Defence Procurement
Supreme Court Draws the Line on Defence-Contract Price Clawbacks.
Ukraine’s Supreme Court is developing a significant line of case law on defence-contract pricing, DASU audits, unjust enrichment and damages claims.
Complex law. Clear action.
Supreme Court of Ukraine, Case No. 915/515/24, 12 February 2026
A recent line of Ukrainian Supreme Court decisions provides important clarification for companies supplying goods under defence contracts: an agreed and fully performed contract price cannot simply be retrospectively reduced through an unjust-enrichment claim because a subsequent state audit identifies a potential breach of mandatory pricing rules.
The ruling in Case No. 915/515/24 of 12 February 2026 does not mean that defence suppliers are immune from liability for excessive pricing. Instead, it draws an important distinction between contractual price adjustment, unjust enrichment and damages — and requires the state customer to pursue the legally appropriate remedy and satisfy the corresponding burden of proof.
Subsequent Supreme Court decisions in June 2026 indicate that this reasoning is developing into a broader and practically significant line of case law.
The dispute
A military unit of the National Guard of Ukraine entered into a defence supply contract with a supplier that was not the manufacturer of the relevant goods.
Following an audit, the State Audit Service of Ukraine (DASU) questioned the profit included in the contract price. The military unit argued that the supplier had exceeded the profit limitation applicable to the transaction under the defence procurement rules, including Cabinet of Ministers Resolution No. 363 of 3 March 2021.
The customer sought, among other remedies, recovery of UAH 530,422 as allegedly unjustly obtained funds under Article 1212 of the Civil Code of Ukraine.
The underlying argument was straightforward: if the supplier had received profit above the legally permitted level, the excess should be returned to the state.
The Supreme Court rejected that legal route.
An agreed contract price cannot simply be rewritten after performance
The Court emphasised the contractual nature of the price.
Under Article 632 of the Civil Code of Ukraine, price is determined by agreement between the parties, while modification of the price after conclusion of the contract is permitted only in the circumstances and under the conditions established by contract or law.
This was particularly important because the contract had already been performed: the goods had been supplied and payment had been made.
Treating part of that agreed price retrospectively as unjust enrichment would, in substance, amount to rewriting an essential contractual term after performance.
The Supreme Court therefore upheld the rejection of the customer's attempt to recover the disputed amount under Article 1212 of the Civil Code through this legal construction.
A DASU audit finding is evidence — not an automatic debt
The judgment is also important for understanding the evidentiary status of State Audit Service findings.
The Supreme Court relied directly on the position adopted by the Joint Chamber of the Commercial Cassation Court in Case No. 915/222/24 on 19 December 2025.
The connection between the two cases is particularly strong.
The Supreme Court had suspended the cassation proceedings in Case No. 915/515/24 pending the Joint Chamber's determination of Case No. 915/222/24. Following the Joint Chamber judgment of 19 December 2025, the proceedings were resumed and its conclusions were applied in Case No. 915/515/24.
A properly prepared DASU audit act may constitute relevant evidence. It does not, however, have predetermined evidentiary force.
The court must assess the audit findings together with the other evidence in the proceedings.
This distinction matters considerably in defence procurement disputes.
An audit finding that a contractor was not the manufacturer, or that the profit included in the contract price exceeded an applicable statutory limitation, does not by itself establish an immediately recoverable debt owed to the state.
The customer must still establish the legal basis for recovery and prove the relevant facts through the appropriate judicial procedure.
The correct remedy may be damages
This is the most important practical element of the Supreme Court's reasoning.
The Court did not conclude that excessive profit can never be recovered.
Instead, following the Joint Chamber's reasoning in Case No. 915/222/24, it recognised that the difference between:
a contract price allegedly inflated as a result of unlawful conduct by the contractor; and
the price that should have been paid under the applicable mandatory pricing rules
may constitute damages under Ukrainian civil law.
That changes the structure of the dispute.
Where a state customer alleges that a defence contractor exceeded an applicable statutory profit limitation, the appropriate remedy may be a claim for damages, rather than an attempt to retrospectively treat part of the agreed contract price as unjust enrichment.
