On 16 January 2026, Lord Sandison issued his opinion in Biffa Waste Services Limited v Scottish Ministers ([2026] CSOH 3).
The case has featured prominently in the headlines. Biffa sought payment of damages of £51.4 million in relation to the Scottish Government’s proposed Deposit Return Scheme (the DRS), which has yet to be introduced.
Following an eight-day proof, the Scottish Ministers were ultimately successful. Lord Sandison granted decree of absolvitor on the basis that the statements made by Lorna Slater MSP, who was the responsible Cabinet Minister for the DRS, in a letter to Biffa on 17 May 2022 did not amount to negligent misrepresentation nor did the making of those statements amount to a breach of any duty of care incumbent on the Scottish Ministers.
In this article, we discuss the opinion and consider its broader significance for public private contractual relationships looking ahead.
The UK’s internal market
The rules governing trade within the UK are set out in the United Kingdom Internal Market Act 2020 (the UKIMA). This formed a core part of the legislation passed as part of the repatriation of powers formerly exercised by EU institutions during Brexit. Prior to that, the UK had been bound by the EU’s internal market rules while it was a Member State.
The UKIMA contains two market access principles. Each is intricately defined and includes a framework of tests and qualifications governing which rules apply to a particular product placed in the market and the circumstances in which regulatory divergence within the UK may be justified.
The first market access principle is the principle of 'mutual recognition'. In practice, this means that where different requirements apply within the UK to matters such as product labelling, a party placing goods on the market need only comply with the product labelling requirements of one part of the UK in order to place goods on the market throughout the rest of the UK regardless of whether different rules apply elsewhere.
The second market access principle is the principle of 'non-discrimination', which is in brief that certain rules on the sale of goods applicable within one part of the UK are of no effect if they directly or indirectly discriminate against incoming goods that have a relevant connection to another part of the UK.
In practice, the rules are considerably more complex. One aspect of that complexity is that the 'relevant requirements', meaning the regulatory rules, caught by each market access principle differ. For example, the principle of non-discrimination captures manner of sale requirements, which regulate where, when, by whom, price conditions or other conditions on the sale of goods. Any issue involving the application of the UKIMA therefore requires careful consideration.
We have explained the UKIMA framework in further detail in our previous article on this case.
The Deposit Return Scheme
All four nations of the UK have announced their intention to establish their own DRS. These would require drinks producers, importers, marketers or others offering goods for sale to pay a small deposit to place drinks containers made of recyclable material such as metal or plastic on the market. That deposit would then be passed on to consumers at the point of purchase, who could recover it when the container was returned for recycling. There was, however, a distinction between the DRS planned by the Scottish Government, which would apply to glass containers, and the schemes planned for the rest of the UK, which would not apply to glass.
As a result of that intra UK divergence, the regulation on the sale of goods imposed by the Scottish Government’s implementation of the DRS would be caught by the non-discrimination principle. This would result in the Scottish DRS regulations being of no effect if they were directly or indirectly discriminatory against goods produced in or passing through the rest of the UK en route to Scotland.
It is possible to obtain an exemption from the scope of the market access principles, although such an exemption can only be granted by the UK Government. To avoid a situation in which the implementing regulations would be of no effect, an exemption was sought in relation to the Scottish DRS. However, the exemption that was granted was limited in scope and did not apply to the DRS’s application to glass. This is explained in further detail in our previous article.
Biffa Waste Services Limited v Scottish Ministers
The Scottish Government appointed Circularity Scotland Limited (CSL) as scheme administrator for the DRS. Biffa was appointed by CSL as a logistics provider for the DRS and was responsible for collecting, counting, transporting and recycling material. Biffa contended that, having relied on assurances from the Scottish Government regarding the deliverability of the DRS, it incurred upfront costs in preparation for the scheme amounting to £51.4 million. CSL was funded by the drinks industry and, following delays to the implementation of the DRS, funding for CSL was withdrawn and the company entered administration.
Biffa raised an action against the Scottish Ministers. It initially sought payment of £114.8 million comprising its upfront costs and lost profits but at proof sought only to recover its upfront costs incurred in preparing for the implementation of the DRS.
On 28 January 2025, Lord Clark issued an opinion refusing to dismiss the action and remitting the matter to proof. The proof was heard before Lord Sandison.
Biffa’s action was based on two alternative grounds:
Breach of duty of care: negligent misrepresentation
Biffa’s first ground was that the Scottish Government’s conduct amounted to negligent misrepresentation.
