Pentland Ferries loses appeal on subsidies ruling
A ferry firm has lost a legal challenge to subsidy support for rival routes between the Scottish mainland and Orkney and Shetland.
Lawyers for Pentland Ferries, which runs an unsubsidised service to Orkney, argued that the Scottish government help was unlawful.
The company lost an earlier legal challenge and appealed.
Three civil judges at the Court of Session in Edinburgh have now ruled that the appeal should be refused.
Two companies - CalMac Ferries and Serco NorthLink - are bidding for an eight-year contract to operate the subsidised routes.
A third company, Förde Reederei Seetouristik GmbH, had been bidding but pulled out in May.
The routes involved are between Scrabster in Caithness and Stromness in Orkney, Aberdeen to Kirkwall in Orkney and Lerwick in Shetland and also Kirkwall and Lerwick.
Pentland Ferries challenged the inclusion of the Scrabster route within the contract, saying the subsidy support threatened its competing business.
Its counsel, Mark Lindsay QC, had earlier described the move as "an existential threat" to the ferry firm.
Lord Drummond Young, who heard the appeal with the Lord President and Lord Menzies at the Court of Session, said that at this stage the court had to rely on government ministers observing their legal obligations in a proper manner.
He said: "Provided they do so, any risk to the economic viability of the petitioners' own ferry service should be kept as a minimal level or eliminated."