Public Procurement: CJEU Restricts the Automatic Lifting of the Suspensive Effect
The Court of Justice of the European Union (CJEU) has ruled on an issue of particular importance to Portuguese public procurement litigation: can the suspensive effect of proceedings challenging an award decision be lifted automatically in order to prevent delays to projects financed by European funds?
In its Judgment of 17 September 2026 in Joined Cases C-266/25 and C-267/25, the Court held that EU law precludes a regime requiring a court provisionally to lift the suspensive effect without first hearing the tenderer challenging the award and without allowing the court to balance the interests at stake in the specific case.
The judgment has significant consequences both for contracting authorities and for companies participating in public procurement procedures.
What is the automatic suspensive effect?
In pre-contractual litigation, a challenge to certain award decisions may produce an automatic suspensive effect.
The rationale is relatively straightforward.
If a company challenges an award decision but the contract is nevertheless immediately entered into and begins to be performed, a later judgment in favour of the challenger may lose much of its practical effectiveness.
Suspension is therefore intended to preserve the effectiveness of judicial protection while the dispute is being determined.
The special regime for projects financed by European funds
Law no. 43/2024 introduced a special regime under Article 25-A of Law no. 30/2021 for certain procedures associated with projects financed or co-financed by European funds.
Under that regime, pre-contractual proceedings brought within the statutory time limit could automatically suspend the effects of the award decision.
However, the contracting authority could request the provisional lifting of that suspension, and at the initial stage it was sufficient to demonstrate the connection between the contract and European funding and the risks associated with delaying implementation of the project.
The tenderer challenging the award would only be heard subsequently.
It was precisely this mechanism that the Administrative and Tax Court of Porto referred to the CJEU.
The case referred to the Court of Justice
The proceedings arose out of two actions concerning contracts awarded by EDIA – Empresa de Desenvolvimento e Infraestruturas do Alqueva for the construction of floating photovoltaic power plants.
The company I-Sete challenged the respective award decisions, raising the question of whether the suspensive effect of those proceedings could be lifted under the special regime applicable to projects financed by European funds.
The Administrative and Tax Court of Porto decided to refer to the Court of Justice the question of whether that mechanism was compatible with the guarantees provided under EU law.
What did the CJEU decide?
The Court acknowledged the importance of the public interest in ensuring the timely implementation of projects and preserving the relevant European funding.
However, it held that this interest cannot automatically determine the outcome of the balancing exercise.
The difficulty lay in the fact that the national court was prevented from genuinely assessing the individual circumstances before lifting the suspension.
Tenderers are entitled to effective judicial protection
Lifting the suspensive effect may allow the contract to be entered into before a ruling has been given on the legality of the award.
This can create a situation that may subsequently be difficult to reverse.
For that reason, the European system of review procedures in public procurement requires tenderers to have access to effective interim remedies.
The CJEU linked this protection to the right to an effective remedy and to a fair trial under Article 47 of the Charter of Fundamental Rights of the European Union.
The tenderer must be given an opportunity to be heard
One of the central aspects of the judgment concerns the right to be heard.
The national regime allowed the suspensive effect to be provisionally lifted before the company bringing the action had been given an opportunity to submit its position.
According to the Court, a decision of such significance cannot result from a mechanism under which the unsuccessful tenderer’s position is considered only at a later stage.
The court must be able to assess the individual circumstances
This is perhaps the most important aspect of the judgment.
The fact that a contract benefits from European funding may be relevant, but it cannot replace judicial assessment.
The court must be able to balance the various interests at stake, including the urgency of the project, the risk that funding may be lost and the need to ensure effective judicial protection for the company challenging the award decision.
The legislature cannot perform that balancing exercise in advance on behalf of the court.
Did the CJEU repeal the Portuguese legislation?
No.
The judgment was delivered in the context of a preliminary ruling procedure.
Under that mechanism, the CJEU interprets EU law, while it remains for the national court subsequently to apply that interpretation to the dispute before it.
The Portuguese provision does not formally cease to exist merely as a consequence of the judgment.
However, national courts are bound by the interpretation of EU law given by the Court of Justice and must disapply national legislation where it cannot be interpreted in a manner compatible with EU law.
What changes for contracting authorities?
European funding and the risk of losing that funding may still be relied upon.
However, those circumstances can no longer operate as grounds which, effectively by themselves, determine that the suspension must be lifted.
The contracting authority will need to demonstrate the specific circumstances justifying continuation of the procedure or conclusion of the contract.
The court must then carry out the necessary balancing exercise.
And what does this mean for tenderers?
For companies participating in public procurement procedures, the judgment reinforces the importance of pre-contractual litigation as a means of challenging award decisions considered unlawful.
However, one factor remains absolutely critical: timing.
Time limits in pre-contractual litigation are particularly short and, in certain circumstances, the availability of the suspensive effect also depends on how quickly the company reacts to the decision.
An exclusion decision or contested award should therefore be reviewed as soon as it is notified.
A particularly important judgment in 2026
The judgment comes at a time of significant change in Portuguese public procurement law.
Decree-Law no. 177/2026 introduced a broad revision of the Portuguese Public Contracts Code, which generally enters into force on 1 October 2026.
On the one hand, there is a legislative trend towards simplifying and accelerating public procurement procedures.
On the other hand, the CJEU judgment serves as a reminder that procedural speed must coexist with effective mechanisms of judicial review.
Contracting authorities and companies dealing with the public sector will need to take both considerations into account.
Frequently Asked Questions
Does an action challenging an award decision always suspend the procurement procedure?
No. The suspensive effect depends on the type of decision, the procedural remedy used and the statutory requirements and time limits applicable to the case.
Can a project financed by European funds justify the lifting of the suspension?
It may be a relevant consideration, but it does not automatically determine that the suspensive effect should be lifted.
Can a contracting authority obtain the lifting of the suspension without the company being heard?
The CJEU held that EU law precludes a regime requiring provisional lifting without first hearing the tenderer and without a genuine judicial balancing of the interests involved.
Did the CJEU invalidate Article 25-A?
No. The CJEU interpreted EU law in preliminary ruling proceedings. It is for the national courts to apply that interpretation and, where necessary, disapply a national provision that is incompatible with EU law.
Why is it important to react quickly to an award decision?
Because pre-contractual litigation is subject to particularly short time limits and the timing of the challenge may affect the procedural remedies available.
How can we help?
URB Law Services advises companies on public procurement, administrative law and pre-contractual litigation, including the review of procurement procedures, exclusions of tenders, award decisions and the remedies available against them.
We assist companies in the Algarve and throughout Portugal both in participating in public procurement procedures and in carrying out legal reviews of decisions adopted by contracting authorities.
Contact us to find out more.
