One of the longest-running cases in British legal history came to an end today as the Bank of England secured £73.6 million in costs from the liquidators of the collapsed Bank of Credit and Commerce International (BCCI).

The move comes seven months after a 12-year suit described by the presiding judge as a "farce" was brought to an end in November. It set several new records, with one QC making an epic 86-day address to the court between January and July 2004: a record broken only by his opponent's 119 days.

BCCI went bust in 1991 with debts of £10 billion. The liquidators, Deloitte, took the Bank of England to court, claiming misfeasance in a public office over its supervision. Until responsibility was transferred to the Financial Services Authority in 1997, the Bank of England was responsible for regulating all banks in the UK.

Over the eight years before BCCI’s collapse, allegations had emerged of links with terrorist organisations, arms shipments to Arab states and South American drug cartels, but its licence was not withdrawn by regulators until 1991.

Lovells, representing the liquidators, told a High Court hearing in 2004 that that regulators "shut their eyes and turned away" from the activities of BCCI. But Freshfields Bruckhaus Deringer, the Bank of England’s lawyers, described the allegations as "nothing short of scandalous" and the £850 million claim was finally dropped in November of last year.

Following the case’s collapse Mr Justice Tomlinson, said: "I became so concerned about the case that I decided both to consult and to warn the Lord Chief Justice about it. I told the Lord Chief Justice, then Lord Woolf, that the case was a farce."

The liquidators handed over £73.6 million to the Bank after the collapse of the case. In an out-of-court settlement the two parties today agreed that the Bank could keep the £73.6 million as well as interest of £1.7 million accrued since then.

A Bank of England spokesman said: "This is an excellent result which allows us to draw a final line under the BCCI case. Without this settlement, there could have been several years of assessment hearings which would have added millions more in costs."

BCCI was founded in 1972 by Agha Hasan Abedi, a Pakistani financier, and went on to become a worldwide operation with 14,000 employees at 400 branches in 73 countries.

Deloitte declined to comment.

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