Lawyers for two UK pressure groups have this morning started preparing a legal challenge against the Government’s decision to abandon the Serious Fraud Office’s investigation into BAE System’s dealings with Saudi Arabia.

Campaign Against Arms Trade (CAAT) and The Corner House, a social justice group, have instructed solicitors Leigh Day & Co to start work on the case because they believe the Government will ignore their demands to reinstate the two year-old corruption probe, which was dropped last week.

Last night Leigh Day & Co wrote to the Prime Minister, the Attorney-General and the director of the SFO warning that they would file an application for a judicial review into the decision if the Government did not reverse it within two weeks.

But this morning a spokesman for CAAT told the Times Online that it was "highly unlikely" the Government would agree to its request and so the group had instructed its solicitors to begin work on the application immediately.

The two groups claim that the Government’s decision was in breach of article five of the Organisation for Economic Co-operation and Development’s anti-bribery convention.

The convention, which as an OECD member the UK is bound to uphold, states that "investigation and prosecution of the bribery of a foreign official…shall not be influenced by considerations of national economic interest…or the potential effect upon relations with another State."

Announcing that the SFO probe had been dropped last Thursday, the Attorney-General, Lord Goldsmith, said the Prime Minister was concerned the probe "would cause serious damage to UK/Saudi security, intelligence and diplomatic co-operation, which is likely to have seriously negative consequences for the UK public interest".

Jason Mansell, a barrister at 7 Bedford Row, said he believed the Government would be forced to defend itself in court because the two groups had a very good chance of being granted permission to bring a full judicial review.

In order to begin a judicial review, a process by which individuals or groups can seek to challenge Government decisions through the courts, a judge must decide whether the applicants have an "arguable" case.

The Corner House has enjoyed previous success in challenging the Government on a similar issue. In January 2005, it succeeded in forcing the Export Credit Guarantee Agency (ECGA), a unit of the Department of Trade and Industry, to launch a full public consultation on changes to its anti-corruption guidelines. The ECGA had previously altered its guidelines after private meetings with interested parties, including BAE Systems, but agreed to a wider consultation after a legal challenge by the Corner House.

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