It is collateral damage. Johnny (Overlord) explains it here in a post from December 9, 2009:
Air attacks will go through as long as the target sector isn't your own or someone with whom you have a treaty, and missiles and bombs also do collateral damage. So, if a friendly unit is in range of the attack, it will take damage (despite the treaty). This can't be used on shared borders (since the land would all be either yours or the friend's and therefore never take place), but it can be used to attacks friendly units anywhere else.