Ashkenazic custom requires standing. If, however, he suspects that sitting would cause tension and strife, then he should follow the local custom and stand.