Deposit Return Scheme: Biffa’s claim against the Scottish Ministers allowed to proceed

The Court of Session has given Biffa Waste Services Ltd permission to proceed to a proof before answering its £166 million claim against the Scottish Government for financial loss resulting from delays to a national Deposit Return Scheme. 

Delay to DRS

The Deposit Return Scheme (“DRS”) was a measure introduced by the Scottish Government, which intended to encourage recycling by charging a deposit to customers when buying single-use drink containers such as in cans and bottles. If the customer placed the recyclable container (which includes recycled plastic, cans, tins and glass) in a “recognised return point”, the deposit would be refunded to the customer.

In a surprise turn of events in June 2023, the introduction of DRS was delayed until October 2025, after the UK Government declined a request for full exclusion from the UK Internal Market Act (“IMA”), which meant the scheme as envisaged was unviable. 

Biffa had entered into a contract to operate the DRS, with the contract due to run for 10 years. It now claims £166 million in financial losses over the collapsed scheme and the subsequent loss of profit.  

What is Biffa alleging?

Biffa’s claims that the Scottish Ministers owed Biffa a legal “duty of care”, which they failed to meet by not applying early enough for IMA approval, and by not alerting Biffa that approval was required, had not been sought and had not been granted. They say that Scottish Ministers were uniquely able to apply for approval and had knowledge of whether such approval was required and whether it had been granted. Biffa argues that the Scottish Government purported to assure it that the DRS was entirely deliverable in 2022, which they knew - or ought to have known – that Biffa would rely on in deciding to proceed with the DRS contract.  
Alternatively, Biffa relies on a letter from the Scottish Government which they say should have disclosed that IMA approval had not been sought nor granted, and that offering assurances on the DRS without this caveat was a “half-truth”. 

The Scottish Government denies the allegations, arguing that the letter was written at a point in time when the DRS was deliverable. The Government added that Biffa was aware that the DRS was not live and that the scheme had already been delayed. Participation in the scheme was a “commercial risk” and assumptions on IMA approval were made by Biffa at its own risk. 

The Scottish Government was attempting to have Biffa’s claim thrown out at the first hurdle.  They have failed in that attempt and the case will now proceed to trial. This will examine a range of thorny issues, including what responsibilities the Scottish Government had to Biffa, whether it was reasonable for Biffa to rely on the Scottish Government to provide the crucial information, and what Biffa is entitled to recover. The issues form a legal tick list for cases of this kind, and could resonate across the UK and elsewhere.

The question for the court is: Was the Scottish Government in the wrong, or was this simply a commercial risk when transacting with the Scottish Government? 

The outcome of this proof will be of interest to industry bodies in this sector, but also to any entities that contract with the Scottish Government and wider public bodies. Depending on the ultimate decision by the court in this case, it may prompt other businesses which had signed up to the DRS before the initial deadline and suffered a financial loss as a result of its abandonment, to review their own position as regards any potential claim against the Scottish Government. 

Commercial organisations that contract with the Scottish Government or indeed the wider public sector in the future may seek additional comfort and/or potentially price in greater risk, particularly where they are providing any services required to implement new legislative and policy frameworks.

Our public law and disputes teams are on hand to assist with any queries relating to the DRS, this case, or the wider issues raised. 

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