The customer must therefore establish the elements required for civil liability, including:
the existence and amount of loss;
unlawful conduct by the contractor;
causation between that conduct and the alleged loss; and
fault.
Questions such as whether the contractor was actually the manufacturer, which pricing limitation applied, whether that limitation was breached, and what evidentiary weight should be given to a DASU audit must therefore be examined within the applicable legal and evidentiary framework.
This reasoning must also be read against the Law of Ukraine “On Defence Procurement”, including the statutory framework governing defence procurement during martial law and the rules relevant to contractor liability.
Why this matters for defence contractors
The decision materially affects the litigation position of suppliers confronted with audit-driven recovery claims.
A DASU finding should not be treated as a self-executing mechanism for reducing the value of a completed defence contract.
Nor does an allegation that a statutory profit limitation was exceeded automatically convert part of an agreed contractual payment into unjust enrichment.
Instead, the state customer must identify the correct cause of action and satisfy the corresponding evidentiary burden.
For contractors, this creates several important lines of defence.
First, examine whether the claimant has selected the appropriate legal remedy.
Second, distinguish an administrative audit conclusion from judicially established civil liability.
Third, determine whether the allegedly applicable pricing limitation actually applied to the contractor, the particular transaction and the relevant period.
Fourth, test each element of the alleged damages claim separately — particularly unlawfulness, causation and quantum.
Fifth, preserve contractual, costing and pricing documentation capable of demonstrating how the price was calculated, negotiated and agreed.
The practical lesson is therefore not that an audit finding can be ignored. It is that the finding must be translated into a legally sustainable claim before money can be recovered through court proceedings.
This is becoming a line of Supreme Court authority
Case No. 915/515/24 should not be viewed in isolation.
The key foundation is the Joint Chamber judgment in Case No. 915/222/24 of 19 December 2025, which addressed both the evidentiary status of DASU audit findings and the appropriate legal framework for recovery of losses allegedly resulting from violations of mandatory defence-contract pricing rules.
Importantly, the development did not stop with the February 2026 judgment.
On 18 June 2026, in Case No. 910/10047/25, the Supreme Court expressly relied on the Joint Chamber's conclusions in Case No. 915/222/24 when addressing the appropriate remedy for an alleged breach of defence-contract profit limitations.
The Court reiterated that the difference between an allegedly inflated contract price and the price that should have been paid under the applicable mandatory pricing rules may constitute damages, provided that the customer proves the required elements of liability.
The June judgment is particularly significant because the Supreme Court did more than simply cite the earlier case. It concluded that the lower courts had not fully reflected the Joint Chamber's position concerning the proper remedy and therefore changed the reasoning of the lower-court judgments while leaving the dismissal of the claim in force.
On the same day, 18 June 2026, in Case No. 912/2412/24, the Supreme Court again expressly referred to Case No. 915/222/24 when addressing the evidentiary status of audit findings.
The Court reiterated that an audit act prepared in accordance with applicable legal requirements may constitute relevant evidence, but that it has no predetermined evidentiary force, must be assessed together with other evidence, and does not relieve the party relying on it from its burden of proof.
These subsequent decisions materially strengthen the conclusion that Case No. 915/222/24 is not an isolated judgment. Its reasoning is already being applied by subsequent Supreme Court panels.
A developing framework can therefore be identified:
DASU finding ≠ automatic debt
Agreed contract price ≠ automatically recoverable unjust enrichment
Potential breach of mandatory pricing rules → possible damages claim
Damages claim → customer must prove the required elements of liability
For both defence contractors and state customers, this distinction is increasingly important when structuring claims and defences arising from audited defence contracts.
What defence suppliers should do now
Companies supplying the Ukrainian defence sector should not wait for litigation before addressing this risk.
Contracts concluded under defence procurement procedures should be reviewed against the pricing rules applicable at the time of the relevant transaction.
Particular attention should be paid to:
contractor and manufacturer status;
the specific pricing regime applicable on the contract date;
applicable profit limitations;
cost and profit calculations;
pricing protocols and supporting documentation;
contractual representations concerning price formation; and
subsequent amendments to the contract.
This temporal point is particularly important.
