A Scottish local authority has fought off a legal challenge over its decision to award a contract as part of a landmark project to transform a redundant castle into a major visitor attraction, The Scotsman has reported.

Comhairle Nan Eilean Siar is aiming to develop Lews Castle, in Stornoway, on the isle of Lewis, into a heritage and hospitality tourist destination.

As part of the process it signed a development agreement last year with Natural Assets Investments and NA Lews Castle.

But Kenman Holdings, which runs hotels on the Hebridean island, raised a judicial review at the Court of Session in Edinburgh seeking to have the decisions set aside claiming that it was a breach of European Union procurement law and natural justice.

The Western Isles local authority claimed that the application for judicial review was incompetent and should be refused because of delay and acquiescence on the part of the hotel firm.

A judge this week ruled that the application was competent but held that it had delayed “for an unreasonably long time” and found in favour of the council.

Lord Tyre said: “In a public law matter where it is detrimental to good administration to allow a matter as important as the development with which these proceedings are concerned to remain in a state of uncertainty, I consider that reluctant acquiescence may reasonably be inferred from the petitioner’s delay and taciturnity.”

Kenman had claimed that pre-tender discussions between the council and the successful company were such as to create a distortion of competition and an un­equal treatment of potential ­tenderers.

It also maintained that post-tender negotiations led to ­fundamental changes to the contract, including a postponement of an obligation to lodge £500,000 in a joint account.

It maintained that alleged breaches of European Union law and other principles amounted to an award of state aid by the council.

Kenman’s chief executive Kenneth Mackenzie had expressed concerns about the procurement process to council leader Angus Campbell at a meeting last year and asked that the process be ­terminated.