A Bellshill-based businessman has won a legal battle against the administrator of Scotland's Deposit Return Scheme (DRS).
Abdul Majid challenged the legality of the retailer handling fees which Circularity Scotland was due to impose.
The 13-page court ruling by Lord Young, followed a hearing at the Court of Session in December.
Majid's lawyers said a 2020 law which was set up to oversee the introduction of the scheme did not give Circularity Scotland the power to determine a reasonable handling fee for the business dealing with returns.
They argued that even if the company did possess that power under the law, the return handling fee had to be based on the costs incurred by the outlet dealing with the returned item.
Lawyers said that Circularity Scotland's plan for the handling fee to be determined by the costs incurred by every outlet dealing with returned items was wrong, which breached European laws on competitiveness.
Majid's legal team said their client would be set to lose a £1,000 a week if the scheme went ahead in its original form.
This is now unlikely, as last month it was announced that the DRS in Scotland was to be delayed until October 2025 at the earliest - after having been meant to launch this August, before a delay to next March.
Circular Economy Minister Lorna Slater told MSPs she had been left with no choice to fall in line with UK DRS plans, after Westminster excluded glass from the Scottish scheme.
As a result of the latest delay, Circularity Scotland went into administration on 20 June.
When it is finally introduced, the DRS should see a 20p charge placed on drinks containers, which would be refunded to consumers when they return the bottles and cans.
Lawyers for Circularity Scotland agreed during the hearing that it did not have the statutory power to set the return handling fee, while also accepting that the law for the scheme meant that businesses like Majid's did not have to accept the fee determined for handling the returned item.
This prompted Lord Young to rule in favour of the submission made by Majid's legal team.
He wrote: "It is accepted by the respondent that it has no statutory power to set the Return Handling Fee for any Return Point Operator.
"It is also accepted that the petitioner is not contractually bound to accept the Return Handling Fee announced by the respondent."
Majid, who runs a Nisa store and Baba’s Kitchen in Bellshill, told the BBC: "I am absolutely delighted to have won my case, one which I feel in many ways was not just for myself but for the many other retailers who would have been negatively impacted if Circularity Scotland had been able to proceed with their plans for the setting of the retail handling fee.
"From the outset it was clear that there was an issue over the legality of the retailer handling fees but it is not as if this was not pointed out to them.
"I hope the UK government take note of this decision and use it to avoid a similar situation arising in any UK-wide scheme."
Scottish Grocers' Federation chief executive Pete Cheema said: "The Court of Session has held that the way that the Scottish government and Circularity Scotland had set up the Deposit Return Scheme was unlawful and did not comply with the regulations made by the Scottish Parliament.
"CSL had no powers to set the fees that it sought to impose on retailers and even if it had, then they had still got it wrong by trying to impose a flat fee on all retailers, despite the difference in costs to the operators.
"This decision essentially stops the DRS progressing in its current form."
The Scottish Government, which was not involved in the proceedings, said Circularity Scotland wrongly applied one aspect of the DRS regulations in setting the reasonable handling fee for retailers operating return points.
"The court did not find that the DRS regulations are unlawful, nor did it find that the Scottish government acted unlawfully in setting up DRS or in making the DRS regulations," stated a spokesperson.
"But the Scottish government will consider the decision in this case as well as any implications for the Deposit Return Scheme as we work towards a launch date in 2025 along with other nations in the UK."
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
