TSJCV orders Guardamar del Segura town hall to compensate Avanza over public bus service

A ruling by the High Court of Justice of the Valencian Community (TSJCV) has sided with transport company Avanza Movilidad Levante in a dispute with Guardamar del Segura Town Hall. The court has declared the current setup illegal, ordering the local administration to update the financial conditions of the town’s urban bus service and compensate the contractor for operating without a formal contract.

The TSJCV revoked a previous judgement from December by an Elche court, which had validated a Guardamar del Segura plenary agreement from 4th October 2024. That decision required Avanza to continue running the urban transport lines under identical legal and financial conditions from 31 October 2024 until 30 October 2026, or until a new contract was awarded.

The higher court declared the plenary resolution illegal and ruled that Avanza is entitled to be indemnified by the municipality for the damages caused by the improper extension of the contract. This covers the period between October 2024 and October 2026, as well as any subsequent time the company continues to run the bus service.

According to the mayor of Guardamar del Segura, José Luis Sáez, the town hall has been waiting two years to resolve a new tender that remains stuck on technical issues. In the meantime, the Mayor confirmed that the service will continue to run under the current temporary conditions because it is an essential public service.

The exact compensation amount is yet to be determined, but the TSJCV specified that it must equal total costs deducted from income, plus a 6% industrial profit margin and statutory interest.

The original contract, valued at more than 300,000 euro per year, was signed on 2nd May 2003 with a maximum allowable duration of 25 years through agreed five-year extensions. In 2018, an extension was approved to end the contract in 2023. However, in December 2021, the duration was extended by a further 15% to re-establish financial balance after COVID-19 pandemic restrictions disrupted operations between March and May 2020, setting a final end date of 30th October 2024.

When the town hall attempted to enforce another two-year extension under identical terms to avoid service interruption, Avanza appealed. The TSJCV concluded that contract extensions cannot be imposed tacitly or indefinitely once a contract has legally expired. Because continuing an expired public contract violates public sector procurement regulations, the contractor is entitled to full financial reimbursement for the losses incurred while providing the service.