Portugal's Fast Track for EU-Funded Public Contracts Fails in Luxembourg, and a Losing Bidder's Automatic Suspension Comes Back

A rule Portugal wrote in December 2024 to stop court challenges from delaying projects paid for with European money has been found incompatible with European law. On Thursday the Court of Justice of the European Union ruled that Article 25-A of the Public Procurement Code, which lets a contracting authority ask a judge to lift the automatic suspension of a disputed contract award without the losing bidder being heard first, is precluded by the directive that guarantees effective remedies in public procurement.

The judgment came in Joined Cases C-266/25 and C-267/25, decided by the Second Chamber and handed down in Luxembourg on 17 September 2026. It answers two questions sent by the Tribunal Administrativo e Fiscal do Porto (Administrative and Tax Court, Porto) by decisions of 11 and 14 March 2025, which reached the Court on 8 April 2025.

Two floating solar plants on the Alqueva, and a bidder that lost both

The dispute began with two public works contracts put out by EDIA (Empresa de Desenvolvimento e Infra-estruturas do Alqueva), the state company that runs the Alqueva irrigation system, whose reservoir has been the centre of Portugal's stalled floating-solar programme. One was for a floating photovoltaic plant at the Álamos pumping station, the other for floating photovoltaic plants at the S. Pedro and S. Matias pumping stations.

On 23 December 2024 EDIA awarded the first to a grouping of DST Solar and Domingos da Silva Teixeira, and the second to Greenvolt Next Portugal. A competing bidder, I-Sete (Inovação, Soluções Económicas e Tecnologias Ecológicas), went to the Porto administrative court to challenge both decisions.

EDIA told the Court that it had financing of 45 million euros in total from the Council of Europe Development Bank for the two contracts, on condition that they were completed by 31 December 2025 at the latest. If the automatic suspension triggered by I-Sete's challenge were not lifted, EDIA argued, it could not deliver on time and the money would be lost.

The rule at the centre of the case

Article 25-A was inserted into the procurement rulebook by Lei n.º 43/2024 of 2 December 2024, which amended Lei n.º 30/2021 on special public procurement measures and was published in Diário da República, Série I, n.º 233, on the same day. It sits alongside, rather than inside, the main procurement rulebook that was rewritten by Decreto-Lei n.º 177/2026 earlier this month. It sets up an exceptional track for urgent administrative actions in pre-contractual disputes where the project is financed or co-financed by European funds.

Under paragraph 1, bringing such an action within ten working days of the award being notified to all tenderers automatically suspends the effects of the award. Under paragraphs 2 to 4, the contracting authority can then apply, without the other side being heard, for that suspension to be lifted provisionally. The judge has a maximum of 48 hours to decide, and must lift it once two cumulative conditions are summarily established: that the ten working days have run, and that there is a risk of losing the funding. The second condition is presumed as soon as the authority produces a document showing the contract belongs to a financed project.

Only afterwards does the losing bidder get a hearing. Paragraph 5 gives it five days to ask for the suspension to be maintained, and it can do so only by showing that one of those two objective conditions was not met. Paragraphs 6 to 8 then set up the proper weighing of public and private interests, on a timetable of seven days at a stretch, ending with the suspension being lifted if the damage from keeping it would exceed the damage from removing it.

What the Court decided

The referring court had framed its questions around Article 2d of Directive 89/665, the Remedies Directive, which deals with contracts being declared ineffective. The Court of Justice reframed them. As the parties confirmed at the hearing on 5 March 2026, no contract had actually been signed in either case, so the disputes were pre-contractual and the governing provision was Article 2, not Article 2d.

Read that way, the answer was that Article 2(3) to (5) of the directive, in the light of Article 47 of the Charter of Fundamental Rights, precludes national legislation which, in pursuit of speed in procurement so as to avoid losing European funding, requires the national court to lift the automatic suspension of a challenge to an award, on the contracting authority's application, without first hearing the unsuccessful tenderer and without being able to weigh all the interests at stake on the merits.

The reasoning is unusually blunt for a preliminary ruling. Both EDIA and the Portuguese Government accepted at the hearing that Article 25-A allows the authority to use the temporary lifting to go ahead and sign the contract. That alone, the Court said, infringes Article 2(3), which forbids a contracting authority from concluding a contract before the review body has ruled on either the interim application or the substance.

The Court then took the two sides of the Portuguese procedure and set them next to each other. The authority has to establish two objective conditions that, subject to the referring court's own check, it can apparently satisfy easily. The bidder, to resist, has to prove those same two conditions are absent, which the Court described in terms as imposing a probatio diabolica, the proof of a negative that cannot in practice be made. And the judge, at that stage, has no discretion at all: the text says the suspension "shall be provisionally lifted" once the summary finding is made.

The result, in the Court's words, is a rule that replaces the principle of automatic suspensive effect with one that is its exact opposite, so that the automaticity of the suspension becomes the automaticity of its removal. Because the authority may sign in the meantime, the bidder has no guarantee of ever reaching the inter partes weighing of interests that paragraphs 6 to 8 promise.

The funding argument, and why it did not carry

The Court did not dismiss the objective Portugal was pursuing. Ensuring the swiftness of procurement procedures in order to avoid losing European funding is, it accepted, an objective of general interest recognised by the Union, and the limitation on the right to an effective remedy was properly provided for by law.

What it would not accept was that the risk of losing money can settle the balance on its own. Advocate General Manuel Campos Sánchez-Bordona, whose Opinion was delivered on 7 May 2026, had said the same. The review body must keep the power to weigh the interests before it, and the risk of losing European financing cannot by itself be an overriding reason in the public interest that systematically tips the scales towards the contracting authority.

Protection that absolute, the Court added, is liable to defeat the directive's own purpose, because it could end with European-funded contracts being awarded unlawfully and yet still benefiting from the lifting of the suspension, with effects that are potentially irreversible.

In its written observations the Portuguese Government had pointed to the explanatory notes on the draft that became Lei n.º 43/2024, which said the aim was to reduce the risk of losing funds that are vital to performing recovery and resilience plan contracts and that contracting authorities do not have. The pressure behind that drafting is real enough: Portugal 2030 and the recovery plan have been running against spending deadlines for most of this year. The Court read that as an admission: Article 25-A assumes, or at least implies, that the weighing of public and private interests must ordinarily favour the contracting authority, and on that basis it found the provision undermines the essence of the right to an effective remedy in Article 47 of the Charter.

What happens now

A preliminary ruling does not annul the national provision. It binds the Tribunal Administrativo e Fiscal do Porto, which now has to decide I-Sete's two cases in line with it, and it binds every other Portuguese court facing the same provision. Several findings were expressly left for the referring court to verify, including whether the funding really was conditional on completion by the end of 2025 and how easily the two conditions can in fact be met.

Beyond the two Alqueva contracts, the practical effect is that the shortcut is no longer available in the form Parliament wrote it. A contracting authority that wants a suspension lifted has to persuade a judge who can hear both sides and weigh what is at stake, which is the position the Remedies Directive has required since 1989. The general machinery for freezing an administrative act while a court looks at it is set out in our guide to stopping the State in Portugal.

It is the second time this year that Lisbon has been found wanting in Luxembourg on a point of European law, after the ruling on the Industrial Emissions Directive in July. The Czech Government and the European Commission both filed observations in the case. Costs are a matter for the Porto court.