The company that flies drones over the English Channel to spot small boats is suing the Home Office after losing the contract to run the surveillance service, in a legal fight that has frozen the new deal weeks before the old one expires.

Canadian firm PAL Aerospace has provided aerial surveillance of Channel crossings for two years under a contract worth £54 million, which is due to end on 30 November. The Home Office awarded the replacement contract to Nottinghamshire-based DEA Aviation, but PAL launched a High Court challenge on 17 July, arguing that the winning bid should have been thrown out.

Under procurement rules, PAL's claim automatically stopped the Home Office from signing the new contract. Government lawyers asked the court to lift that suspension, but Deputy High Court Judge Jonathan Acton Davis refused, and the case will now go to an expedited trial beginning on 7 December.

What PAL Aerospace is arguing

PAL says DEA was allowed to submit a bid that did not comply with the tender requirements and should have been excluded. The published judgment is heavily redacted, with the prices blanked out, but it records that PAL appears to have lost to DEA on price.

The judge found there was a serious issue to be tried and that damages alone might not be an adequate remedy for PAL if the suspension were lifted and it later won the case. He also found that keeping the suspension in place until a speedy trial in December would not cause the Home Office harm that damages could not cover.

In his reasons, published as PAL Aerospace Limited v Secretary of State for the Home Department, the judge said maintaining the suspension avoided the risk that the public purse would have to pay twice, once to the appointed provider and once in damages.

What happens to Channel surveillance now

The Home Office has agreed to extend PAL's existing contract for four months while the case is resolved, at a cost reported to run into millions of pounds. The surveillance system feeds information to the Border Security Command, HM Coastguard and other partners so they can respond to crossings.

The dispute surfaced after 1,193 people crossed the Channel in small boats between Thursday and Saturday, according to Home Office figures. The existing contract began on 29 October 2024, and the new deal was expected to be in place before it expired at the end of this month.

Shadow Home Secretary Chris Philp said the legal action was another example of Labour's borders bungling. A Home Office spokesman said it would not be appropriate to comment while legal proceedings are ongoing.

The trial in December will decide whether the award to DEA was lawful. If PAL wins, the Home Office could face a fresh procurement exercise or a damages bill; if it loses, the department will be free to sign the contract with DEA.