The Serious Fraud Office (SFO) is to appeal against a High Court judgment that it acted unlawfully in dropping an inquiry into allegations of bribery and corruption relating to a BAE Systems arms deal with Saudi Arabia.

A successful appeal could prevent the bribery inquiry being reopened.

The judgment, given on April 10, was a significant victory for anti-corruption groups that brought the case after the SFO dropped its investigation, citing national security concerns.

The SFO inquiry, which was discontinued in December 2006, related to BAE's £43billion al-Yamamah arms deal with Saudi Arabia in 1985, which provided aircraft and other military equipment.

When it was halted, Tony Blair, then Prime Minister, said that if the SFO had continued its inquiry, it would have damaged national security.

The SFO's legal challenge begins tomorrow with a hearing to certify that points of law of general public importance are involved.

Richard Alderman, the recently appointed director of the SFO, who succeeded Robert Wardle, said: “The judgment ... raises principles of general public importance affecting, among other things, the independence of prosecutors and the role of the court in reviewing a prosecutor's evaluation of the public interest ... The court itself has commented that the issues raised in this case are important points of public interest.”

In the High Court, Lord Justice Moses said: “No one, whether within this country or outside, is entitled to interfere with the course of our justice. It is the failure of government and the defendant to bear that essential principle in mind that justifies the intervention of this court.”

The judicial review was brought by the anti-bribery groups Corner House and Campaign Against Arms Trade.

They argued that a decision to end the inquiry was tainted by government concerns about trade with Saudi Arabia.

Case history

1985: Michael Heseltine, the Defence Secretary, signs first phase of al-Yamamah arms deal with Saudi Arabia
1989: National Audit Office begins inquiry into contract. Report is not published
November 2004: Serious Fraud Office (SFO) says that BAE is being investigated over allegations of false accounting in Saudi contracts
December 2006: Lord Goldsmith, the Attorney-General, says that the SFO will end its inquiry
June 2007: BAE Systems says it is under investigation by the US Justice Department over arms deal payments with Saudi Arabia
November 2007: Campaign groups win judicial review of SFO’s decision to drop case

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