I'm not sure it actually works like it should, but it definitely does something. When you klick on the portrait of the cursed unit in battle (on the left side of the screen), you get the unit information screen still showing normal armor...BUT when you hover the cursor over the armor you get a tooltip showing 0 armor.

So my guess is that the spell does work but the interface doesn't show correctly.

maybe it still uses the old mechanic - reducing blunt/pierce/cutting armor that actually aren't in the game any more? 

it shoud have visible effect anyway and provide clear info about how effective it is.

like:

10 +5(cursed) damage