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The warnings had clearly come from the Saudi authorities at the highest level; and it was wrong to suggest that no steps had been taken to verify the seriousness of the threats, he said.

The judges in the divisional court who ruled against him, he added, were saying that once an overt threat had been made, then “the only lawful resonse” was to ignore it.

That was a “startling proposition,” Mr Sumption said and meant that whenever a prosecutor was proceeding with an investigation and was told of adverse consequences this would have on third parties, he was bound to ignore them.

“The suggestion is not that the Director surrendered his discretion to the UK Government but that that surrender was to the author of the threat. This is perfectly absurd.”

There was no suggestion that the decision was irrational.

“His decision followed protests from the Saudi Arabian government that the investigation was a breach of the inter-governmental confidentiality agreement in the Al Yamamah contract, and threats relayed through a number of channels from the Saudi Arabian government to withdraw diplomatic and intelligence co-operation if it continued.”

In another “remarkable” passage the Divisional Court had suggested that neither the Director nor his advisers considered the likelihood of the threats being carried out or their impact; or if the Saudis were open to persuasion.

There was no evidence before the judges as to how this might be done, Mr Sumption said, or whether “someone should give the Saudis a little lecture on how the separation of powers is considered in England and that the Director is an independent office holder who could not lawfully submit to a threat and therefore it was pointless to make one.”

Mr Sumption said the director was aware that the Foreign and Defence Secretaries shared the Prime Minister’s view about the damaging impact of continuing the investigation which had been formed after advice from the Government’s most senior national security advisers.

“The director saw information provided by the Cabinet Office, which gave details of the nature and extent of Saudi Arabia’s co-operation with the United Kingdom on intelligence related to counter-terrorism, and which explained its importance to the UK’s security.”

The QC said that it was not the role of the courts to interfere in such a case. “Decisions about whether to initiate or discontinue investigations and about what the public interest requires in that context, are not among the functions of the courts.

“They are the functions of independent administrative officers, such as the director, on whom the relevant powers and discretions have been conferred by statute.”

In quashing the decision to drop the investigation, the High Court had “in significant respects” assumed the role which Parliament had assigned to the director under the superintendence of the Attorney General.

“It did not have, and could not readily have been provided with, all the information necessary to put it in the director’s shoes and the shoes of those advising him, so as to enable it to weigh the public interest.”

The duties of the director were subject to the use of discretion as a matter of law, he said. The rule of law required the director to carry out the duties Parliament had laid on him to exercise the discretion Parliament had conferred, in line with the principles of public law.

The hearing continues.

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