The European Union has sued IBM, French IT group Atos and Italian defence contractor Leonardo over repeated delays in developing its new smart border system, the Financial Times reported on Monday, in a case that lays bare years of friction over one of the bloc's biggest technology projects.

The legal action was brought by eu-LISA, the EU agency responsible for the operational management of large-scale IT systems in the area of freedom, security and justice, according to the newspaper, which cited internal communications. Reuters reported the Financial Times account on Monday 9 November.

At the centre of the dispute is the Entry/Exit System, known as the EES, the digital platform that records when non-EU nationals enter and leave the bloc. The case does not allege that the system is failing today. It concerns delays during its development, and eu-LISA has said the proceedings have no effect on how the system currently operates.

What the Entry/Exit System does

The EES electronically records the entry and exit of non-EU nationals at the bloc's external borders. It applies across the 29 countries in the Schengen area and is designed to identify visa overstayers, combat identity fraud and curb illegal migration.

Travellers from outside the bloc have their fingerprints scanned and their photograph taken when they first enter the Schengen area under the system. The data is then held so that later crossings can be checked against the original entry record, replacing the passport stamps that were previously used.

The system was years behind its original timetable, and its phased rollout was accompanied by complaints about queues and technical problems at some airports. Those operational difficulties are separate from the legal dispute, which turns on who was responsible for the delays in delivering the system in the first place.

A dispute over delays, not current operations

eu-LISA told the Financial Times that the legal proceedings had "no impact on the functioning of the Entry/Exit System (EES)", adding that the dispute relates to delays in the delivery of the system at the time of its development and is not related to the operation of the EES. The European Commission has given the same account of the case.

Reuters said it could not immediately verify the Financial Times report. IBM, Leonardo, Atos and eu-LISA did not immediately respond to a request for comment sent outside regular business hours, Reuters reported.

No court has ruled on the claims. The proceedings are a contractual dispute in which eu-LISA is seeking a remedy for missed deadlines, not a finding that any of the three companies broke the law.

A contract signed in 2019

In 2019, eu-LISA awarded a core EES contract to a consortium including IBM Belgium, Atos Belgium and Leonardo. The six-year contract covered the implementation and maintenance of the central Entry/Exit System.

The relationship between the agency and the consortium was strained long before the case reached court. In an October 2021 letter seen by the Financial Times, Atos Belgium and IBM Belgium contested "both the principle ... and the calculation" of a fine imposed by the agency, arguing that delays stemmed from external factors, including the COVID-19 pandemic.

A few months later, in February 2022, the three companies pushed back against new deadlines set by eu-LISA, according to the Financial Times account reported by Reuters.

Reporting on the same case, Traders Union said eu-LISA filed the lawsuit in Estonia in December 2025, that a spokesperson for Estonia's Harju county court confirmed the civil case had been lodged there, and that no hearings had taken place or been scheduled. It also reported that eu-LISA confirmed in annual accounts published in July that it had activated contractual and legal remedies after what it described as various delivery delays by the consortium.

The same report said the total contract value had risen to 212 million euros by 2022, up from 142 million euros in 2021, with the budget for 2023 nearly doubling to 40 million euros.

Why the case matters

The EES is one of the most consequential border technology projects the EU has attempted, and its troubled delivery has already shaped how travellers experience the bloc's external frontier. A court case between the agency that commissioned it and the companies that built it puts the cost of those delays, and who should bear it, before a judge.

The outcome could also influence how the EU writes and enforces contracts for other large-scale IT systems, including the border and migration databases that sit alongside the EES. For now, the system itself keeps running, the companies remain involved in its operation, and the argument over how it got there continues in an Estonian court, with no hearings scheduled yet.