The High Court has ruled that the Serious Fraud Office (SFO) acted unlawfully by dropping a corruption inquiry into a £43bn Saudi arms deal.

Defence firm BAE was accused of making illegal payments to Saudi officials to secure contracts, but the firm maintains that it acted lawfully.

The SFO said national security would have been undermined by the inquiry.

Two judges allowed the challenge made by Corner House and the Campaign Against Arms Trade (CATT).

'Failure of government'

In handing down the decision on Thursday, one of the judges, Lord Justice Moses, told the High Court that the director of the SFO had failed to assure them that everything had been done to meet the rule of law.

"No one, whether within this country or outside, is entitled to interfere with the course of our justice," he said.

"It is the failure of government and the defendant to bear that essential principle in mind that justifies the intervention of this court."

CAAT had argued that the SFO's decision to drop the probe was illegal under the Organisation for Economic Co-operation and Development's (OECD's) Anti-Bribery Convention.

"We are delighted." said CAAT's Symon Hill after the decision.

"It has been clear from the start that the dropping of the investigation was about neither national security nor jobs. It was due to the influence of BAE and Saudi princes over the UK government."

Susan Hawley of the Corner House said: "This is a great day for British justice. The judges have stood up for the right of independent prosecutors not to be subjected to political pressure."

Following the judgement, BAE said: "The case was between two campaign groups and the director of the SFO. It concerned the legality of a decision made by the director of the SFO.

"BAE Systems played no part in that decision."

For its part, the Serious Fraud Office said it had no further comment, but was "carefully" considering the implications of the judgement.

Horrifying allegations of torture and killings carried out by the British Army in southern Iraq emerged on January 31.

Based on witness statements, death certificates and video evidence, the lawyers allege that nine more people survived torture and abuse.

"the allegations were the most harrowing he had ever heard"

“the police asked us to send ambulances to the British base to collect some bodies. When they brought the 22 bodies, it was a surprise to us to see some of these bodies mutilated and tortured.”

At the time, the British Army dismissed allegations of torture as “absurd.” But the case, along with hundreds of accusations arising from its activities in Iraq, has been the subject of calls for a public inquiry ever since. A yearlong investigation by the Royal Military Police (RMP) found no evidence of deliberate mutilation.

On January 31, however, the ban was overturned by Lord Justice Moses following legal moves by the victims’ families, the Guardian, the Times and the BBC. The Guardian reported Moses as ruling that the MoD’s attempt to stop media reporting on the allegations has no basis in law and that their handling of the case was “barmy.”

Regarding the ban on naming soldiers, Moses told the defence secretary’s counsel, “It is not the way it works. If you’re right about that there would be one rule for the Ministry of Defence and another for the ordinary citizen.”

The Majid al Kabir allegations further refute the central point made in a recent report published by the British Army into aspects of its reign of terror in southern Iraq, which whitewashed previous abuses as the result of bad planning, inadequate training and the work of individuals.

Baha Mousa was a 26-year-old hospital worker detained September 2003 during a raid by members of the Queen’s Lancashire regiment on a hotel in Basra. Mousa, who witnessed soldiers stealing cash from the hotel, was arrested along with six other workers at the hotel. All were hooded, bound, subjected to stress positions and brutally beaten for days.

Photographs and records show Mousa suffered 93 injuries, including four broken ribs, a fractured nose, smashed wrists and a ligature around his neck. According to one witness, “I heard Baha Mousa screaming. I was still hooded but it sounded like he was in another room. I heard him scream: ‘Please help me, blood is coming out, please help me, I am going to die.’ The last thing I heard him say was: ‘My nose broke.’ After this there was silence.”

The case was also central to a 2007 ruling by the British Law Lords that the government was in breach of the European convention of Human Rights and the UK’s own Human Rights Act for not conducting an independent inquiry.

Aitken also reported on the outcome of cases against soldiers accused of brutality following a riot in Amara in 2004. A video showing youths being beaten by British troops was passed to the News of the World. No charges were brought.

In the Camp Breadbasket case, four soldiers were finally found guilty of abuse after images showing prisoners being forced to simulate sex were discovered by a worker at a photo-processing shop. Other images showed prisoners suspended from a forklift truck.

“As a senior officer in the Iraqi army, I am clear that these terrible actions could not have taken place without support from senior officers within the British army.”