LIDW 2026: Arbitration in Military Supply Contracts
July 14, 2026
On 4 June 2026, during London International Disputes Week (“LIDW”), the Centre for Commercial Law Studies of Queen Mary University of London hosted an event on Arbitration in Military Supply Contracts, jointly organised with AGA Partners and Clyde & Co LLP. The panel consisted of Iryna Moroz (AGA Partners), Loukas Mistelis (QMUL), Clement Ducamin, (NATO) and Professor Crenguta Leaua (sole practitioner), Iurii Gulevatyi, Dmytro Koval, and Vasyl Sukhovyi (Ministry of Defence of Ukraine).
Following the Chatham House Rule, no comments are attributed to individual speakers. The following summary reflects the key themes discussed.
1. The Growing Prominence of Defence Procurement Disputes
The panel opened with the rising relevance of contracts associated with defence and military defence borders, which is a major development that has come to the forefront within the past 5 or 6 years. The Russia-Ukraine war has resulted in the rise of contracts for the supply of equipment, protective equipment, military equipment, ammunition, and other goods in Ukraine, triggering multiple disputes across defence procurement.
2. The Ukrainian Legal Framework in Defence Procurement
The panel started with a broad explanation of the Ukrainian legal framework on the defence procurement. The Law of Ukraine on Defence Procurement of 17 July 2020 aligns the Ukraine legislation with the Directive 2009/81/EC and was passed under the EU-Ukraine Association Agreement.
There are 3 main procurement methods in Ukraine: direct contracting, open tenders (the Prozorro system), and closed competitive procedures. In direct contracts, the Ukrainian Ministry of Defence or its subordinated bodies may conclude a contract for the specific provision of weapons and products. Open tenders are generally used to purchase dual-use items (goods and technologies capable of both civilian and military application), and civilian procurement rules apply, requiring open competitive bidding and publicly disclosed contract terms. Closed competitive procedures were highlighted as particularly complex, being based on Art 18 of the Law on Defence Procurement, which governs the supply of classified defence goods, which are highly restricted under state secrecy. Most disputes arise from direct contracting between the Ministry of Defence and its international subsidiaries with international suppliers of military equipment.
3. International Arbitration in Military Supply Disputes
Today, most of contracts for the supply of military goods are handled by subsidiaries, particularly the Ukraine’s Defence Procurement Agency (“DPA”).
The criteria for the selection of the seat and arbitral institution are as follows.
(i) The destination of military goods. The end-user country shapes key aspects of the arbitral process. Locating the seat in Ukraine simplifies the logistics for witnesses and counsel.
(ii) Costs. Seating the arbitration in Ukraine at the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (“ICAC”) allows the State to be represented directly by the Ministry of Defence, eliminating the need to hire external counsel.
(iii) Time limits. Rules written during peacetimes are not designed for active war, with cases taking 2-3 years to resolve. Arbitrating locally at the ICAC is preferable, as it generally provides awards within a year.
(iv) Security, including confidentiality and classified information. Obtaining security clearance for foreign arbitrators is difficult, and heightened public and law enforcement scrutiny makes secrecy essential. Local arbitration mitigates these risks, as local arbitration reduces the risk of information exposure inherent in the cross-border movement of personnel and documents.
(v) Preparedness, especially considering the potential consequences of active warfare.
The panel also discussed various issues surrounding the recognition and enforcement of awards abroad, such as the lack of uniform terms or time limits concerning recognition across various jurisdictions where debtors are located. The panellists therefore called for changes, such as possible amendments to the New York Convention to establish strict deadlines, or for Member States to the New York Convention to apply strict time limits for enforcement.
Emergency rules were suggested as an example of how arbitration could be improved in the military sector. Changes should be made to both arbitration rules and domestic laws to expedite and provide for provisional measures and clawback provisions concerning inferior goods. However, a balance needs to be struck between required due process and expedited speed.
