The company behind the redevelopment of an abandoned Victorian fort in Alderney is seeking legal advice after the States terminated their partnership.
Fort Tourgis has been derelict for decades and there have been numerous attempts to transform it.
In the latest attempt, Dutch firm Move Development had been working with the government to turn the site into a luxury hotel.
The States cited the required financial guarantees and assurances on enhanced air connectivity as reasons to terminate the partnership.
It said there "wasn't an appetite to keep the Fort Tourgis project on the States agenda".
"The States has a duty to demonstrate that it is acting in the best interests of the local taxpayer in financial and commercial matters.
"It is difficult to do this when the market was tested so long ago."
"The termination of the project by the States of Alderney disregards the efforts and investments made by Move in recent years," the company said.
"Also, this attitude ignores the interests of Alderney's residents and, given the investment required for the runway, the residents of Guernsey.