Arms Export Controls and International Legal Liability: What the ICJ Germany-Nicaragua Case Means for Global Contracts

The ICJ Proceedings in Brief

In 2024, Nicaragua filed proceedings at the International Court of Justice alleging that Germany had breached the Genocide Convention, several Geneva Conventions and their Additional Protocols by supplying weapons to Israel during the conflict in Gaza. Germany has now appeared before the Court to challenge those claims and to request dismissal of the case. Whatever the eventual outcome, the proceedings have already produced a concrete legal effect: they have placed state responsibility for third-party arms use squarely onto the international judicial agenda, and that shift has direct consequences for how governments, defence companies and their lawyers should structure contracts.

The case is not merely a dispute between two states. It is a test of whether a supplying state can be held internationally responsible for the downstream conduct of a recipient state, a question that touches every tier of the global defence supply chain.

Who Is Bound and By Which Rules

The Genocide Convention binds all 153 state parties, requiring them not only to refrain from genocide themselves but, as the ICJ confirmed in its 2007 Bosnia ruling, to prevent and punish it to the extent within their power. The four Geneva Conventions enjoy near-universal ratification, covering 196 states. Common Article 1 of those Conventions obliges parties to "ensure respect" for international humanitarian law, a phrase the ICJ has interpreted broadly to encompass restraining third parties where a state has the means to do so.

The Arms Trade Treaty, in force since 2014 and ratified by 113 states, goes further still: Article 7 requires an exporting state to assess whether transferred arms could be used to commit or facilitate serious violations of international humanitarian law, and to refuse the transfer if there is an overriding risk. These are not soft-law aspirations. They are treaty obligations that can, as Nicaragua's application demonstrates, form the basis of ICJ contentious proceedings.

Defence contractors, logistics providers and financial institutions that facilitate government-to-government arms transfers may not be directly subject to ICJ jurisdiction, but they are directly subject to the domestic implementing legislation that states enact to honour these international obligations.

The Contract Changes Being Forced Across Jurisdictions

The Nicaragua-Germany case has accelerated a drafting trend already visible in procurement offices from Brussels to Canberra. The following contractual adjustments are becoming standard or are increasingly requested by legally cautious buyers and sellers alike.

End-use and re-transfer clauses. Contracts now routinely require the buyer to certify the intended end-use, to prohibit onward transfer without written consent, and to allow audit or inspection rights. Where a supplier faces potential ICJ-level scrutiny, those clauses need teeth: liquidated damages, automatic termination triggers, and the right to obtain injunctive relief in a named jurisdiction.

Material adverse change and regulatory suspension provisions. If a government suspends or revokes an export licence mid-contract, the seller needs a clear contractual right to suspend performance without penalty. Conversely, the buyer needs a break clause that does not expose it to damages when political circumstances change. Standard MAC clauses drafted for commercial M&A rarely cover regulatory revocation with sufficient precision for defence transactions.

Representations and warranties on legal compliance. Buyers and intermediaries are now being asked to represent, at signing and on a continuing basis, that they are not subject to sanctions, arms embargoes or pending ICJ provisional measures. Sellers should consider whether their own representations need to reflect the current legal position regarding the recipient state, not merely the position at the date of signature.

Force majeure and frustration. A binding ICJ provisional measure ordering a halt to weapons transfers, or a domestic court injunction granting the same, arguably frustrates a supply contract under English law. Parties should specify whether such events constitute force majeure, how notice must be given, and whether the contract survives in a suspended state or terminates automatically.

Jurisdiction and Governing Law Choices Under Pressure

The choice of governing law in arms-related contracts has always been strategic. English law remains popular because of its predictability and the availability of injunctive relief, but the Nicaragua-Germany case highlights a risk that is easy to overlook: domestic courts in third countries can be asked to grant interim relief that effectively blocks performance of a contract governed by a different law, if the plaintiff can establish a sufficient connection to that jurisdiction.

GCs advising defence clients should review whether their dispute resolution clauses adequately address the possibility of parallel proceedings, whether choice of forum clauses are exclusive and enforceable in the relevant states, and whether arbitration (with its narrower grounds for third-party intervention) is preferable to litigation for sensitive transfers.

What Comes Next and Why It Matters Now

Germany's application for dismissal will be argued on preliminary objections, including questions of jurisdiction and admissibility, before the merits are reached. That process typically takes years. In the interim, the case functions as a compliance signal: states and their contractors that export arms into active conflicts should assume that their supply chains will be examined through an international humanitarian law lens, and that their contracts will be scrutinised for the safeguards they contain.

The practical implication for general counsel is straightforward. Contracts entered into now will be the documentary record against which conduct is assessed later, whether in an ICJ proceeding, a domestic criminal inquiry, or a parliamentary investigation. Investing in precise, legally current drafting is not caution for its own sake. It is the evidentiary foundation that will matter most if the legal environment continues to harden.