Broken Arms Contract: Arbitration Orders US Company to Return Over $18 Million to Ukraine
An arbitration tribunal in Switzerland has ruled in favor of the Ministry of Defense and ordered an American company to return more than $18 million to the state budget of Ukraine.
This was reported by the Ministry of Justice of Ukraine.
On December 17, 2025, the arbitration tribunal of the Swiss Arbitration Center ruled in a case brought by the Ministry of Defence of Ukraine against an American supplier. The tribunal satisfied all the claims of the Ukrainian side in full and ordered the return of more than USD 18 million to Ukraine.
The arbitration proceedings were initiated in connection with the failure of the American company to deliver ammunition. Under the contract concluded at the beginning of the full-scale Russian invasion, the supplier was obliged to supply the Ministry of Defense with a batch of artillery ammunition in a short time.
The Ukrainian side made a 100% prepayment for the goods, but the supplier delivered only a third of the ordered ammunition with a significant delay in delivery and other violations of the contract.
According to the Ministry, the American company insisted that it had fulfilled the contract properly. The company claimed that the contract had allegedly been amended, and the Defense Ministry had allegedly agreed to cover the company’s additional costs for the search and purchase of ammunition.
However, the tribunal agreed with the arguments of the Ukrainian side and confirmed that no changes had been made to the contract, the defendant company had not properly performed it, and the claims for recovery of the amount paid for the undelivered ammunition and the accrual of penalties were found to be justified.
As a reminder, in October 2025, it was reported that a US court ordered the American company OTL Firearms to pay Ukraine more than €20 million for a failed defense contract worth $1 billion.
This refers to the 2022 agreement concluded by the state-owned Progress company for the supply of ammunition worth $1 billion. OTL Firearms was supposed to provide Ukraine with a batch of Soviet ammunition, ranging from 23 mm shells to Grad rocket systems and mortar shells.
Ukraine transferred an advance payment of €17 million, but did not receive any deliveries. The company attributed the disruption to ‘political reasons’ and the lack of Serbian licenses, but these claims have not been confirmed.
An arbitration in Austria found that OTL did not have the necessary US export permits and experience in military supplies. The US court, which Ukraine appealed to after the company ignored the arbitration award, upheld it.
This precedent was the first such decision in the United States to confirm Ukraine’s right to compensation for broken defense contracts.
