A FAMILY firm has lost a legal challenge against the Scottish Government’s £370 million Northern Isles lifeline ferry tendering process.
Orkney based Pentland Ferries raised a judicial review of the contract tender at the Court of Session in Edinburgh claiming that it was unlawful.
But during a brief hearing on Friday a judge said he had decided to refuse the petition brought by the firm which runs the non-subsidised route between Gills Bay in Caithness and St Margaret’s Hope, on South Ronaldsay, in Orkney.
The court’s decision has been welcomed by Scottish islands minister Paul Wheelhouse.
Lord Boyd of Duncansby rejected claims that the decision was unlawful and that aspects of it were irrational. The judge’s full decision will be released later.
Mark Lindsay QC told the court during an earlier hearing that the firm viewed the process as “an existential threat” and feared it might no longer be able to trade.
He argued that the subsidy amounted to unlawful state aid and would distort the market.
Three firms, Calmac Ferries, Förde Reederei Seetouristik (FRS) and the current operator Serco NorthLink, were announced as contenders for operating ferry routes between Orkney, Shetland and the Scottish mainland.
Pentland Ferries challenged the provision of subsidy for the route between Scrabster, in Caithness, and Stromness, in Orkney, and the “bundling” of it with ferry links between Aberdeen and Kirkwall, in Orkney and Lerwick, in Shetland.
The firm, which provides the fastest car and passenger sea link between the mainland and Orkney across the Pentland Firth, is profitable and receives no subsidy.
It maintained that the proposed subsidy paid to the successful tendering company for the routes would be unlawful and in breach of obligations imposed on Scottish Ministers by European regulations.
It also maintained that there was no justification provided for including the Scrabster to Stromness route with other routes in the same subsidised public service contract.
The Scottish Government contested the action brought by Pentland Ferries and after Lord Boyd’s decision its counsel, Ruth Crawford QC, sought its expenses for the case following its success.
The move was opposed by Mr Lindsay who said that it was only during the course of the judicial review hearing that accurate figures over the subsidy on the Scrabster to Stromness route were provided.
But Lord Boyd said: “I have decided that the normal rule about expenses should apply in this case and the respondents (the Scottish Government) are entitled to their expenses.”
Paul Wheelhouse said the court’s decision would allow the government to focus on delivering the tender of the next contract.
“This contract, worth around £370m over an eight year period, underlines the Scottish Government’s continued commitment to the Northern Isles.
“It is important to note that Pentland Ferries have also made two separate complaints to the European Commission.
“While today’s judgment allows us to continue with the tender, these complaints are still live and we will engage with the Commission to try and resolve them as soon as possible.
“We remain fully committed to pursuing all avenues to deliver our commitment to reduced fares to Orkney and Shetland through the Road Equivalent Tariff scheme.”
Copy by Dave Finlay