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A ferry operator has lost a £12m claim against the Scottish government after it unsuccessfully bid for a contract.

Shetland Line (1984) took part in the process to secure the work on the routes between mainland Scotland and Orkney and Shetland.

In 2012, ministers awarded the six-year contract to rival bidder, Serco Ltd.

Shetland Line raised a commercial action at the Court of Session in Edinburgh claiming there was a breach of public contract regulations.

But a judge ruled that Shetland Line's claim should be rejected.

Lord Doherty said: "In my opinion there was no arbitrariness and no lack of transparency in the evaluation process."

He added: "The facts are that the pursuers' (Shetland Line) bid was given a high score for services, and a high score for quality.

"Serco's bid won despite having lower scores than the pursuers for those matters it scored far better than them on price."

The judge said there was nothing in material placed before him during the case that persuaded him that if a benchmarking process had been used the outcome would have been different.

A Scottish Government spokesman said: "We welcome Lord Doherty's decision in this case which rules strongly in our favour, dismissing the claims made against us.

"We have always maintained that we conducted a robust and fair procurement process for the Northern Isles Ferry Services contract and this result not only supports this but also endorses the approach we took.

"The Northern Isles Ferry Services play a vital role for the communities of Shetland and Orkney and the Scottish government will continue to make sure that we provide the best possible transport links for the people that depend on them."