Grangemouth refinery owner Ineos has abandoned a lawsuit against its workers' union over a case that saw production of around 70 per cent of Scotland's fuel grind to a halt.

The company threatened to sue the Unite union for libel in September after Scottish secretary Pat Rafferty described Grangemouth's workforce as labouring under a "culture of fear" culminating in a series of management disciplinary investigations against then convener Stevie Deans.

Ineos UK chairman Calum MacLean rejected the allegation as "untrue and defamatory" - less than a month before informing the workforce of plans to shut down the plant's entire petrochemicals arm and axe 800 jobs unless they agreed to drastic cuts to pay, pensions and conditions.

The case had been destined for the High Court but Ineos's lawyers Slaughter and May this week withdrew the case.

Union officials said the company could be liable for the union's legal costs of as much as £100,000.

Unite leader Len McCluskey said yesterday that Ineos's decision to drop the lawsuit suggested its legal threats had been "completely wrong."

He said his own members and officers had been "disgracefully misrepresented" in the dispute, with "shamefully opportunistic" detractors in Parliament and the media.

"We hope that this now draws a line under all dispute issues," Mr McCluskey said.

Unite members and reps "must now be allowed to get on with their jobs knowing that they will be treated with respect," he added.

A spokesman declined to say whether Ineos stood by the chairman's comments or whether the company's actions had countered perceptions of a "culture of fear."

"Ineos has dropped its claim in order to draw a line under last year's dispute and focus on working with our employees to build a strong future for the Grangemouth site," he said.