Emergency arbitration was also considered as a potential suitable mechanism. However, while emergency arbitration was theoretically viable, issues remained in enforcement and recognition. Furthermore, disputes arising from contracts signed in 2022 contained basic terms and clauses which did not account for the possibility of the invasion. It was therefore considered whether peremptory orders, as in the English Arbitration Act 1996, would be a suitable provisional measure.
4. The NATO Role
The panel went to reflect on the North Atlantic Treaty Organization (“NATO”), explaining that NATO is no longer a “distant” political institution but a significant supplier. It was noted that NATO’s position as a military alliance means its immunity to national courts’ jurisdiction ensures its neutrality.
Most terms in NATO contractual instruments are based on standard international contracts, with a minority of terms remaining NATO-specific. These include purchases made in NATO’s name on behalf of the Ministry of Defence, and NATO’s right to terminate a contract if deemed in the associated State’s best interests. This ensures an independent assessment of the procurement process.
Arbitration with NATO is governed by the PCA arbitration rules. However, the panellists highlighted that NATO does not have an enforcement mechanism for awards. Compliance therefore rests on NATO's voluntary practice rather than on an enforceable obligation. While NATO has complied in practice, the panellists observed that voluntary compliance may not be sufficient to secure counterparties' confidence in the process.
Panellists suggested NATO could consider looking towards the International Institute for the Unification of Private Law (“UNIDROIT”) to solve broader issues unsolved by civil law to reduce uncertainties, such as the enforceability and interpretation of contract schedules. However, this was challenged from a common law perspective, where UNIDROIT does not carry the same authority. Incorporating UNIDROIT as contractual terms rather than governing law was therefore proposed. While this could still pose challenges in UK or US courts, this concern is largely academic, given NATO's position that disputes should be resolved outside national court systems entirely.
5. Arbitration Rules in the Defence Sector
Panellists highlighted that the current arbitration rules are too general to accommodate the issues of security and war raised: negotiation is required between parties to tailor the rules to their specific case. Negotiation is therefore paramount, and terms should therefore be shaped by the parties and written in the arbitration contract from the beginning. The panellists described the main problem as the time taken to adapt arbitration agreements on a case-by-case basis.
Case familiarity was raised as the main bottleneck for efficiency. The panellists therefore called for the appointment of a standing panel of arbitrators who are appointed from the inception of the contract. Where the decision is made to bring an arbitration claim, the panel would therefore be already aware of the facts of the claim. This would reduce the time needed for case familiarisation.
6. Technology
The panel considered dual-use technology, which concerns how civilian technology provided for non-military purposes may subsequently be repurposed for military use.
Information technology and communication platforms lack a clear legal regime, with multiple divergent frameworks having emerged to address dual-use concerns. At the individual level, whether a software licence's original terms anticipated military repurposing of a civilian application may vary by case.
Issues therefore arise where technology initially deployed for civilian purposes subsequently triggers transfer restrictions, whether by licence limitation or state intervention. A further issue was identified concerning the public political positioning of technology providers, where stated ideological commitments may give rise to reputational and regulatory risk independent of the technology's intended use.
It was further noted that some of these technologies lie beyond state control. This raised the issue of whether public-private cooperation in enforcement, as in social media, would be adopted. The possibility of a kill-switch button to turn off services in a targeted manner was also raised. The connection between the arbitral tribunals, technology provider and user was also considered.
It was finally suggested that the aim of the arbitrators should be the enforcement of an award. In technology cases, the main issue arises in the territoriality of the enforceability. However, it was conceded that the risk of non-enforcement is present in all arbitrations, such as parties that are located in North Korea or Libya.
7. Conclusion
In conclusion, the panel agreed that the rules of peacetime arbitration are inherently incompatible with the speed and efficiency demanded of arbitration in wartime. In these circumstances, domestic arbitration is favoured over foreign arbitration due to issues surrounding costs, speed, recognition, and enforcement. In the broader arbitration context, negotiation and the adaptation of arbitral agreements was seen as paramount to ensure increased efficiency. Broader issues concerning technology disputes were also considered, especially in enforceability.
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