Estonia Takes Shell Supplier to Arbitration over €70m Ukraine Deal

Estonia paid about €70m ($81m) in advance under contracts for artillery shells intended for Ukraine, but the ammunition was never delivered. The supplier had no previous record of producing the required shells, and Estonia has now taken the dispute to the European Court of Arbitration in Strasbourg.

In 2024, the Estonian Center for Defense Investments signed four contracts with Italian-registered Datasel S.R.L., which is owned by the Indian company Neco Defence Munitions. Neither company had previously produced shells. The advance payments were financed through the EU’s European Peace Facility.

The first contract was signed in August 2024, followed by a €15m ($17m) payment. A second agreement in October brought another advance payment of €10m ($12m). The first batch was due to reach Ukraine in November, but Datasel reported delays and problems. Despite this, two more contracts were signed by the end of the year, bringing total advance payments to about €70m.

The center’s current director general, Elmar Vaher, said he would not have signed the contracts and that they had been approved by a very small group without the knowledge of the then head of procurement. His predecessor, Magnus-Valdemar Saar, disputed this, saying no major decision had been made without the approval of the Defense Ministry’s leadership.

Company representatives met officials in Tallinn in spring 2025 to discuss the problems, but the deliveries were ultimately canceled altogether.

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