The claim that the Lusitania was carrying arms has always been pure baloney, and even if it had been carrying arms, there is no evidence that the German submariners involved considered her to be in violation of international law.
It's undisputed that the ship was, at least, carrying over 4 million rounds of ammunition (.303, suitable for use in British machine guns, and purchased from Remington), over 1271 cases of 3 inch shells (4 shells per case) and other items of war. More here: http://www.lusitania.net/index.html