There is no safe basis for treating a particular percentage profit cap as universally applicable across all Ukrainian defence contracts. The applicable legal regime must be determined by reference to the specific contract, procurement procedure, contractor status and version of the relevant legislation in force at the material time.
Where a DASU audit has already identified an alleged pricing violation, contractors should therefore avoid treating the amount stated in the audit as automatically established liability.
The first legal questions should instead be:
What pricing rule applied to this specific contract?
Was this contractor legally subject to the alleged profit limitation?
Was that rule actually breached?
What does the DASU audit establish — and what does it not establish?
What cause of action is available to the state customer?
Can the customer prove each element required for damages?
The Supreme Court's developing case law makes these questions central to both dispute prevention and litigation strategy.
The practical takeaway
The significance of Case No. 915/515/24 is not that the Supreme Court has prevented the state from recovering losses caused by unlawful defence-contract pricing.
It has done something more legally precise.
It has drawn a line between an audit finding and civil liability, between an agreed contractual price and unjust enrichment, and between an allegation of excessive profit and a properly established damages claim.
The subsequent June 2026 decisions provide further evidence that this distinction is becoming embedded in Supreme Court practice.
For Ukrainian defence suppliers, that creates a stronger basis for challenging automatic or improperly structured audit-driven clawback claims.
For state customers, it means that recovery strategies must be built around the correct cause of action and supported by evidence capable of establishing the full legal basis for liability.
For both sides, the message is the same:
An audit finding may start the dispute — but it does not decide it.
What matters. What’s next.
Disclaimer
This article has been prepared by CORVUS AI for general informational and educational purposes only. It is intended to make complex legal and regulatory developments easier to understand.
It does not constitute legal advice and does not create a professional adviser–client relationship. The information should not be relied upon as a substitute for advice based on the specific facts, circumstances and applicable law relevant to your organisation or project.
The article reflects our understanding of the law and regulatory framework as of the date of publication. Legislation, case law, regulatory guidance and administrative practice may subsequently change. While reasonable care has been taken in preparing this article, CORVUS AI does not warrant that the information is complete or remains current after the date of publication. We do not undertake to update this content.
To the fullest extent permitted by applicable law, CORVUS AI excludes liability for loss arising from reliance on this article. Nothing in this article constitutes an offer or solicitation to provide regulated legal services in any jurisdiction where doing so would be unlawful.
AI-assisted preparation: This article was prepared with the assistance of AI tools. Its legal analysis, conclusions and final text were subject to human review and editorial control and were reviewed and approved prior to publication by Oleksandr Sobovyi, Founder & CEO of CORVUS AI. CORVUS AI retains editorial responsibility for the published content.
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Sources & authorities
Supreme Court of Ukraine
Case No. 915/515/24, 12 February 2026 — principal judgment concerning the attempted recovery of UAH 530,422, Article 1212 Civil Code claim, DASU findings and the application of the Joint Chamber's reasoning in Case No. 915/222/24.
Joint Chamber of the Commercial Cassation Court, Case No. 915/222/24, 19 December 2025 — key authority concerning the evidentiary status of DASU audit acts and the treatment of losses resulting from alleged violations of mandatory defence-contract pricing rules as potential damages.
Case No. 910/10047/25, 18 June 2026 — subsequent application of Case No. 915/222/24 concerning the appropriate remedy for alleged violations of defence-contract pricing rules.
Case No. 912/2412/24, 18 June 2026 — subsequent Supreme Court confirmation that an audit act may constitute evidence but has no predetermined evidentiary force and must be assessed together with other evidence.
Legislation
Civil Code of Ukraine, Law No. 435-IV of 16 January 2003 — including Articles 632 and 1212 (Civil Code of Ukraine — official text).
Law of Ukraine “On Defence Procurement”, No. 808-IX of 17 July 2020 (Law of Ukraine “On Defence Procurement” — official text).
Cabinet of Ministers of Ukraine Resolution No. 363 of 3 March 2021, “Issues of Defence Procurement” (Cabinet Resolution No. 363 — official text).
Supreme Court — Case No. 915/515/24, 12 February 2026 · Joint Chamber — Case No. 915/222/24, 19 December 2025
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