More than 150,000 shareholders in Northern Rock will tomorrow claim that the Government breached their human rights in setting up a compensation scheme that left them penniless.

In a test High Court case over the way the Government nationalised the bank, shareholders will cite the Human Rights Act to say that the total lack of compensation was unfair and unlawful.

They argue that the terms used by the Government for compensating shareholders was wrongly based on an assumption that the bank was in administration and no longer a going concern.

As a result, they may receive as little as 5p a share compared with what they maintain is a “fair” value of £3-£4 per share.

The legal action, which sees a line-up of Britain’s top and most-highly paid Queen’s Counsel, is being brought by two investment funds and some 150,000 individual shareholders who held 25 per cent of the bank’s shares.

SRM Global Master Fund is represented by David Pannick, QC, and RAB Special Solutions (Master) Fund Ltd by Michal Beloff, QC, and some 150,000 individual shareholders, represented by Tom de la Mare.

The defendant to the claim, which will be heard over three days by Lord Justice Stanley Burnton and Mr Justice Silber, is the Treasury, represented by Lord Grabiner, QC, the Labour peer and leading commercial silk.

The legal nub of the case is that the compensation scheme approved for shareholders by Parliament - which required the shares to be valued as if Northern Rock was in administration - was a breach of the shareholders’ human rights.

They say it violated article one of the first protocol to the European Convention on Human Rights, which guarantees the right to property, and seek a declaration that the statutory scheme is incompatible with the Human Rights Act.

The shareholders argue that the bank was solvent with valuable assets and say that the Prime Minister and Chancellor stated that the Government’s intention was to sell the company back to the private sector as soon as possible for a large profit.

In a few years’ time, the Government could float Northern Rock for an estimated £2 billion to £3 billion, which would be pocketed by the Government although the shareholders have received nothing.

Professor Tim Congdon, the leading economist who has been instructed by White & Case, lawyers for the individual shareholders as an expert witness, will argue that if the statutory compensation scheme (under the Banking Act 2008) is valid, then the Government could “steal” the entire banking system from its shareholders for next to nothing.

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