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She said that, therefore, the decision violated the OECD Anti-Bribery Convention.

She said that there were threats from the Saudi Arabian Royal Family to pull the Typhoon order, adding that the SFO director had allowed threats or blackmail to influence his decision.

Ms Rose said that the threats to cancel the Typhoon contract came after BAE discovered that the SFO was about to obtain access to details of various Swiss bank accounts.

The court was told it was widely reported that the threats came from Prince Bandar, a national security adviser in Saudi Arabia, and his agents, who were being investigated by the SFO.

Previously, Ms Rose said, the Attorney-General had believed that it would not be right for the SFO to halt its investigations because of threats from the Saudis.

She said that on December 5, 2006, Prince Bandar met Foreign Office officials in London, and the following day the Prime Minister’s office informed the Attorney-General that Mr Blair wanted to make further representations before any offer of a possible plea bargain was made to BAE.

Three days later, the court was told, Mr Blair wrote a “personal minute” to the Attorney-General, attaching assessments prepared by Cabinet Office and Foreign Office officials.

In a meeting with the Attorney-General on December 11, a “carefully drafted” letter recording the meeting disclosed the Prime Minister saying that this was “the clearest case for intervention in the public interest” he had seen.

CAAT and Corner House research won the right for the judicial review last November.

Then Lord Justice Moses, who also presided over the preliminary hearing last year, said that the challenge "cried out for a hearing" and that it raised "matters of concern and public importance".

The Government has denied any breach of the OECD Anti-Bribery Convention.

The High Court hearing is expected to last two days.

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