The club's spectacular plans for the renovation of their stadium have been brought to a halt amid an investigation by the European Commission into alleged "illegal public help"
Madrid unveiled their proposals for the spectacular stadium in January, with the all-new Bernabeu to include a shopping centre complex and a hotel in an area to cover 12,250 metres adjacent to the ground - almost half of which is currently unoccupied land and would be given to the club as part of the agreement.
In order to approve those plans, Madrid's government approved changes to the city's General Urbanisation Plan from 2011.
However, the European Commission has opened an investigation into possible "illegal public assistance" by part of the government towards the club.
A group of ecologists have also filed an official complaint claiming that Madrid reneged on a previous agreement to build an underground car park and a walkway giving access to the stadium in 1991.
"The club never fulfilled its part and ended up owing the government €2.8 million," a statement from the action group Ecologistas en Accion AEDENAT read.
The Spanish High Court have decided that the European investigation means there are sufficient grounds to bring a halt to the €400m project.
The Madrid government dismissed the High Court ruling in a statement on Friday which read: "The agreement between the Madrid government and Real Madrid, which is supposedly the cause of the procedure opened by the European Union, has nothing to do with the modficition of the [urban] planning. Therefore, it makes no sense to halt these modifications when they have absolutely no relation to the proprietary agreement."
Madrid, meanwhile, have 10 days to lodge an official appeal against the High Court decision.