U.S. Court Awards Ukraine Over €20 Million for Broken Contract

A U.S. court has ordered the American company OTL Firearms to pay Ukraine over €20 million for breaching a $1 billion defense contract.

A U.S. federal court upheld an arbitration ruling requiring OTL Firearms to return an advance payment to Ukraine and to pay penalties for failing to fulfill the contract, according to the Financial Times.

The case concerns a 2022 agreement between the state-owned company Progress and the government for the supply of ammunition worth $1 billion.

OTL Firearms was supposed to supply Ukraine with a batch of Soviet-style ammunition – ranging from 23mm shells to Grad rockets and mortar mines.

Ukraine transferred an advance payment of €17 million, but did not receive any deliveries.

The company blamed the failed deliveries on “political reasons” and the lack of Serbian licenses, but those claims were not substantiated.

An arbitration panel in Vienna found that OTL lacked the necessary U.S. export licenses and experience in military supply operations.

The U.S. court that Ukraine turned to after the company ignored the arbitration award upheld it.

“OTL Firearm completely failed to perform the contract and must pay Ukraine compensation, including interest and penalties,” Judge Rosemary Márquez stated.

As of October 2025, the company had effectively ceased operations in Tucson and is not commenting on the case.

This precedent is the first such U.S. ruling confirming Ukraine’s right to compensation for breached defense contracts.

It was previously reported that the U.S. aims to reach production of 100,000 shells per month by October 2025.