Biffa relied on a letter from Lorna Slater MSP, the Minister for the Circular Economy, to Biffa’s Chief Executive dated 17 May 2022. The letter was sent at CSL’s request while negotiations were ongoing between Biffa and CSL regarding Biffa’s involvement in the implementation of the DRS. The Scottish Government was not itself a party to those negotiations.
Biffa’s position was that the letter contained assurances about the viability of the DRS but failed to alert Biffa to the need to apply for an exclusion from the UKIMA market access principles, whether such an exclusion would be sought or the consequences for the DRS if an exclusion was not obtained. Biffa claimed that it had been misled about material circumstances relating to the DRS. Had it known the true position, and in the absence of the necessary exclusion being in place, Biffa contended that it would not have entered into the contract with CSL or incurred the associated implementation costs.
The Scottish Ministers’ position was that the letter merely provided reassurance to Biffa and, having been sent at CSL’s request, did not purport to address all aspects of a complex set of arrangements.
Lord Sandison held that the Scottish Ministers owed a duty of care to Biffa on the basis that they possessed relevant special knowledge regarding the DRS and CSL’s position as scheme administrator and that they had assumed legal responsibility to state the matters contained in the letter of 17 May 2022 with reasonable care.
However, Lord Sandison concluded that there was no breach of that duty. At proof, senior counsel for Biffa accepted that there were no matters of fact expressly advanced in the letter that were untrue. Biffa therefore had to establish that the content of the letter would have created a false impression in the mind of a reasonable reader in the circumstances and that such an impression was in fact created.
Lord Sandison did not accept that a reasonable reader could have formed the impression that Ms Slater MSP was assuring Biffa that there was no risk that the DRS would not proceed or that there were no issues concerning potential legislative barriers or legal soundness. In his view, Biffa required something approaching the alchemy capable of transmuting base metal into gold, so far were the words used from the meaning which the pursuer required. The statements in the letter did not therefore amount to negligent misrepresentation.
Breach of duty of care to disclose
Biffa also contended that it was owed a duty of care by the Scottish Ministers, who it argued had assumed responsibility in relation to the necessity of obtaining an exemption from the market access principles, which was fundamental to the viability of the scheme and the requirements for obtaining such an exemption. Biffa maintained that the Scottish Ministers breached that duty by failing to alert it to the need for an exemption, which in turn caused Biffa to fail to take steps to mitigate its losses.
The Scottish Ministers denied that they owed a duty of care to Biffa to volunteer advice or information relating to the UKIMA or that they were under any wider duty to ensure the viability or deliverability of the scheme. They maintained that Biffa had taken a commercial risk in investing in preparation for the anticipated launch of the DRS.
Again, on the basis that the Scottish Ministers had voluntarily sent the letter to Biffa on 17 May 2022, Lord Sandison held that they had assumed responsibility to make those statements with reasonable care. However, he did not consider that the duty extended further to oblige the Scottish Ministers to provide Biffa with information to inform its decision on whether to enter into the contract with CSL. No breach of duty of care had therefore occurred.
Decree of absolvitor was accordingly granted in favour of the Scottish Ministers.
Comment
As we noted in our previous article, the UKIMA has not been the subject of extensive litigation and is referred to in very few cases across the UK.
While this may be surprising given the novelty and importance of the legislation and its impact on intra UK trade following Brexit, the lack of litigation may reflect the fact that the operation of the internal market is largely a matter for intergovernmental relations. No intergovernmental disputes have reached the courts since the General Counsel for Wales’s unsuccessful judicial review proceedings in 2021.
It is therefore notable that the first UK case to address the operation of the internal market regime in any depth concerns a public private contractual relationship. Lord Sandison observed that the legal issues were not particularly difficult to resolve and that the most significant ramifications of the decision are likely to arise in the context of negotiating public private contracts where the market access principles apply.
The case makes clear that the UKIMA gives rise to important considerations for public authorities and private entities entering contractual relationships. Where public private contracts involve the provision of goods or services and intra UK regulatory divergence is possible, careful consideration must be given to whether either market access principle may affect or disrupt the intended operation of the contract. Where such a risk exists, detailed analysis is required. Parties remain free to allocate risk within the contract as they see fit.
Looking more broadly to the future of the internal market, the UK Government concluded its consultation on the UKIMA in 2025. As the UK Government remains the sole authority able to grant exclusions from the market access principles, further development of the UK’s internal market is likely to occur at a political level through intergovernmental relations and Common Frameworks.
